At a surface level, Petco Health and Wellness NASDAQ: WOOF looks like a company that would be a solid defensive stock for times like these.
Data from the American Pet Products Association forecasts that Americans will spend $165 billion on their pets in 2026, an increase of 4.4% from 2025.
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That low single-digit growth didn't show up in WOOF's latest revenue numbers, which were flat year over year (YOY). But does that justify a 4% drop in the company's stock price?
The report had some positives, and even more importantly, the market has been pricing the stock for failure for so long that it may be setting up an opportunity for risk-tolerant investors.
The Good and the Bad From Petco's EarningsIn the second quarter of Petco's 2027 fiscal year, the company booked net sales of $1.49 billion, essentially flat against the year-ago period, with comparable sales up 0.6%. That marked the second straight quarter of positive comps.
Management pinned some of the topline softness on a rockier-than-expected rollout of a relaunched membership program. Specifically, point redemptions came in heavier than anticipated right out of the gate, pulling sales forward and creating a short-term drag.
That could be a sign of a stressed consumer. However, Petco said sales were tracking ahead of its internal targets before the relaunch hit.
On the bottom line, the story looks better. Gross profit rose to $591.1 million, a 39.7% margin, up 37 basis points from a year ago. But that came with a caveat. About $6.8 million of that improvement came from a net benefit tied to IEEPA tariff refunds. If that gets stripped out, the normalized gross margin was roughly flat YOY.
Operating income still climbed 11.1% to $47.8 million, and net income more than doubled to $38.7 million from $14 million in the same period last year. Adjusted EBITDA came in at $122.2 million versus $113.9 million a year ago, or $115.4 million on a normalized basis excluding the tariff item.
Petco also made real progress on its balance sheet. First-half free cash flow improved to $60.8 million, up from just $9.9 million over the same stretch in 2025, and total debt fell to $1.48 billion from $1.59 billion a year earlier.
After the quarter closed, the company voluntarily prepaid another $75 million of debt, bringing total prepayments to $170 million over the past nine months as it works toward a leverage target of 2x net debt to Adjusted EBITDA.
Petco's Turnaround Strategy Is Gaining TractionCEO Joel Anderson framed the results as evidence that the company's "Reach for the Sky" turnaround strategy is gaining traction, particularly in consumables, while CFO Sabrina Simmons pointed to the prepayment as a sign of the company balancing growth investment against deleveraging.
Petco left its full-year guidance unchanged, calling for net sales flat to up 1.5% and adjusted EBITDA of $415 million to $430 million, while guiding Q3 sales growth of 0.4% to 1.0% and adjusted EBITDA of $100 million to $103 million. Management also flagged initiatives for the back half of the year—including a rollout of Hill's Pet Nutrition fresh dog food and continued growth in cat products—as levers to reaccelerate the top line.
WOOF May Be Forming a BottomIt's always tough to call a bottom for a stock. That said, the WOOF chart suggests the worst may already be priced in. Since May 2026, the stock has found support near $2.50, which is close to its closing price on Sept. 4.
But there are concerns. WOOF has been finding support near the descending 200-day moving average, which has marked resistance.
Complicating things further is the lack of institutional ownership. Only about 6% of the WOOF float is sold short, but with a lack of institutional buyers, traders can have an outsized influence on price action. That was the case on the day after the earnings report, when the stock was down over 4% with nearly five times the normal trading volume.
Petco Health and Wellness Stock Forecast Today12-Month Stock Price Forecast:
$3.42
26.67% Upside
Reduce
Based on 9 Analyst Ratings
Current Price$2.70High Forecast$5.00Average Forecast$3.42Low Forecast$2.11Petco Health and Wellness Stock Forecast Details
How to Approach Petco After EarningsAnalyst coverage of WOOF is light, and ratings from the group tracked by MarketBeat are mixed. Out of nine analysts, two have a Sell rating, and the consensus rating is Reduce.
However, the consensus price target of $3.42 offers 32% upside. For that upside to materialize, the company will need to show strong improvement, not only with margins but with its growth investments.
The bottom line is, as much as WOOF seems like the right stock for the right time, there are better options for investors with a speculative itch to scratch.
Should You Invest $1,000 in Petco Health and Wellness Right Now?Before you consider Petco Health and Wellness, you'll want to hear this.
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Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Petco Health and Wellness Company delivered strong Q2 2026 earnings, with EPS beating expectations despite flat revenue and a modest after-hours stock surge. WOOF's 'Reach for the Sky' strategy is driving growth in consumables and services, with omnichannel initiatives and service expansion showing clear early traction. Profitability improved sharply: EPS rose from $0.05 to $0.13, net income hit $38.7M, and operating cash flow nearly doubled, aided by a one-time tariff refund.
Petco Health & Wellness (WOOF - Free Report) came out with quarterly earnings of $0.16 per share, beating the Zacks Consensus Estimate of $0.06 per share. This compares to earnings of $0.08 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +166.67%. A quarter ago, it was expected that this pet store chain would post a loss of $0.02 per share when it actually produced earnings of $0.01, delivering a surprise of +150%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Petco, which belongs to the Zacks Retail - Miscellaneous industry, posted revenues of $1.49 billion for the quarter ended July 2026, missing the Zacks Consensus Estimate by 0.3%. This compares to year-ago revenues of $1.49 billion. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Petco shares have lost about 8.2% since the beginning of the year versus the S&P 500's gain of 11.5%.
What's Next for Petco?While Petco has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Petco was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.03 on $1.48 billion in revenues for the coming quarter and $0.19 on $6.01 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Miscellaneous is currently in the bottom 15% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
One other stock from the broader Zacks Retail-Wholesale sector, CarMax (KMX - Free Report) , is yet to report results for the quarter ended August 2026.
This used car dealership chain is expected to post quarterly earnings of $0.68 per share in its upcoming report, which represents a year-over-year change of +6.3%. The consensus EPS estimate for the quarter has remained unchanged over the last 30 days.
CarMax's revenues are expected to be $7.05 billion, up 6.9% from the year-ago quarter.
Petco Health and Wellness Company, Inc. (WOOF) Q2 2026 Earnings Call September 2, 2026 4:15 PM EDT
Company Participants
Roxanne Meyer - VP, Head of Investor Relations & Treasury
Joel Anderson - CEO & Director
Sabrina Simmons - Chief Financial Officer
Conference Call Participants
Michael Lasser - UBS Investment Bank, Research Division
Katharine McShane - Goldman Sachs Group, Inc., Research Division
Kaumil Gajrawala - Jefferies LLC, Research Division
Peter Benedict - Robert W. Baird & Co. Incorporated, Research Division
Steven Zaccone - Citigroup Inc., Research Division
Oliver Wintermantel - Evercore ISI Institutional Equities, Research Division
Steven Forbes - Guggenheim Securities, LLC, Research Division
Simeon Gutman - Morgan Stanley, Research Division
David Lantz - Wells Fargo Securities, LLC, Research Division
Presentation
Operator
Thank you. Good day, and welcome to Petco's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Roxanne Meyer, Vice President of Investor Relations and Treasury. Please go ahead.
Roxanne Meyer
VP, Head of Investor Relations & Treasury
Good afternoon, and welcome to Petco's Second Quarter Fiscal 2026 Earnings Conference Call. Joining me on the call today are Joel Anderson, Petco's Chief Executive Officer; and Sabrina Simmons, Petco's Chief Financial Officer. In addition to the earnings release, we've posted a slide presentation on our website at ir.petco.com.
