Petco ends FY2025 with lower sales, sharper focus on profit

CURRENT FULL VERSION: Petco ended fiscal 2025 with lower sales, but materially stronger profitability, underscoring how far the company has shifted from chasing volume to rebuilding margins. In results released March 11, 2026, the retailer reported full-year net sales of $6.0 billion, down 2.5%, while operating income climbed to $120.4 million from $7.1 million and adjusted EBITDA rose 21.3% to $408.2 million. Management framed the year as one of foundational repair, and used the update to launch its next phase, a growth plan called “Reach for the Sky.” (corporate.petco.com)

That pivot follows a longer reset already visible through 2025. In third-quarter results released November 25, 2025, Petco had already said it was “rebuilding the base” of its economic model, with sales still down 3.1% but operating income and adjusted EBITDA improving meaningfully. The company also tightened its fiscal 2025 sales outlook at that point while raising its EBITDA expectations, reinforcing that management was willing to trade top-line softness for healthier economics. Leadership changes in 2024 and early 2025, including the appointments of CEO Joel Anderson and additional senior executives, were positioned as part of that turnaround effort. (ir.petco.com)

The new strategy is aimed at restarting growth without giving back margin gains. Petco’s 2026 outlook calls for net sales ranging from flat to up 1.5%, adjusted EBITDA of $415 million to $430 million, and approximately 15 to 20 net store closures. On the earnings call, executives said consumables, which make up roughly half the business, will be a major focus. The company plans to add more than 1,000 freezer units over the course of 2026 to expand fresh food, increase the cadence of product launches, and bring in more new brands and flavors. Management argued that fresh-food shoppers visit more often and spend substantially more per year than dry-food-only dog customers, making the category strategically important beyond simple product mix. (corporate.petco.com)

Veterinary services remain part of that thesis, though the timeline is more measured than some headlines suggest. Executives said owned services, including vet hospitals and grooming, are being optimized for higher productivity, with about 20% of the chain currently hosting veterinary locations. They also said Petco expects to begin growing its hospital base again in 2027, while using 2026 to improve utilization and add technology that supports cross-selling between clinical care, prescriptions, food, and supplies. In other words, the company is still leaning into veterinary care, but first wants better returns from the footprint it already has. (fool.com)

Industry reaction was strongest on the profitability story. While broad analyst commentary available publicly was limited, market coverage following the March 11 release highlighted renewed investor confidence as Petco beat its own EBITDA outlook and reduced leverage. Some reporting also noted that analysts had viewed the company’s margin repair and reduced liquidity risk more favorably after the quarter, even as questions remained about whether sales growth would return fast enough. (corporate.petco.com)

There’s also a wider market context. While Petco posted declining sales in 2025, other pet retailers have continued to show growth in some markets. GlobalPETS reported that Brazil’s Petz and Cobasi, which merged in December to form União Pet, delivered combined revenue growth of 8.8% in 2025, with Petz up 7.9% to R$4.3 billion and Cobasi up 9.9% to R$3.6 billion. Both physical stores and digital channels contributed, with brick-and-mortar sales up 7.3%, digital commerce up 11.7%, and online reaching 40.9% of total sales. Services also accelerated in the fourth quarter, rising 10% at Petz and 22% at Cobasi, while same-store sales grew 8% and 6.2%, respectively. (GlobalPETS)

Profitability improved there, too, but with a different mix. The combined group posted adjusted net income of R$242.1 million, up 50.4% from 2024, which management attributed to progress in private-label brands and a balance between growth and margin. Cobasi said its Joy private-label dry food launch helped that segment grow 37% year over year to 7.6% of sales, while Petz reported 26% private-label growth. At the same time, the companies halved investment in new stores and hospitals during 2025, redirected resources toward operational continuity and existing-store improvements, and still ended the year with 521 stores after opening 15 units. As part of merger approval, they also had to divest 26 stores in São Paulo. Management now says 2026 will mark the start of a new chapter as a unified company focused on integration and synergy capture. (GlobalPETS)

Why it matters: For veterinary professionals, Petco’s results are a reminder that corporate veterinary expansion is increasingly tied to productivity, retention, and cross-category spending, not just clinic count. If Petco can make its in-store hospitals and Vetco-linked services more efficient, that could strengthen the case for future hiring and site growth in 2027 and beyond. It also reflects a broader competitive reality: major pet retailers are trying to use veterinary access, grooming, nutrition, pharmacy, digital convenience, and private label as a connected ecosystem that drives repeat visits and higher lifetime value from pet parents. The Brazil comparison is not a direct read-through to the U.S. market, but it does show that pet retail growth can still come from a mix of services, e-commerce, owned brands, and operational discipline, even when companies slow new hospital development. (fool.com; GlobalPETS)

What to watch: The next key markers are whether Petco’s first-quarter 2026 results show the comp-sales inflection management projected, whether fresh-food expansion lifts traffic as planned, and whether the company can demonstrate better veterinary productivity in 2026 before reopening the hospital growth conversation in 2027. It is also worth watching whether Petco can build more momentum in owned brands, services, and digitally connected shopping in ways that echo stronger-performing peers abroad while still protecting the margin gains it made in 2025. (corporate.petco.com; GlobalPETS)