Petco closes FY2025 with lower sales, higher profit

Petco ended fiscal 2025 with declining sales, but a much stronger profit profile, underscoring how far the retailer has leaned into a turnaround built on tighter execution rather than top-line growth. In results released March 11, 2026, the company reported full-year net sales of $6.0 billion, down 2.5% year over year, while adjusted EBITDA rose 21.3% to $408.2 million and operating income increased to $120.4 million from $7.1 million a year earlier. Management framed the year as the end of a reset period and the start of a new expansion phase called “Reach for the Sky.” (corporate.petco.com)

That framing matters because Petco entered 2025 already under pressure. In fiscal 2024, the company posted net sales of about $6.12 billion and adjusted EBITDA of $336.5 million, while guiding investors toward a year of low-single-digit sales declines, margin repair, and real estate rationalization. By the second quarter of fiscal 2025, Petco was still reporting sales declines, but it had raised its earnings outlook and said it was using the year to strengthen its operating model and retail fundamentals. In other words, the sales decline at year-end didn’t come as a surprise; it was part of a strategy management had been telegraphing for several quarters. (ir.petco.com)

The fourth quarter showed the same pattern. Net sales fell 2.4% to roughly $1.5 billion, and comparable sales declined 1.6%, but operating income jumped 83.2% to $31.9 million and adjusted EBITDA rose 10.6% to $106.3 million. Gross margin improved in both the quarter and the full year, inventory fell faster than sales, and cash from operations rose sharply. Petco also paid down debt, refinanced its capital structure in February 2026, and reduced its leverage ratio to 3.0x from 4.2x at the start of the year. For fiscal 2026, the company is guiding to flat to 1.5% sales growth, adjusted EBITDA of $415 million to $430 million, and another 15 to 20 net store closures. (corporate.petco.com)

What changes now is where Petco says it will put its energy. Its March 2026 investor presentation lays out four growth pillars: compelling product, trusted store experience, services at scale, and an integrated omnichannel platform. Within that framework, management said it will expand fresh food, add new national brands, ramp owned brands in food and supplies, increase product newness, relaunch loyalty efforts, and invest behind services. The presentation is explicit on veterinary care: Petco says it is “committed to vet business,” with the near-term plan to optimize productivity first and then ramp. Secondary coverage of the earnings call also reported that Petco plans to add more than 1,000 freezer units to support fresh pet food, highlighting how central consumables and fresh feeding have become to the retailer’s next phase. (ir.petco.com)

Industry context helps explain that emphasis. Fresh and frozen pet food has remained one of the faster-growing areas in pet retail, and Petco has been trying to defend a differentiated position against both mass retailers and specialty competitors. PetfoodIndustry reported earlier that cold-chain infrastructure is increasingly viewed as a competitive advantage as fresh pet food grows, with larger chains devoting more freezer space and delivery capabilities to the segment. That gives Petco’s freezer expansion and fresh-food push a broader strategic logic: it’s not only a merchandising move, but also a bid to reinforce store relevance and basket size in categories where pet parents may shop more frequently and seek more guidance. (petfoodindustry.com)

Expert commentary directly tied to the results was limited outside investor-focused coverage, but the company’s own messaging has been consistent. CEO Joel Anderson said Petco had largely completed the work of rebuilding its economic model and was now focused on “driving sustainable, profitable top-line growth.” On the earnings call, as summarized in transcript coverage, management described services, including veterinary hospitals and grooming, as owned assets being optimized for higher productivity, with future expansion expected after that utilization work is further along. That suggests Petco is not backing away from veterinary care, but sequencing growth more cautiously than some headline summaries might imply. (corporate.petco.com)

Why it matters: For veterinary professionals, Petco’s results are a reminder that corporate veterinary strategy is increasingly tied to broader retail economics. Petco is signaling that veterinary services remain central to its differentiation, but the immediate priority is getting more out of existing assets rather than racing into large-scale new openings. That could mean a continued focus on clinic productivity, staffing efficiency, cross-referrals from retail traffic, and service attachment to wellness plans, grooming, nutrition, and pharmacy. It also means veterinary teams working inside retail ecosystems may feel the effects of a more disciplined capital environment, where growth is expected to come from utilization and integration before footprint expansion. (ir.petco.com)

What to watch: The next key markers will be whether Petco delivers on its forecast for a return to positive comps in fiscal 2026, how aggressively it invests in fresh-food infrastructure and owned brands, and whether management starts to give more concrete timing for veterinary expansion after its stated productivity-improvement phase. (corporate.petco.com)