I'd like to remind everyone that on this call, we will make certain forward-looking statements which are subject to a number of risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include those set out in our earnings materials and SEC filings. In addition, on today's call, we will refer to certain non-GAAP financial measures. Reconciliations of these measures can be found in our earnings release, presentation and SEC filings.
2nd Consecutive Quarter of Positive Comparable Sales Growth
Delivered Q2 Profitability Ahead of Outlook
Announces $75 Million Debt Prepayment, Progressing Toward 2x Leverage1Target
Reaffirms Fiscal 2026 Outlook
, /PRNewswire/ -- Petco (Nasdaq: WOOF), the retailer "where the pets go" to find everything they need to live their best lives, today reported its second quarter 2026 financial results.
Joel Anderson, Chief Executive Officer of Petco, stated, "We delivered stronger than expected profitability in the quarter while achieving our second consecutive quarter of positive comps. We were pleased to see growth in consumables, which highlights that our 'Reach for the Sky' strategy is gaining traction. Looking ahead to the second half, we are positioned to benefit from several growth drivers and are pleased to reaffirm our full-year sales and profitability outlook. We remain confident in our ability to generate sustainable, long-term growth."
Q2 2026 Overview
In the second quarter of 2026, the Company received substantially all IEEPA tariff refunds related to tariffs paid under IEEPA in 2025 and 2026. All results below include a net benefit of $6.8 million related to such refunds, representing the proceeds net of investments to propel the repositioning of new assortments for future growth, and to a lesser degree, offset incremental fuel and tariff expense in Q2.
For the second quarter of 2026 compared to the second quarter of 2025:
Net sales of $1.5 billion increased 0.05%; comparable sales increased 0.6%. These results reflect a sales disruption from the initial stronger-than-expected points redemption from our membership program relaunch. Prior to the relaunch, sales were trending ahead of our Q2 outlook. Gross profit increased to $591.1 million; gross margin rate increased 37 basis points to 39.7% of net sales, compared to $585.3 million or 39.3% of net sales last year. Without the net benefit from the tariff refund, normalized gross margin was about flat with the prior year. Operating income increased 11.1% to $47.8 million compared to $43.0 million last year; operating margin increased 32 basis points to 3.2% compared to 2.9% of net sales last year. Net income increased to $38.7 million versus $14.0 million. Adjusted EBITDA2 was $122.2 million versus $113.9 million. Without the net benefit from the tariff refund, normalized adjusted EBITDA was $115.4 million. The Company closed 1 net store, ending the quarter with 1,377 stores. Sabrina Simmons, Chief Financial Officer of Petco, added, "We are pleased to deliver another quarter of positive comps and deliver on our bottom-line commitments as we execute on our economic model. Subsequent to the second quarter, we voluntarily prepaid an additional $75 million in debt, bringing our total prepayments to $170 million in the past nine months. Looking ahead, we are pleased to reaffirm our full-year sales and Adjusted EBITDA outlook, reflecting confidence in our second half strategic initiatives while remaining thoughtful about balancing the dynamic backdrop while investing behind our growth priorities."
Q2 2026 Balance Sheet and Cash Flow
Ending cash balance grew by $104.8 million to $293.5 million versus $188.7 million last year. Inventory decreased 1.1% year-over-year versus the 0.05% increase in net sales. Cash provided by operating activities year-to-date was $130.6 million compared to $70.4 million last year. Free cash flow2 was $60.8 million year-to-date versus $9.9 million last year. Total debt was $1.48 billion, down from $1.59 billion last year. Subsequent to the second quarter, the Company prepaid $75.0 million in debt, underscoring its commitment to lowering its leverage ratio1 to 2x. 2026 Outlook
The Company reaffirmed its full year 2026 net sales and Adjusted EBITDA2 outlook, which includes net IEEPA tariff refunds of $6.8 million, and provided its outlook for the third quarter of 2026. Given the Company's solid profit performance in the first half of the year, the outlook provides the Company the flexibility to continue investing behind its growth initiatives in the second half, while also absorbing ongoing supply chain headwinds.
Assumptions in the outlook include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent, and that current or planned tariffs on imports into the U.S. from China and other countries as of September 2, 2026, will remain at current levels. Additionally, the outlook assumes no additional IEEPA tariff refunds are received for the balance of the year.
Full Year 2026 Outlook
FY 2026 Outlook*
Net Sales
Flat to up 1.5% year over year
Adjusted EBITDA2
$415 million to $430 million
Net Interest Expense
~$122 million
Capital Expenditures
~$140 million
Depreciation & Amortization
~$200 million
Net Store Closures
~15-20
Third Quarter 2026 Outlook
Q3 2026 Outlook*
Net Sales
0.4% to 1.0% growth
Adjusted EBITDA2
$100 million to $103 million
(1)
Leverage ratio is defined as net debt divided by Adjusted EBITDA2
(2)
Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information on
non-GAAP financial measures and a reconciliation to the most comparable GAAP measures
* Adjusted EBITDA is a non-GAAP financial measure and has not been reconciled to the most comparable GAAP outlook because it is not possible
to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events
and often outside of management's control and which could be significant. Because such items cannot be reasonably predicted with the level of
precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA are made
in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the Securities and Exchange Commission.
Earnings Conference Call Webcast Information:
Management will host an earnings conference call on September 2, 2026 at approximately 4:15 PM Eastern Time to discuss the Company's financial results. A live webcast of the conference call will be available on the Company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations. A replay of the webcast will be available through the same link approximately two hours after the conference call.
About Petco:
We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Chile. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide and have helped find homes for over 7 million animals through in-store adoption events.
Forward-Looking Statements:
This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding our Q3 and full year 2026 outlook, operational reset of our business, our competitive positioning, profitability, cash generation through our economic model, expense leverage, operating margin expansion, cost action plans and associated cost-savings, our path to sustainable, profitable growth and our expectations regarding tariffs, IEEPA tariff refunds and associated impacts. Such forward-looking statements can generally be identified by the use of forward-looking terms such as "believes," "expects," "may," "intends," "will," "shall," "should," "anticipates," "opportunity," "illustrative," "estimates," "projects", "forecasts" or the negative thereof or other variations thereon or comparable terminology. These statements are only predictions based on our current expectations and projections about future events and reflect our beliefs regarding such future events and do not represent historical facts or statements of current condition. Although Petco believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this earnings release is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of the operations or business or financial condition of Petco. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Petco. Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in the forward-looking statements, including, without limitation, those identified in this earnings release as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation, prevailing interest rates and the impact of tariffs and tariff refunds; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in Ukraine and the Middle East), government shutdowns, health crises, and pandemics; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; (xx) impairments of the carrying value of our goodwill and other intangible assets; (xxi) our ability to successfully implement our operational adjustments, achieve the expected benefits of our cost action plans and drive improved profitability; (xxii) our ability to deliver sustainable, profitable growth and (xxiii) the other risks, uncertainties and other factors identified under "Risk Factors" in our most recent Annual Report on Form 10-K and elsewhere in Petco's Securities and Exchange Commission filings. The occurrence of any such factors could significantly alter the results set forth in these statements.
Petco cautions that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. Petco undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.
