Petco ends FY2025 with lower sales, higher profits

Petco closed fiscal 2025 with lower sales, but better profits, as the retailer leaned into a deliberate reset rather than chasing low-margin volume. The company reported full-year net sales of $6.0 billion, down 2.5% year over year, while operating income rose to $120.4 million from $7.1 million and adjusted EBITDA increased 21.3% to $408.2 million. Petco said the decline reflected its strategy of moving away from unprofitable sales, and it’s now shifting into a new growth phase centered on consumables, fresh food, owned brands, and services. For fiscal 2026, the company is guiding to flat to 1.5% net sales growth and adjusted EBITDA of $415 million to $430 million. (corporate.petco.com)

Why it matters: For veterinary professionals, the notable piece isn’t just the margin recovery, but where Petco says it will invest next. Management has positioned veterinary hospitals, vaccination clinics, grooming, and training as core differentiators alongside retail, and the company’s latest SEC filing says Petco had about 300 full-service veterinary hospitals and operated about 1,600 Vetco clinics weekly as of January 31, 2026. That suggests Petco still sees services as a traffic driver and retention tool, even as it remains cautious on broader store growth and plans roughly 15 to 20 net store closures this year. The broader pet retail backdrop also matters: GlobalPETS reported that Brazilian retailers Petz and Cobasi posted combined 2025 revenue growth of 8.8%, with gains in stores, e-commerce, same-store sales, and services before completing their merger into União Pet. That contrast suggests Petco’s sales decline was tied at least partly to its own strategic pullback, rather than a uniformly weak pet specialty market. (fool.com; globalpetindustry.com)

What to watch: Watch whether Petco’s 2026 “Reach for the Sky” plan, including more than 1,000 additional freezer units for fresh food and continued emphasis on services, actually restores traffic without eroding the margin gains it just rebuilt. It’s also worth watching whether owned brands and service productivity can play the same kind of margin-supporting role that private label and service growth played for Petz and Cobasi in 2025. (petfoodprocessing.net; globalpetindustry.com)