Petco ends FY2025 with lower sales, sharper focus on services

Petco ended fiscal 2025 with a smaller top line, but a much healthier income statement, as management leaned harder into a turnaround built on profitability over volume. The company reported $5.96 billion in net sales for the year ended January 31, 2026, down 2.5% from the prior year, while adjusted EBITDA rose 21.3% to $408.2 million and net income turned positive at $9.1 million, compared with a loss of $101.8 million a year earlier. Fourth-quarter results showed the same pattern: lower sales, but materially better operating performance. (corporate.petco.com)

That outcome reflects a strategy Petco has been signaling for several quarters. Through 2025, the retailer tightened costs, reduced exposure to lower-return sales, and focused on margin improvement, even as traffic and comparable sales remained under pressure. By the end of the year, Petco had closed seven stores in the fourth quarter and finished with 1,382 locations, with additional closures planned in 2026. Management’s message is that the reset phase is largely complete, and the business is now shifting from stabilization toward selective growth. (petfoodprocessing.net)

The next phase is Petco’s “Reach for the Sky” expansion strategy, which is aimed first at consumables, especially fresh pet food. The company said it will add more than 1,000 freezer units starting in the first quarter of 2026 to expand fresh offerings, while also increasing product newness and putting more emphasis on its strongest owned brands. Petco said fresh-food shoppers visit more often and spend materially more over time than dry-food-only dog customers, making that category strategically important beyond simple product mix. For 2026, the company is guiding to flat to 1.5% net sales growth and adjusted EBITDA of $415 million to $430 million. (petfoodprocessing.net)

Veterinary services remain part of that growth story. In company materials, Petco has described services as a bright spot and said its ecosystem includes more than 280 full-service veterinary hospitals and roughly 1,400 mobile clinics per week. The company’s annual-report messaging has emphasized mobile clinics as a capital-efficient way to extend reach, while hospitals and grooming help deepen engagement with higher-value pet parents. Even where this quarter’s announcement focused more on consumables and fresh food, veterinary care remains embedded in the broader retail-service model Petco is using to differentiate itself. (annualreport.petco.com)

Industry coverage has largely read the results the same way: Petco is accepting slower sales in exchange for better economics. Trade reporting highlighted the jump in operating income and EBITDA, and framed the fresh-food buildout as the company’s clearest near-term growth lever. That’s notable because it suggests Petco isn’t abandoning services, but pairing them with categories that can increase trip frequency and total annual spend. In other words, the retailer appears to be betting that food, preventive care, and grooming work best as a connected ecosystem, not as standalone lines of business. That’s an inference based on the company’s stated strategy and category priorities. (petfoodprocessing.net)

Why it matters: For veterinary professionals, Petco’s results are another reminder that large pet retailers still view veterinary access as commercially important, even in a tougher operating environment. A retailer that is cutting unprofitable sales but continuing to emphasize hospitals, vaccination clinics, and grooming is signaling that services remain sticky, margin-supportive, and useful for retaining pet parents. That has implications for independent practices, corporate groups, and industry suppliers alike: competition is increasingly about convenience, preventive touchpoints, and cross-category loyalty, not just exam-room medicine. (corporate.petco.com)

There’s also a broader market context. While Petco reported contraction, other pet retail players posted stronger growth in 2025. In Brazil, Petz and Cobasi ended the year with combined revenue growth of 8.8% before moving forward as the newly merged União Pet. Petz sales rose 7.9% to R$4.3 billion and Cobasi’s increased 9.9% to R$3.6 billion, with fourth-quarter growth at both companies also running in the high single digits. Both physical stores and e-commerce contributed, with digital sales up 11.7% and reaching 40.9% of total sales, while service revenue accelerated in the fourth quarter and same-store sales grew 6.2% at Cobasi and 8% at Petz. The combined group’s adjusted net income rose 50.4% year over year to R$242.1 million, helped by private-label expansion and operational efficiencies. Cobasi cited strong progress in owned brands, including its Joy dry pet food line, while Petz also posted 26% private-label growth. That doesn’t make the businesses directly comparable to Petco, but it does show that pet retail growth in 2025 was not uniformly weak, and that operators elsewhere are also leaning on services, owned brands, digital penetration, and margin discipline to drive results. (globalpets.com; petfoodprocessing.net)

That comparison is useful for another reason: Petz and Cobasi also slowed expansion spending, halving investments in new stores and hospitals during 2025 even as they opened 15 units and ended the year with 521 stores. In other words, stronger growth did not necessarily come from aggressive footprint expansion alone. For Petco, the question is whether a leaner store base, stronger margins, and a more service-linked assortment can restore sustainable growth in a still-competitive market. (globalpets.com)

What to watch: The next milestones are whether Petco can return to positive comps in fiscal 2026, execute the freezer expansion on schedule, and keep veterinary and grooming utilization rising as it closes another 15 to 20 stores and chases modest top-line growth. Against that backdrop, it will also be worth watching whether Petco can build more momentum in owned brands, fresh food, and service attachment as other pet retailers show that digital growth, private label, and service expansion can support both revenue and profit. (petfoodprocessing.net; globalpets.com)