Petco ends FY2025 with lower sales, higher profits

Petco is ending fiscal 2025 in a more profitable, but smaller, position. The retailer reported $6.0 billion in full-year net sales, down 2.5% from the prior year, yet operating income climbed sharply to $120.4 million from $7.1 million, and adjusted EBITDA rose 21.3% to $408.2 million. In other words, Petco’s reset appears to have improved earnings even as revenue slipped, and management is now presenting 2026 as the start of a return-to-growth phase. (corporate.petco.com)

That outcome follows a year in which Petco focused on rebuilding its economics rather than maximizing top-line volume. According to reporting from GlobalPETS, CFO Sabrina Simmons told investors the sales decline reflected a decision to move away from unprofitable sales. CEO Joel Anderson said the company had spent fiscal 2025 strengthening leadership and rebuilding the operating model, framing the year as a foundation-setting period before a new expansion push. (globalpetindustry.com)

The clearest sign of that next phase is Petco’s “Reach for the Sky” strategy. In its March 11, 2026 earnings release, the company said fiscal 2026 sales should range from flat to up 1.5%, with adjusted EBITDA of $415 million to $430 million. Petco is also planning about 15 to 20 net store closures, signaling that physical footprint rationalization is still underway even as growth investments resume. In the fourth quarter, net sales were $1.52 billion, down 2.4%, but operating income increased 83.2% to $31.9 million, reinforcing the pattern of better profitability despite softer sales. (corporate.petco.com)

Management’s growth thesis is centered on consumables and fresh food. Petco said it will add more than 1,000 freezer units over the course of 2026 to expand fresh pet food assortments, while also increasing product newness and putting more emphasis on key private-label lines. Anderson said fresh-food shoppers make more trips and spend materially more than dry-food-only shoppers, making the category strategically important beyond simple product mix. That matters because Petco is trying to drive higher-frequency visits from pet parents without reverting to the lower-quality revenue it spent 2025 shedding. (petfoodprocessing.net)

Veterinary and other services remain part of that strategy. Third-party earnings coverage described wholly owned services, including veterinary hospitals and grooming, as a key differentiator for Petco, and one summary of the earnings call said the company is optimizing those assets for productivity, with future expansion in mind. Petco’s fiscal 2025 Form 10-K adds scale to that picture: as of January 31, 2026, the company had approximately 300 full-service veterinary hospitals in its network and operated about 1,600 Vetco clinics weekly. (tipranks.com)

For veterinary professionals, the takeaway is that Petco is still treating care delivery as a strategic growth lever, not just an ancillary store service. A retailer under pressure might have chosen to retreat from labor-intensive veterinary operations while cutting costs. Instead, Petco is pairing cost discipline with continued emphasis on hospitals, vaccination clinics, grooming, and training, suggesting it sees care services as central to customer retention, cross-selling, and differentiation from generalist retailers and e-commerce competitors. That could keep competitive pressure on independent practices in preventive care and routine wellness, especially in markets where Petco’s in-store ecosystem is already established. (fool.com)

There’s also a broader market context. While Petco posted a sales decline in fiscal 2025, Brazilian retailers Petz and Cobasi reported combined revenue growth of 8.8% in 2025, driven by both store and digital gains before completing their merger into União Pet, according to GlobalPETS. Petz’s sales rose 7.9% to R$4.3 billion and Cobasi’s increased 9.9% to R$3.6 billion, while physical-store sales grew 7.3% and digital commerce climbed 11.7%, reaching 40.9% of total sales. Same-store sales also increased, by 8% at Petz and 6.2% at Cobasi, and both companies reported Q4 acceleration in services, up 10% and 22%, respectively. The newly merged group’s adjusted net income rose 50.4% to R$242.1 million, with GlobalPETS attributing part of that strength to private-label momentum and a balance between growth and margin. Cobasi, for example, said its Joy dry-food launch helped private label grow 37% year over year to 7.6% of sales, while Petz reported 26% private-label growth. (globalpetindustry.com)

That contrast underscores that pet specialty retail isn’t uniformly contracting; Petco’s softer sales appear tied at least in part to company-specific strategic retrenchment and mix decisions, not just a weak category backdrop. It also offers a useful comparison for Petco’s own 2026 playbook: both companies are leaning on owned brands and services to support profitability, but Petz and Cobasi managed to do so while still growing revenue. At the same time, the Brazilian group also slowed expansion, halving investments in new stores and hospitals in 2025 and prioritizing operational continuity and existing-store improvements, showing that disciplined capital allocation is not unique to Petco. Even so, the merged company still ended the year with 521 stores after opening 15 units, despite having to divest 26 São Paulo stores as a merger condition. (globalpetindustry.com)

What to watch: The next key test is whether Petco can translate its cleaner profit base into durable traffic growth in fiscal 2026. Watch fresh-food rollout execution, same-store sales trends, and whether services productivity improves enough to support future veterinary expansion, which some earnings-call coverage suggested may not accelerate until 2027. It will also be worth watching whether Petco’s owned-brand push and service mix can deliver the same kind of margin support that private label and services did for Petz and Cobasi. (petfoodprocessing.net; globalpetindustry.com)