PETCO HEALTH AND WELLNESS COMPANY, INC
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited and subject to reclassification)
13 Weeks Ended
26 Weeks Ended
August 1,
2026
August 2,
2025
August 1,
2026
August 2,
2025
Net sales:
Products
$ 1,216,857
$ 1,225,605
$ 2,444,944
$ 2,467,496
Services and other
272,363
262,924
541,008
514,432
Total net sales
1,489,220
1,488,529
2,985,952
2,981,928
Cost of sales:
Products
733,898
747,143
1,491,676
1,513,428
Services and other
164,175
156,067
328,704
313,213
Total cost of sales
898,073
903,210
1,820,380
1,826,641
Gross profit
591,147
585,319
1,165,572
1,155,287
Selling, general and administrative expenses
543,335
542,297
1,093,134
1,095,906
Operating income
47,812
43,022
72,438
59,381
Interest income
(2,493)
(909)
(3,989)
(2,268)
Interest expense
32,556
33,297
65,340
66,791
Loss on extinguishment and modification of debt
—
—
11,840
—
Income (loss) before income taxes and income from
equity method investees
17,749
10,634
(753)
(5,142)
Income tax (benefit) expense
(15,710)
746
(13,511)
1,241
Income from equity method investees
(5,201)
(4,084)
(10,756)
(8,694)
Net income attributable to Class A and B-1 common
stockholders
$ 38,660
$ 13,972
$ 23,514
$ 2,311
Net income per Class A and B-1 common share:
Basic
$ 0.14
$ 0.05
$ 0.08
$ 0.01
Diluted
$ 0.13
$ 0.05
$ 0.08
$ 0.01
Weighted average shares used in computing net income per Class A
and B-1 common share:
Basic
285,629
279,058
284,657
278,303
Diluted
290,497
285,741
289,691
284,350
PETCO HEALTH AND WELLNESS COMPANY, INC
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited and subject to reclassification)
August 1,
2026
January 31,
2026
ASSETS
Current assets:
Cash and cash equivalents
$ 293,498
$ 256,736
Receivables, less allowance for credit losses1
38,386
45,812
Merchandise inventories, net
601,591
590,210
Prepaid expenses
54,433
51,747
Other current assets
65,190
75,281
Total current assets
1,053,098
1,019,786
Fixed assets
2,433,782
2,378,208
Less accumulated depreciation
(1,803,480)
(1,722,060)
Fixed assets, net
630,302
656,148
Operating lease right-of-use assets
1,268,518
1,288,593
Goodwill
980,064
980,064
Trade name
1,025,000
1,025,000
Other long-term assets
209,668
203,834
Total assets
$ 5,166,650
$ 5,173,425
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and book overdrafts
$ 455,314
$ 450,552
Accrued salaries and employee benefits
132,518
154,148
Accrued expenses and other liabilities
225,908
204,751
Current portion of operating lease liabilities
340,643
320,082
Current portion of long-term debt and other lease liabilities
12,061
4,608
Total current liabilities
1,166,444
1,134,141
Senior secured credit facilities, net, excluding current portion
872,798
1,488,527
Senior notes, net
590,567
-
Operating lease liabilities, excluding current portion
1,005,146
1,047,185
Deferred taxes, net
246,861
234,911
Other long-term liabilities
77,907
104,407
Total liabilities
3,959,723
4,009,171
Commitments and contingencies
Stockholders' equity:
Class A common stock2
248
244
Class B-1 common stock3
38
38
Class B-2 common stock4
—
—
Preferred stock5
—
—
Additional paid-in-capital
2,328,170
2,312,354
Accumulated deficit
(1,116,479)
(1,139,993)
Accumulated other comprehensive loss
(5,050)
(8,389)
Total stockholders' equity
1,206,927
1,164,254
Total liabilities and stockholders' equity
$ 5,166,650
$ 5,173,425
1
Allowances for credit losses are $801 and $779, respectively
2
Class A common stock, $0.001 par value: Authorized - 1.0 billion shares;
Issued and outstanding - 248.2 million and 243.7 million shares, respectively
3
Class B-1 common stock, $0.001 par value: Authorized - 75.0 million shares;
Issued and outstanding - 37.8 million shares
4
Class B-2 common stock, $0.000001 par value: Authorized - 75.0 million shares;
Issued and outstanding - 37.8 million shares
5
Preferred stock, $0.001 par value: Authorized - 25.0 million shares;
Issued and outstanding - none
PETCO HEALTH AND WELLNESS COMPANY, INC
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited and subject to reclassification)
26 Weeks Ended
August 1,
2026
August 2,
2025
Cash flows from operating activities:
Net income
$ 23,514
$ 2,311
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
99,440
99,171
Amortization of debt discounts and issuance costs
2,689
2,499
Provision for deferred taxes
(1,439)
1,113
Equity-based compensation
18,051
18,209
Loss on extinguishment and modification of debt
11,840
—
Income from equity method investees
(10,756)
(8,694)
Amounts reclassified out of accumulated other comprehensive loss
(24)
(413)
Non-cash operating lease costs
206,243
205,005
Changes in assets and liabilities:
Receivables
7,427
5,783
Merchandise inventories
(11,381)
44,823
Prepaid expenses and other assets
3,696
(9,487)
Accounts payable and book overdrafts
5,084
(69,691)
Accrued salaries and employee benefits
(21,628)
(26,729)
Accrued expenses and other liabilities
20,722
14,508
Operating lease liabilities
(209,279)
(206,414)
Other long-term liabilities
(13,615)
(1,556)
Net cash provided by operating activities
130,584
70,438
Cash flows from investing activities:
Cash paid for fixed assets
(69,788)
(60,516)
Insurance recoveries
422
—
Proceeds from sale of assets
—
2,425
Cash received from partial surrender of officers' life insurance
74
—
Net cash used in investing activities
(69,292)
(58,091)
Cash flows from financing activities:
Borrowings under long-term debt agreements
1,500,000
—
Repayments of long-term debt
(1,502,250)
—
Debt refinancing costs and original issue discount
(28,442)
—
Payments for finance lease liabilities
(3,172)
(3,252)
Proceeds from employee stock purchase plan and stock option exercises
1,923
1,998
Tax withholdings on stock-based awards
(4,261)
(3,026)
Net cash used in financing activities
(36,202)
(4,280)
Net increase in cash, cash equivalents and restricted cash
25,090
8,067
Cash, cash equivalents and restricted cash at beginning of period
269,412
181,665
Cash, cash equivalents and restricted cash at end of period
$ 294,502
$ 189,732
NON-GAAP FINANCIAL MEASURES
The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The Company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.
Adjusted EBITDA
Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission's (SEC) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Petco's core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 13, 2026 for additional information on Adjusted EBITDA.
The table below reflects the calculation of Adjusted EBITDA for the thirteen and twenty-six weeks ended August 1, 2026 compared to the thirteen and twenty-six weeks ended August 2, 2025.
