Petco ends FY2025 with lower sales, shifts to services-led growth

CURRENT FULL VERSION: Petco ended fiscal 2025 with a familiar top-line problem but a much improved bottom line, giving the retailer a clearer runway for its next push into growth. Full-year net sales fell 2.5% to $6.0 billion, yet operating income climbed to $120.4 million from $7.1 million a year earlier, net income swung to a $9.1 million profit from a $101.8 million loss, and adjusted EBITDA rose 21.3% to $408.2 million. CEO Joel Anderson said the company spent 2025 rebuilding its economic model and leadership team, and is now shifting into a new growth phase. (corporate.petco.com)

That framing matters because Petco has spent much of the past year in turnaround mode. Earlier 2025 filings showed pressure on transaction volume and store count, with management explicitly tying sales declines to a more disciplined approach on pricing, promotions, and unit economics. At the same time, the company said services continued to show momentum, helped by customer acquisition and retention efforts and work to optimize the existing veterinary hospital footprint. (ir.petco.com)

The new strategy, branded “Reach for the Sky,” is aimed at restoring sustainable sales growth without reversing the profitability gains. Management is putting the heaviest emphasis on consumables, which it described on the earnings call as roughly half the business, along with fresh food expansion, more continuous product innovation, and higher owned-brand penetration. A central near-term tactic is a planned rollout of more than 1,000 additional freezer units starting in the first quarter of 2026 to expand fresh pet food assortment. Petco’s FY2026 guidance calls for net sales ranging from flat to up 1.5%, with adjusted EBITDA of $415 million to $430 million. (fool.com)

Veterinary and other owned services remain part of that playbook, but the message from management was more measured than expansive. Petco said it wants to grow wholly owned services including hospitals, vaccination clinics, grooming, and dog training, yet commentary around the call suggests the immediate focus is on productivity and utilization. Management said about 20% of the chain currently hosts veterinary locations, with future expansion beginning in 2027. In other words, the near-term thesis appears to be making the current services footprint work harder while using food, loyalty, and omnichannel improvements to drive traffic and basket attachment. That’s an inference based on the company’s guidance and call commentary, rather than a direct statement. (fool.com)

That approach stands out more when placed against the wider pet retail landscape. In Brazil, newly merged retailers Petz and Cobasi reported combined 2025 revenue growth of 8.8% year over year, with physical-store sales up 7.3%, digital commerce up 11.7%, and digital reaching 40.9% of total sales. Both companies also posted faster service growth in the fourth quarter, with services up 10% at Petz and 22% at Cobasi, while adjusted net income for the combined group rose 50.4%, supported by private-label expansion and operational efficiencies. Cobasi said its Joy dry-food private label helped that category grow 37% year over year to 7.6% of sales, while Petz’s private-label business grew 26%. (globalpets.community)

The comparison is not apples to apples, but it does reinforce the strategic themes Petco is emphasizing: consumables, owned brands, services, and omnichannel execution. It also shows that other pet retailers are finding growth in the same areas even while moderating expansion. Petz and Cobasi said they halved investments in new stores and hospitals during 2025, prioritized operational continuity and existing-store improvements, and still ended the year with 521 stores after opening 15 units and divesting 26 stores in São Paulo as a merger condition. Their focus in 2026 will shift to integration and synergy capture as a unified company. (globalpets.community)

Outside commentary has largely focused on the same tension: declining sales versus improving profitability. Zacks highlighted fourth-quarter services growth even as overall revenue slipped, while market summaries of the earnings presentation pointed to veterinary services as one of Petco’s higher-margin differentiators in the 2026 plan. Those reactions align with Petco’s own narrative that services can help support margin and customer retention even when discretionary retail categories remain soft. (zacks.com)

Why it matters: For veterinary professionals, Petco’s results are a reminder that corporate pet retail is still treating care delivery as a strategic asset, not just an add-on. But in this phase, the emphasis looks less like aggressive footprint growth and more like tighter integration: using hospitals, vaccination clinics, grooming, and training to increase visit frequency, strengthen loyalty, and capture more of the pet parent’s spending across food, pharmacy, and preventive care. The Brazil comparison adds context here too: services growth, private label, and digital execution are helping other large pet retailers grow revenue and profits even while they slow new-unit investment. If that works, Petco could become more efficient as a care-and-commerce platform. If it doesn’t, veterinary services may face pressure to prove their value primarily through productivity and attachment rather than expansion alone. (fool.com; globalpets.community)

What to watch: The next key markers will be whether FY2026 comps stabilize, whether fresh food and loyalty investments actually lift traffic, and whether Petco shows measurable gains in services productivity before any broader vet expansion begins in 2027. It’s also worth watching whether Petco can generate the kind of top-line support from owned brands, services, and omnichannel mix that peers elsewhere are currently demonstrating. (corporate.petco.com; globalpets.community)