Petco ends FY2025 with lower sales, shifts focus to profitable growth
CURRENT BRIEF VERSION: Petco closed fiscal 2025 with net sales of $6.0 billion, down 2.5% year over year, after what management described as a deliberate pullback from unprofitable sales. But the retailer’s profitability improved sharply: operating income rose to $120.4 million from $7.1 million a year earlier, adjusted EBITDA increased 21.3% to $408.2 million, and Petco swung to net income of $9.1 million from a prior-year loss. Petco also strengthened its balance sheet, lowering leverage to 3.0x from 4.2x, growing cash to $256.7 million after paying down $95 million of debt, and refinancing in February 2026 to push maturities to 2031. For fiscal 2026, the company is guiding to flat to 1.5% sales growth and says its new “Reach for the Sky” strategy will focus on consumables, fresh food, owned brands, and services. Petco also said it ended the year with 1,382 stores after seven net closures and expects another 15 to 20 net store closures in 2026. (corporate.petco.com)
Why it matters: For veterinary professionals, the notable point isn’t just weaker top-line retail sales, but where Petco says it will invest next. Management is positioning services, including veterinary hospitals, vaccination clinics, and grooming, as part of its next growth phase, while also trying to improve productivity in existing locations rather than chase volume at any cost. Earnings-call coverage suggests about 20% of the chain currently hosts veterinary locations, with broader hospital expansion not expected to resume until 2027, implying 2026 will be more about optimizing current assets, traffic, and cross-category spend than rapid clinic buildout. The broader market picture is mixed: while Petco is closing stores and prioritizing margin repair, Brazil’s newly merged União Pet — combining Petz and Cobasi — posted 8.8% combined 2025 revenue growth, with gains in stores, digital sales, services, and private-label products. (corporate.petco.com; globalpetindustry.com)
What to watch: Watch whether Petco can turn its profitability reset into same-store sales growth in 2026, whether service productivity, especially in veterinary and grooming, improves before any larger expansion resumes, and how its slower, optimization-first approach compares with faster-growing international pet retail models that are leaning on digital, services, and private label. (corporate.petco.com; globalpetindustry.com)