(dollars in thousands)
13 Weeks Ended
26 Weeks Ended
Reconciliation of Net Income Attributable to Class A and B-1
Common Stockholders to Adjusted EBITDA
August 1,
2026
August 2,
2025
August 1,
2026
August 2,
2025
Net income attributable to Class A and B-1 common stockholders
$ 38,660
$ 13,972
$ 23,514
$ 2,311
Add (deduct):
Interest expense, net
30,063
32,388
61,351
64,523
Income tax (benefit) expense
(15,710)
746
(13,511)
1,241
Depreciation and amortization
50,399
49,360
99,440
99,171
Income from equity method investees
(5,201)
(4,084)
(10,756)
(8,694)
Loss on extinguishment and modification of debt
—
—
11,840
—
Equity-based compensation
8,600
8,789
18,051
18,209
Mexico joint venture EBITDA (1)
13,139
10,360
26,055
20,558
Other costs (2)
2,269
2,329
3,566
5,990
Adjusted EBITDA
$ 122,219
$ 113,860
$ 219,550
$ 203,309
Net sales
$ 1,489,220
$ 1,488,529
$ 2,985,952
$ 2,981,928
Net margin (3)
2.6 %
0.9 %
0.8 %
0.1 %
Adjusted EBITDA Margin
8.2 %
7.6 %
7.4 %
6.8 %
(1)
Mexico joint venture EBITDA represents 50 percent of the entity's operating results for all periods, as adjusted to reflect the results
on a basis comparable to Adjusted EBITDA. In the financial statements, this joint venture is accounted for as an equity method
investment and reported net of depreciation and income taxes because such a presentation would not reflect the adjustments made
in the calculation of Adjusted EBITDA, we include the 50 percent interest in the Company's Mexico joint venture on an Adjusted
EBITDA basis to ensure consistency. The table below presents a reconciliation of Mexico joint venture net income to Mexico joint
venture EBITDA.
13 Weeks Ended
26 Weeks Ended
(in thousands)
August 1,
2026
August 2,
2025
August 1,
2026
August 2,
2025
Net income
$ 10,402
$ 8,167
$ 21,506
$ 17,387
Depreciation
8,838
6,793
17,144
13,390
Income tax expense
5,216
3,935
10,410
8,101
Foreign currency loss
326
696
470
404
Interest expense, net
1,496
1,129
2,579
1,833
EBITDA
$ 26,278
$ 20,720
$ 52,109
$ 41,115
50% of EBITDA
$ 13,139
$ 10,360
$ 26,055
$ 20,558
(2)
Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with
significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions.
(3)
We define net margin as net loss attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA
margin as Adjusted EBITDA divided by net sales.
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the Company's financial performance.
The table below reflects the calculation of Free Cash Flow for the thirteen and twenty-six weeks ended August 1, 2026 compared to the thirteen and twenty-six weeks ended August 2, 2025.
(in thousands)
13 Weeks Ended
26 Weeks Ended
August 1,
2026
August 2,
2025
August 1,
2026
August 2,
2025
Net cash provided by operating activities
$ 161,553
$ 85,892
$ 130,584
$ 70,438
Cash paid for fixed assets
(31,635)
(32,104)
(69,788)
(60,516)
Free Cash Flow
$ 129,918
$ 53,788
$ 60,796
$ 9,922
Net Debt
The table below reflects the calculation for net debt as of August 1, 2026 compared to January 31, 2026 and August 2, 2025.
(dollars in thousands)
August 1,
2026
January 31,
2026
August 2,
2025
Total debt:
Senior secured credit facilities, net, including current portion
Petco Faces Tough Competition, But Momentum Is BuildingPetco Health and Wellness NASDAQ: WOOF reported second-quarter fiscal 2026 sales of $1.5 billion and adjusted EBITDA of $122 million, as the retailer posted its second consecutive quarter of positive comparable sales and continued efforts to reduce debt.
Comparable sales increased 0.6% in the quarter, while net sales were slightly higher than a year earlier, Chief Financial Officer Sabrina Simmons said. The company’s adjusted EBITDA included a $6.8 million net benefit from tariff refunds. Excluding that benefit, adjusted EBITDA was $115 million, which Simmons said was above the prior-year level and the company’s outlook.
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The Squeeze is on for Petco Stock, Buy it When the Dust SettlesChief Executive Officer Joel Anderson said Petco’s “Reach for the Sky” strategy gained traction across its strategic priorities, including merchandise innovation, digital capabilities, veterinary hospitals and the integration of services with its retail stores.
Membership Relaunch Created Near-Term Sales Pressure Anderson said Petco’s nationwide relaunch of its Petco Perks membership program in late January made points easier for customers to redeem. The change produced stronger-than-expected redemption activity, but it also reduced second-quarter net sales, particularly in services.
Will This Pet Retailer's Stock Break Out of the Doghouse?“Prior to the nationwide membership rollout, our sales and comp run rates were ahead of our Q2 outlook,” Anderson said.
Simmons told analysts that the effect of the program transition was in the mid-single-digit millions of dollars, based on the difference between Petco’s pre-launch sales trajectory and its reported quarterly results. The company implemented guardrails intended to moderate redemption velocity and said peak redemptions are now behind it.
Petco plans to focus on personalization and loyalty features in coming quarters. Anderson said the company expects a positive impact from those capabilities to emerge in 2027.
During the question-and-answer session, Anderson said the company saw its total customer base grow slightly during the second quarter. He also emphasized an opportunity to increase spending among existing shoppers by moving them across Petco’s stores, digital channels and service offerings.
Multi-channel shoppers who use online, store and service channels generate five times higher net spend per active customer, or NSPAC, than single-channel customers, Anderson said. However, customers using all three channels remain a small portion of Petco’s overall customer base.
Merchandise, Services and Store Initiatives Petco said consumables delivered positive comparable sales growth during the quarter. Anderson attributed the improvement in part to more frequent assortment updates, better in-stock levels and tailoring brands to individual stores.
Cat products were a particular area of strength, with gains across consumables, supplements, bedding and furniture. Petco introduced new cat brands and launched its Cat Candy Shop private-label treats offering. Anderson said the company is growing faster than the overall market in cat, while the dog business remains soft as pet adoptions are down slightly industry-wide.
The company also cited strength in companion animals, especially live reptiles, which helped drive demand for reptile food and supplies. Petco additionally noted growth in pet-oriented gardening products, including potted houseplants and pet-friendly garden seeds.
Petco has rolled out Autoship enrollment capabilities across its physical stores. Autoship represents about half of digital sales, Anderson said, and customers using the service typically spend two to three times more than customers who do not use it.
The company’s veterinary business continued to improve, with double-digit growth in total pet visits and doctor days during the quarter. Petco operates approximately 300 wholly owned veterinary hospitals. The company expects to begin opening additional hospitals in 2027 and said it is working to shorten the maturity curve for newer hospital locations.
Prescription diet sales for dogs and cats both rose by double digits year over year, according to Anderson. Petco also plans to roll out Hill’s Pet Nutrition Science Diet Single Protein dog food rolls during the third quarter, with the broader rollout expected to be completed by year-end. The retailer is adding in-store chillers across most locations to support the fresh-food offering.
Store Test Shows Early Encouraging Results In May, Petco launched a new store format across a seven-store market test. The format includes interactive companion-animal habitats, exclusive brand collaborations, impulse-purchase opportunities, dedicated front-of-store labor and nutrition advice integrated into grooming salons.
Anderson said the test locations have generated a sizable increase in new and reactivated customers, higher transaction counts, larger baskets, stronger comparable sales and improved margins. Petco also saw net promoter scores improve by hundreds of basis points, he said.
