Petco ends FY2025 with lower sales, but doubles down on services

Petco ended fiscal 2025 with lower sales, but stronger profits, underscoring how much of the past year was about retrenchment rather than expansion. In results released March 11, 2026, the retailer reported $6.0 billion in net sales, down 2.5% year over year, while adjusted EBITDA climbed 21.3% to $408.2 million and operating income rose to $120.4 million from $7.1 million a year earlier. CEO Joel Anderson said the company had largely completed work to rebuild its economic model and was moving into a new phase focused on “sustainable, profitable top-line growth.” (corporate.petco.com)

That framing matters because Petco has spent the last several quarters trying to stabilize a business pressured by softer discretionary spending, uneven retail demand, and the need to improve margins. Through 2025, the company repeatedly emphasized cost actions, tighter inventory control, and a more selective approach to sales quality. By year-end, inventory was down 9.7% against a 2.5% sales decline, operating cash flow had risen 76.8% to $314.1 million, and Petco had reduced its leverage ratio to 3.0x from 4.2x, while also paying down debt and refinancing maturities out to 2031. (corporate.petco.com)

Now the company is trying to turn that financial reset into a growth strategy. Petco’s 2026 plan, described in coverage of the earnings release as its “Reach for the Sky” expansion strategy, centers on categories where management believes it can win traffic and margin at the same time: fresh pet food, product newness, national and owned brands, and services. Analyst and market summaries of the earnings call said Petco plans to add more than 1,000 freezer units in 2026, introduce roughly 25 new brands and flavors, and keep building its consumables mix. (investing.com)

Veterinary services remain part of that equation. Petco’s filings and company materials continue to describe a business built around stores, digital commerce, and a network of in-store veterinary hospitals and mobile clinics. Analyst summaries following the latest results highlighted roughly 300 veterinary hospitals as part of Petco’s wholly owned services platform, alongside grooming and training, and characterized those services as a differentiator that’s harder for competitors to replicate. Third-party analysis published after the quarter also pointed to services as one of the few growth pockets in the business, with Zacks noting that services and other revenue rose 5.8% in the fourth quarter to $256 million. (sec.gov)

Outside commentary has largely read the quarter as a turnaround-in-progress. A Yahoo Finance item summarizing Goldman Sachs’ view said the firm saw Petco as positioned for 2026 growth partly because of its higher-margin veterinary services exposure. Other analyst-focused coverage said investors responded positively to the company’s better-than-expected profit outlook even though top-line growth remains modest. That’s an important distinction: the market appears willing, at least for now, to give Petco credit for improving the economics of the business before fully restoring sales momentum. (finance.yahoo.com)

Why it matters: For veterinary professionals, Petco’s results are a reminder that corporate veterinary strategy is increasingly tied to broader retail economics. In Petco’s model, veterinary care isn’t only a standalone service line; it also supports traffic, loyalty, and cross-category spending from pet parents who may buy food, prescriptions, supplements, or grooming in the same ecosystem. If that strategy works, veterinary teams inside retail settings could become even more central to customer retention and recurring revenue. If it doesn’t, pressure may shift toward productivity targets, service mix optimization, and getting more out of existing hospitals and clinics rather than opening many new sites. That inference is supported by management’s focus on profitable growth, planned store closures, and commentary emphasizing optimization of the current services base. (corporate.petco.com)

The competitive backdrop also matters. Your source set notes that Brazilian retailers Petz and Cobasi posted high single-digit revenue growth in 2025, helped by store expansion, digital gains, service acceleration, and private-label momentum, a contrast to Petco’s contraction year. Combined, the two companies grew revenue 8.8% year over year before completing their merger into União Pet, with physical-store sales up 7.3%, digital commerce up 11.7%, and digital reaching 40.9% of total sales. In the fourth quarter, both companies also reported faster service growth, with Petz up 10% and Cobasi up 22%, while same-store sales rose 8% and 6.2%, respectively. Profitability improved too: adjusted net income for the combined group rose 50.4%, helped by private-label gains, including Cobasi’s Joy dry food launch and a 37% increase in that segment. (globalpetindustry.com)

That comparison is useful not because the markets are identical, but because it shows how other pet retailers are balancing growth and margin. Notably, Petz and Cobasi also halved investment in new stores and hospitals during 2025 and redirected resources toward operational continuity and improvements to existing locations, even as they opened 15 units and ended the year with 521 stores. In other words, service-led growth and private-label expansion do not necessarily require an aggressive new-build cycle. For Petco, which is also emphasizing owned brands, services, and productivity, that may be the more relevant takeaway than the headline revenue gap. (globalpetindustry.com)

What to watch: The next key test is whether Petco can deliver positive comparable sales in fiscal 2026 while maintaining profit gains, especially as it rolls out fresh-food capacity, closes 15 to 20 net stores, and leans harder on veterinary and other services to drive repeat visits. First-quarter 2026 guidance calls for sales ranging from down 1% to flat year over year, suggesting the turnaround story is still in its early stages. Against that backdrop, one practical question for the veterinary side of the business is whether Petco follows the same playbook seen elsewhere in pet retail: extracting more growth from existing hospitals, clinics, and service offerings before returning to broader physical expansion. (corporate.petco.com; globalpetindustry.com)