Petco ends FY2025 with lower sales, but keeps vet growth in play
CURRENT BRIEF VERSION: Petco closed fiscal 2025 with lower sales, but meaningfully better profitability, underscoring a deliberate shift away from lower-quality revenue as it tries to reset the business for growth. The retailer 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 climbed to $120.4 million from $7.1 million a year earlier. On the March 11 earnings release and call, CEO Joel Anderson and CFO Sabrina Simmons framed the year as a turnaround phase built on cost discipline, debt reduction, and tighter execution, then introduced a new 2026 growth plan, “Reach for the Sky,” focused on consumables, fresh food, owned brands, services, and omnichannel improvements. Petco ended the year with 1,382 stores after seven net closures, and said it expects another 15 to 20 net closures in fiscal 2026. (corporate.petco.com)
Why it matters: For veterinary professionals, the notable point isn’t just retail softness, it’s where Petco says it will invest next. Management said wholly owned services, including veterinary hospitals and grooming, are part of its growth strategy, with about 20% of the chain now hosting veterinary locations and productivity optimization underway before broader expansion resumes. That suggests Petco still sees in-store veterinary care as a strategic differentiator, even as it reins in less profitable parts of the business and prioritizes return on invested capital. The broader pet retail backdrop also shows that services and private-label growth remain attractive levers: in Brazil, newly merged rivals Petz and Cobasi reported combined 2025 revenue growth of 8.8%, service growth acceleration in the fourth quarter, and strong private-label gains even as they cut investment in new stores and hospitals roughly in half. (fool.com; globalpets.com)
What to watch: Watch whether Petco can turn flat-to-positive comparable sales in 2026 into enough traffic and basket growth to support future veterinary expansion, after management said broader services expansion is more likely to begin in 2027. It is also worth watching whether Petco can get similar lift from owned brands, fresh food, and service productivity as other large pet retailers are pursuing through integration and margin-focused growth. (corporate.petco.com)