The company plans to continue testing through the remainder of the year, accelerate several additional remodels and open a couple of new stores using the format. Anderson said the format could become the company’s model going forward if the results continue to hold. Simmons added that Petco expects to identify lower- and no-capital changes from the tests that could be applied more broadly across its fleet.
Margins, Cash Flow and Outlook Second-quarter gross profit was $591 million, and gross margin expanded 37 basis points to 39.7%. Without the $6.8 million tariff-refund benefit, normalized gross margin was approximately flat from a year earlier, Simmons said.
SG&A expense was $543 million, or 36.5% of sales. Despite lapping an approximately $9 million prior-year benefit from an actuarial true-up, expenses increased by only $1 million from a year earlier. Marketing expense rose $2 million, while the company maintained discipline across other expense categories, Simmons said.
Operating profit was $48 million, compared with $43 million a year earlier. Ending inventory declined 1% year over year, following a 9.5% decline in the prior year. Year-to-date free cash flow increased by $51 million. Cash totaled $293 million, up more than $100 million from the prior-year quarter. Total debt was $1.48 billion, down $113 million year over year. Petco announced a voluntary $75 million debt repayment on Sept. 1. With that payment, the company said its total debt reduction over the past nine months will reach $170 million.
The company reaffirmed its full-year outlook for net sales ranging from flat to 1.5% growth and adjusted EBITDA of $415 million to $430 million. For the third quarter, Petco expects sales growth of 0.4% to 1% and adjusted EBITDA of $100 million to $103 million.
Petco also now expects net interest expense of about $122 million, depreciation and amortization of about $200 million, capital expenditures of about $140 million and net store closures of 15 to 20 for the full year.
About Petco Health and Wellness (NASDAQ:WOOF)Petco Health and Wellness Company, Inc NASDAQ: WOOF is a leading U.S. pet specialty retailer focused on delivering products, services and solutions that improve the health and well-being of pets. The company operates a network of retail locations that provide high-quality pet food, supplies and accessories, along with a growing digital platform that supports online ordering, subscription delivery and telehealth consultations for pets.
In addition to its retail offerings, Petco has built a full suite of in-store and virtual services, including grooming, training, dog daycare and veterinary care.
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, /PRNewswire/ -- Petco (Nasdaq: WOOF), the retailer "where the pets go" to find everything they need to live their best lives, today announced that its financial results for the second quarter fiscal 2026 will be released at approximately 4:00 p.m. Eastern Time on September 2, 2026. The company will host a conference call at approximately 4:15 p.m. Eastern Time to discuss the results.
A live webcast of the conference call, as well as the earnings release and earnings presentation, will be available on the company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations. A replay of the webcast will be available through the same link approximately two hours after the conference call.
Upcoming Investor Conferences
The company also announced that management will participate in the following upcoming investor conferences.
Goldman Sachs Global Consumer and Retail Conference 2026
Management will participate in a fireside chat on Monday, September 14th, 2026 at 1:20pm ET. A live webcast of the fireside chat will be available on the company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations.
Wells Fargo Consumer Conference 2026
Management will participate in meetings on Tuesday, September 22nd, 2026 and Wednesday, September 23rd, 2026.
About Petco:
We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Puerto Rico. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide and have helped find homes for over 7 million animals through in-store adoption events.
Petco Health and Wellness Company, Inc. (NASDAQ:WOOF – Get Free Report)’s share price crossed above its two hundred day moving average during trading on Tuesday . The stock has a two hundred day moving average of $2.74 and traded as high as $2.98. Petco Health and Wellness shares last traded at $2.96, with a volume of 1,581,828 shares traded.
Analyst Upgrades and Downgrades Several research analysts have weighed in on WOOF shares. Weiss Ratings reissued a “sell (d)” rating on shares of Petco Health and Wellness in a research report on Thursday, June 11th. Citigroup lowered their target price on Petco Health and Wellness from $4.00 to $3.25 and set a “neutral” rating on the stock in a research note on Thursday, June 4th. Zacks Research downgraded shares of Petco Health and Wellness from a “strong-buy” rating to a “hold” rating in a report on Monday, May 18th. Wall Street Zen upgraded shares of Petco Health and Wellness from a “hold” rating to a “buy” rating in a research report on Saturday, July 4th. Finally, The Goldman Sachs Group downgraded shares of Petco Health and Wellness from a “buy” rating to a “neutral” rating and set a $3.83 price objective for the company. in a report on Monday, April 13th. Two investment analysts have rated the stock with a Buy rating, eight have assigned a Hold rating and one has assigned a Sell rating to the company. Based on data from MarketBeat, the company currently has an average rating of “Hold” and an average target price of $3.88.
Check Out Our Latest Analysis on WOOF
Petco Health and Wellness Stock Up 1.7% The stock has a fifty day moving average price of $2.72 and a 200 day moving average price of $2.74. The company has a debt-to-equity ratio of 1.27, a current ratio of 0.85 and a quick ratio of 0.29. The stock has a market capitalization of $957.15 million, a P/E ratio of 148.07, a price-to-earnings-growth ratio of 3.38 and a beta of 1.54.
Insider Transactions at Petco Health and Wellness In other Petco Health and Wellness news, insider Holly May sold 200,000 shares of the firm’s stock in a transaction dated Thursday, July 9th. The stock was sold at an average price of $2.54, for a total value of $508,000.00. Following the completion of the transaction, the insider owned 1,327,867 shares in the company, valued at $3,372,782.18. This trade represents a 13.09% decrease in their position. The sale was disclosed in a document filed with the Securities & Exchange Commission, which is available through this hyperlink. Over the last 90 days, insiders sold 450,000 shares of company stock worth $1,145,500. Corporate insiders own 6.50% of the company’s stock.
Institutional Investors Weigh In On Petco Health and Wellness Institutional investors and hedge funds have recently modified their holdings of the company. Bank of America Corp DE boosted its position in shares of Petco Health and Wellness by 6.7% in the first quarter. Bank of America Corp DE now owns 269,589 shares of the company’s stock valued at $749,000 after acquiring an additional 16,825 shares during the period. Amundi bought a new stake in Petco Health and Wellness during the 1st quarter worth approximately $54,000. Renaissance Technologies LLC purchased a new stake in Petco Health and Wellness in the 1st quarter worth approximately $1,455,000. Arrowstreet Capital Limited Partnership purchased a new stake in Petco Health and Wellness in the 1st quarter worth approximately $527,000. Finally, Sei Investments Co. boosted its holdings in Petco Health and Wellness by 36.3% in the 1st quarter. Sei Investments Co. now owns 149,391 shares of the company’s stock valued at $415,000 after purchasing an additional 39,762 shares during the period.
About Petco Health and Wellness (Get Free Report)
Petco Health and Wellness Company, Inc (NASDAQ: WOOF) is a leading U.S. pet specialty retailer focused on delivering products, services and solutions that improve the health and well-being of pets. The company operates a network of retail locations that provide high-quality pet food, supplies and accessories, along with a growing digital platform that supports online ordering, subscription delivery and telehealth consultations for pets.
In addition to its retail offerings, Petco has built a full suite of in-store and virtual services, including grooming, training, dog daycare and veterinary care.
