Petco starts FY25 with softer sales dip and stronger margins

Petco reported net sales of $1.5 billion (€1.3B) for the first quarter of its fiscal year (FY) 2025, ending 3 May 2025. This represents a 2.3% year-over-year (YoY) decrease, in line with the company’s outlook for the period.

The decrease in sales was softer than the 7.3% reported by the San Diego-based firm in the last quarter of FY2024. However, comparable sales were down 1.3%, which was well above the 0.5% decline in Q4 FY2024.

Following a loss in the previous quarter, operating income improved from $33.1 million (€29M) to $16.4 million (€14M) from March to May 2025.

GAAP net loss also improved $34.8 million (€30M) to $11.7 million (€10M), and adjusted EBITDA increased $13.8 million (€12M) to $89.4 million (€78M).

Services boost sales

“We entered the year with a detailed, phased strategy to strengthen retail fundamentals across our operating model and return the business to sustainable, profitable growth,” says company CEO Joel Anderson.

Petco saw net sales for consumables decline 2% YoY to $748 million (€657M), while supplies and companion animal net sales were down 4% to $494 million (€434M).

However, there was a 1% increase in services to $252 million (€221M).

Petco closed a net of 5 stores in Q1 of FY2025, following a net of 25 closures throughout FY2024. It has previously stated its intention to close up to 30 stores during the current fiscal year.

Future and tariffs

Anderson acknowledged that the “current backdrop” – in reference to US trade policy – has served as a catalyst to accelerate the work that was already underway.

The company’s outlook for Q2 and FY2025 projects a decrease of net sales “down low single digits,” assuming that current levels of tariffs on goods from China remain and are not increased.

For Q2, Petco forecasts its adjusted EBITDA to improve to $94 million (€82M) from $92 million (€81M).