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Former CFO of The TJX Companies, Inc. and retail veteran to serve as Audit Committee Chair, bringing deep financial and operational expertise to further support Petco's strategic initiatives
, /PRNewswire/ -- Petco Health & Wellness Company, Inc. (Nasdaq: WOOF) today announced the appointment of Jeffrey Naylor, former Chief Financial Officer of TJX Companies, to its Board of Directors, effective August 1, 2026. In addition to his role on the Board, Mr. Naylor will serve as Chair of the company's Audit Committee.
Mr. Naylor brings over two decades of leadership experience as a seasoned finance and operations executive within the retail sector. He currently serves as Chair of the Board and as a member of the Audit and Compensation Committees of Synchrony Financial, and as a Director and Chair of the Audit Committee at Wayfair. Until recently, he also served as a Director and member of the Audit and Finance Committees at Dollar Tree. From 2004 to 2014, Mr. Naylor served in multiple senior leadership roles at The TJX Companies, Inc. including Senior Executive Vice President, Chief Financial and Administrative Officer. Prior to TJX, Mr. Naylor held CFO and senior leadership roles at Big Lots, Inc., Dade Behring, Inc., and The Limited, Inc.
"I am thrilled to welcome Jeff to our Board of Directors at this pivotal time as we reposition the business for a stronger future," said Joel Anderson, Chief Executive Officer of Petco. "Jeff is a highly accomplished retail leader with a proven track record of driving profitable growth, operational discipline and financial excellence. As we execute on our 'Reach for the Sky' strategy, his deep financial acumen and extensive boardroom experience will be invaluable. I look forward to working closely with him to strengthen our economic model and create long-term value for all our stakeholders."
"I am excited to join Petco's Board of Directors during such a dynamic period of transformation for the company," said Naylor. "Petco is a category-defining leader in pet health and wellness, and I see tremendous opportunities to build on the company's strengthening retail fundamentals and integrated omni-channel model. I look forward to partnering with Joel, the leadership team, and the rest of the Board to support our strategy for long-term profitable growth."
About Petco:
We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Chile. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide and have helped find homes for over 7 million animals through in-store adoption events.
Chewy: Steady Revenue ExpansionChewy (CHWY -3.48%) functions as an online retailer in the United States, selling food, supplies, and medications for companion animals.
While launching a consolidated private-label brand called Chewy Made, it reported a net income margin of approximately 1% for the quarter ended May 3, 2026.
Petco Health and Wellness: Flat Revenue TrendPetco Health and Wellness (WOOF -4.28%) provides veterinary care, grooming, training services, and consumables through its digital platforms and physical retail locations.
While it reported a return to positive comparable-store sales growth, it posted a gross margin of approximately 38% for the quarter ended May 2, 2026.
Why Revenue Matters for Retail InvestorsRevenue here refers to the data provider's standardized income-statement revenue line item, and it helps investors understand the total amount of money a business brings in before any operating expenses are deducted.
Quarterly Revenue for Chewy and Petco Health and WellnessQuarter (Period End)Chewy RevenuePetco Health and Wellness RevenueQ3 2024$2.9 billion (period ended July 2024)$1.5 billion (period ended Aug. 2024)Q4 2024$2.9 billion (period ended Oct. 2024)$1.5 billion (period ended Nov. 2024)Q1 2025$3.2 billion (period ended Feb. 2025)$1.6 billion (period ended Feb. 2025)Q2 2025$3.1 billion (period ended May 2025)$1.5 billion (period ended May 2025)Q3 2025$3.1 billion (period ended Aug. 2025)$1.5 billion (period ended Aug. 2025)Q4 2025$3.1 billion (period ended Nov. 2025)$1.5 billion (period ended Nov. 2025)Q1 2026$3.3 billion (period ended Feb. 2026)$1.5 billion (period ended Jan. 2026)Q2 2026$3.3 billion (period ended May 2026)$1.5 billion (period ended May 2026)Data source: Company filings.
Foolish TakeWhile neither of these petcare companies is a high-flying growth stock anymore, I’d argue that Chewy offers vastly superior growth potential. In contrast, Petco might be more interesting for deep-value investors looking for a turnaround. In their last quarter, Chewy grew sales by 8%, and Petco’s revenue remained flat.
This difference in sales growth is also pretty clearly reflected in each stock’s valuation. Chewy currently trades at 0.7 times sales and 19 times EBITDA, while Petco trades at 0.12 times sales and 10 times EBITDA, both deeply discounted. However, one thing investors should know is that Chewy has a slight net cash balance, whereas Petco has a massive $2.3 billion in debt versus its diminutive market cap of $750 million. This makes Petco a much more vulnerable company compared to Chewy and helps explain its deeply discounted valuation.
Ultimately, I much prefer Chewy for the long term thanks to its better balance sheet, steady growth prospects, leadership position in its e-commerce niche, and loyal customers. Furthermore, Chewy generates 84% of its sales from Autoship repurchases (such as dog food), creating a massive recurring revenue base month after month. Lastly, Chewy has several developments in the works that should have driven its profit margins higher, including:
Chewy Vet Care clinicsprivate label goodshealth and wellness productsadvertisingHigher efficiencies from Autoship as it keeps expandingI would only be interested in buying Chewy today and will likely continue doing so for myself and my daughter while it trades near 52-week lows, despite reporting solid operational results.
Investors interested in stocks from the Retail - Miscellaneous sector have probably already heard of Petco Health & Wellness (WOOF) and Ulta Beauty (ULTA). But which of these two companies is the best option for those looking for undervalued stocks?
Here are three stocks with buy ranks and strong growth characteristics for investors to consider today, May 15:
H World Group Limited (HTHT - Free Report) : This hotel franchise based out of China carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 6.7% over the last 60 days.
H World Group has a PEG ratio of 1.18 compared with 1.25 for the industry. The company possesses a Growth Score of B.
Petco Health and Wellness Company, Inc. (WOOF - Free Report) : This pet specialty retailer carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 26.7% over the last 60 days.
Petco Health has a PEG ratio of 1.22 compared with 2.43 for the industry. The company possesses a Growth Score of A.
Five Below, Inc. (FIVE - Free Report) : This company that operates as a specialty value retailer in the United States carries a Zacks Rank #1, and has witnessed the Zacks Consensus Estimate for its current year earnings increasing 14.6% over the last 60 days.
Five Below has a PEG ratio of 1.61 compared with 2.43 for the industry. The company possesses a Growth Score of A.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Learn more about the Growth score and how it is calculated here.
Key Takeaways Chewy is pairing premium pet care with value brands to widen its customer reach.CHWY said private brands may reach low-to-mid teens sales with higher margins.Chewy projects 8-9% y/y revenue growth and EBITDA margin expansion for FY26. Chewy, Inc. (CHWY - Free Report) is expanding its addressable market through a balanced strategy focused on premium offerings and value-oriented products. The company believes that this dual approach allows it to attract a broader customer base while increasing spending from existing customers. Management highlighted that growth opportunities remain strong across pet consumables, health products and private brands, especially as consumers continue shifting toward e-commerce and subscription-based purchasing.
Chewy’s premium product mix continues to drive higher customer spending and stronger profitability. The company noted that premium and health-related categories remain key contributors to net sales per active customer (NSPAC) growth. Veterinary services, fresh pet food and wellness offerings are generating strong engagement, with Chewy Vet Care emerging as one of the fastest NSPAC compounders within the business. Premium products also contributed to the fiscal 2025 gross margin expansion, which improved 60 basis points year over year to 29.8%.
At the same time, Chewy is aggressively expanding into more affordable product categories through its new private-brand platform, Chewy Made. Management said the initiative will introduce dog food and cat nutrition products at accessible price points, helping the company reach a wider range of pet owners without sacrificing margins. Consumables represent roughly $50-$60 billion of the overall $90-billion pet food and supplies market, making it the company’s largest growth opportunity.
Chewy expects private brands to eventually achieve low-to-mid teens penetration of total net sales while delivering margins roughly 500 basis points above the base business. Combined with projected fiscal 2026 revenue growth of 8-9% and the adjusted EBITDA margin expansion to 6.6-6.8%, the company’s premium-and-value strategy is positioning it to capture a larger share of the evolving pet care market.
CHWY’s Price Performance, Valuation & EstimatesChewy, which competes with BARK, Inc. (BARK - Free Report) and Petco Health and Wellness Company, Inc. (WOOF - Free Report) , has fallen 17.7% in the past three months against the industry’s growth of 17.7%. BARK shares have declined 41.4%, whereas Petco has lost 2.7% in the same period.
Image Source: Zacks Investment Research
From a valuation standpoint, CHWY trades at a trailing price-to-sales ratio of 0.63X, below the industry’s average of 2.02X. It has a Value Score of A. CHWY is trading at a premium to BARK (with a forward 12-month P/S ratio of 0.17) and Petco (0.13).
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CHWY’s fiscal 2026 earnings implies year-over-year growth of 28.4%, whereas the same for fiscal 2027 indicates an uptick of 23.1%. Estimates for fiscal 2026 and 2027 have been revised upward by 7 cents and 9 cents, respectively, in the past 60 days.
Image Source: Zacks Investment Research
CHWY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
, /PRNewswire/ -- Petco (Nasdaq: WOOF), the retailer "where the pets go" to find everything they need to live their best lives, today announced that its financial results for the first quarter fiscal 2026 will be released at approximately 4:00 p.m. Eastern Time on Wednesday, June 3, 2026. The company will host a conference call at approximately 4:15 p.m. Eastern Time to discuss the results.
A live webcast of the conference call, as well as the earnings release and earnings presentation, will be available on the company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations. A replay of the webcast will be available through the same link approximately two hours after the conference call.
About Petco:
We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Chile. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide and have helped find homes for over 7 million animals through in-store adoption events.
Key Takeaways CHWY's Autoship model accounted for more than 83% of fiscal 2025 sales.WOOF is expanding veterinary, grooming and private-label offerings through its turnaround plan.CHWY expects AI initiatives to deliver more than $50M in annualized savings by fiscal 2027. Chewy, Inc. (CHWY - Free Report) and Petco Health and Wellness (WOOF - Free Report) are two major players in the pet-care industry, each pursuing distinct strategies to capture growth in an evolving market.
Chewy, with a market capitalization of nearly $9 billion, has established itself as a leading digital-first pet-care platform, supported by its high-recurring Autoship subscription model, expanding veterinary and pharmacy ecosystem, robust fulfillment infrastructure and growing private-label portfolio. The company serves more than 21 million active customers, supported by a nationwide fulfillment network that enables high recurring revenues and strong customer engagement.
In contrast, Petco, with a market capitalization of roughly $856.8 million, is focused on accelerating its turnaround through its integrated retail and services ecosystem. The company operates more than 1,380 stores across the United States and continues to expand its veterinary, grooming and training services while improving store productivity and omnichannel engagement.
As both companies balance growth investments with profitability improvement, investors are evaluating which pet-care stock appears better positioned for sustained long-term upside.
The Case for CHWYChewy continues to strengthen its position within the digital pet-care industry through consistent market share gains, rising customer engagement and a resilient recurring revenue model. The company benefits from stable demand trends driven by repeat purchases, premiumization and consumers’ growing preference for convenient online solutions.
A major growth driver for Chewy remains its Autoship platform, which accounted for more than 83% of fiscal 2025 sales and continues to grow faster than overall revenues. The subscription-based model improves revenue visibility, strengthens customer retention and supports higher lifetime customer value, while growth in health, wellness and veterinary categories is driving higher spending per active customer.
Chewy is also leveraging technology as a core differentiator. The company has built an integrated data platform and is embedding AI across customer service, fulfillment, pharmacy and marketing operations to enhance personalization and operational efficiency. These initiatives are expected to deliver low tens of millions of dollars in savings in fiscal 2026, with a path to more than $50 million in annualized benefits by fiscal 2027, highlighting a clear opportunity for scalable efficiency gains.
At the same time, the company continues expanding its healthcare ecosystem through Chewy Vet Care and strategic acquisitions. Chewy recently announced the acquisition of Modern Animal, a technology-enabled veterinary platform with 29 clinics and more than 100,000 member families, which will expand Chewy’s veterinary footprint from 18 to 47 locations nationwide and add more than $125 million in annualized run-rate revenue. The deal is expected to strengthen customer engagement, increase spending per active customer and accelerate Chewy’s position as an integrated pet healthcare platform.
In parallel, the rollout of Chewy Made and broader private-label expansion is increasing the company’s exposure to consumables and supporting long-term margin improvement. Looking ahead, Chewy expects fiscal 2026 net sales of $13.6-$13.75 billion, representing 8-9% growth, alongside another year of meaningful adjusted EBITDA margin expansion. Supported by strong free cash flow generation, a debt-free balance sheet and multiple structural growth drivers, Chewy appears well-positioned to sustain profitable long-term growth.
The Case for WOOFPetco is strengthening its position within the pet-care industry through operational discipline and a renewed focus on sustainable growth initiatives. The company spent fiscal 2025 rebuilding its retail fundamentals, optimizing its economic model and improving cash generation, while also reducing its leverage ratio and enhancing financial flexibility.
A major part of Petco’s strategy is its “Reach for the Sky” transformation plan, which focuses on product innovation, service expansion, customer engagement and omnichannel growth. Management believes the company’s integrated ecosystem of stores, veterinary hospitals, grooming, training and digital capabilities provides a differentiated competitive advantage that can drive higher customer retention and long-term spending growth.
Petco is also expanding into consumables and fresh food, one of the fastest-growing areas in pet care. The company is increasing freezer capacity across stores, adding new national brands and increasing the frequency of product launches to drive customer engagement and repeat visits. At the same time, Petco continues expanding its private-label portfolio, which already represents roughly 20% of sales and generates significantly higher margins than national brands.
Services remain another important differentiator for Petco. The company operates approximately 300 veterinary hospitals alongside grooming, training and vaccination services, helping deepen customer relationships and improve spending per customer. Management noted that customers engaging across multiple services and channels generate spending levels roughly five times higher than other customers, highlighting the long-term value of its integrated ecosystem.
Petco is also investing in store productivity, loyalty initiatives and omnichannel capabilities to improve traffic, basket size and repeat purchases. Looking ahead, the company expects fiscal 2026 net sales to range from flat to up 1.5%, reflecting gradual improvement as its strategic initiatives continue to scale.
How Does the Zacks Consensus Estimate Compare for CHWY & WOOF?The Zacks Consensus Estimate for Chewy’s current fiscal-year sales and EPS implies growth of 8.6% and 28.4%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates an 8.1% rise in sales and 23.1% growth in earnings. The consensus estimate for EPS for the current fiscal year has increased 7 cents to $1.63 over the past 60 days, while for the next fiscal year, it has improved by 12 cents to $2.00.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for Petco’s current fiscal-year sales and EPS implies a growth of 1% and 58.3%, respectively, from the year-ago period’s actuals. For the next fiscal year, the consensus estimate indicates a 2.7% rise in sales and 21.1% growth in earnings. The consensus estimate for EPS for the current and next fiscal year has been unchanged at 19 cents and 23 cents, respectively, over the past 60 days.
Image Source: Zacks Investment Research
Assessing Recent Stock Performances of CHWY & WOOFChewy’s shares have lost 24.4% over the past three months. Meanwhile, Petco’s stock has gained 3.9%.
Image Source: Zacks Investment Research
Dive Into Stock Valuations of CHWY & WOOFChewy is trading at a forward price-to-sales (P/S) multiple of 0.62, down from its median of 0.99 in the last three years. Petco’s forward 12-month P/S multiple sits at 0.14, down from its median of 0.17 in the last three years.
Image Source: Zacks Investment Research
CHWY or WOOF: Which Offers Greater Potential?Chewy emerges as the stronger investment candidate, supported by its digital-first platform, highly recurring Autoship model and expanding ecosystem across veterinary care, pharmacy, private-label offerings and AI-driven capabilities. Its ability to drive consistent market share gains, increase spending per active customer and generate strong free cash flow positions the company for sustained long-term growth and continued margin expansion. In contrast, Petco is making progress through operational improvements, services expansion and turnaround initiatives, but its growth outlook remains more gradual amid competitive pressures, making it relatively less compelling for investors at present.
CHWY and WOOF currently carry a Zacks Rank #3 (Hold) each. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Curebound’s annual benefit concert with headliner P!NK raises over $8.25 million in one night for cancer research, joining a roster of past headliners that includes Elton John, Ed Sheeran and Alicia Keys.
SAN DIEGO--(BUSINESS WIRE)--Curebound, a cancer research accelerator, today announced that its 2026 Concert for Cures, headlined by global music icon P!NK, raised $8.25 million, bringing the total raised across the four-year history of the concert series to more than $28 million for cancer research. The May 15 concert at Petco Park drew 25,000 fans, including thousands of cancer survivors, 1,500 who were invited to attend by the Manchester Family Foundation.
Curebound's 2026 Concert for Cures, headlined by global music icon P!NK, raised $8.25 million, bringing the total raised across the four-year history of the concert series to more than $28 million for cancer research.
Share Since launching in 2022, Concert for Cures has united over 60,000 people in San Diego with A-list headliners – Elton John, Ed Sheeran, Alicia Keys and now P!NK – to raise millions for adult and pediatric cancer research. The event has grown exponentially each year, emerging as a marquee night where entertainment, science and community intersect to accelerate the fight against cancer.
P!NK delivered an exhilarating, high-flying performance that brought the Petco Park crowd to its feet from the first note. Known worldwide for her fearless live shows and powerhouse vocals, the global superstar delivered her biggest hits and emotional stripped-down moments, turning the stadium into one of the most memorable nights in Concert for Cures history.
During her performance, P!NK reiterated from the stage, “I want to give a shoutout to Curebound because you are doing some of the most important work that there is to do. Cancer sucks and I am just very grateful to be of use, and I am very grateful to be here with all of you, and I am just very grateful.”
Curebound CEO Robin Toft also delivered powerful remarks on stage that connected the energy of the night to the urgency of the mission, underscoring the importance of continuing to support cancer research.
“Every person in this stadium is helping fund the science that will define how we prevent, detect and treat cancer for the next generation. At a time when national research funding remains uncertain, what we are doing here at Curebound matters more than ever,” says Toft.
Jean-Baptiste Maillard, USA CEO of Chopard, the Swiss luxury watch and jewelry maker and sponsor of Concert for Cures: P!NK, says, "At Chopard, we believe in causes that endure. We are honored to stand alongside Curebound in their ongoing efforts toward prevention, early detection, and treatment, with the ultimate goal of improving survivorship.”
Curebound Board Chair Rick Valencia, who co-chaired the 2026 concert organizing committee with his daughter, Aubrey Salvati, says, "Every research breakthrough gives families more options, every option gives them more time, and more time offers more hope. That's how Curebound measures success, not just in dollars raised, but in the moments families get to share together."
Sponsors
Curebound thanks the generous sponsors and supporters who made the 2026 Concert for Cures possible:
ClayCo Manchester Family Foundation UC San Diego Rady Children's Health Chopard Salk Institute for Biological Studies La Jolla Institute for Immunology San Diego State University JP Morgan Chase Ferrari of San Diego San Diego BioMed Edward Jones UC San Diego Concierge Medicine Brand Napa Valley Casa Dragones Garrett Popcorn Ranch & Coast Nutrafol Kroma goop Equo Co. Messy by Alli Webb Art of Skin MD Save the Date: Curebound Cancer Challenge at UC San Diego August 1, 2026.
Ready to end cancer? Join Curebound for the annual Curebound Cancer Challenge where you can ride, run, walk or spin to raise awareness and funds for cancer research. Registration is open now at curebound.org/curebound-cancer-challenge.
About Curebound
Curebound is a community-powered cancer research accelerator dedicated to advancing breakthrough science into cures. By breaking down barriers, investing in high-impact cancer studies and forging powerful collaborations among top scientists, passionate advocates, entrepreneurs and philanthropists, Curebound advances bold science toward better prevention, detection and treatments to give patients and families more time. To date, Curebound has awarded $51.5 million in cancer research grants, supporting 170 studies across 23 types of cancers. That investment has led to 28 clinical trials and generated $161 million in follow-on funding for expanded research. Headquartered in San Diego, a leading global hub for life sciences and cancer research, Curebound is driven by a single goal: save lives. www.curebound.org.
Petco Health and Wellness Company, Inc. receives a Hold rating as operational improvements are offset by ongoing top-line softness and high leverage. FY2025 saw net sales decline 2.5% to $5.96B, but gross margin rose 70bps to 38.7%, and adjusted EBITDA improved to $408M. Management's 'Reach for the Sky' strategy targets growth in high-margin services, premium food, and footprint optimization, with 2026 guidance implying stabilization.
Returns to Positive Comp Growth in Q1, Validating 'Reach for the Sky' Initiatives
Delivers Q1 Sales and Profitability Ahead of Previously Provided Outlook
Reaffirms Fiscal 2026 Outlook and Provides 2Q Outlook*
, /PRNewswire/ -- Petco (Nasdaq: WOOF), the retailer "where the pets go" to find everything they need to live their best lives, today reported its first quarter 2026 financial results.
"Our strong first-quarter results, highlighted by positive comparable sales and profitability that exceeded our outlook, provide clear, early validation that our Phase 3 'Reach for the Sky' strategy is working. We were particularly pleased to see the improvement in our consumables business, while our differentiated services business continues to outperform and is a key engine of our growth. This solid start to the year demonstrates the power of our distinct, wholly owned omnichannel ecosystem. As we look ahead, we are pleased with the momentum our initiatives are generating, positioning us to continue to deliver positive comps. We remain highly confident in our ability to drive consistent, long-term growth," said Joel Anderson, Chief Executive Officer of Petco.
Q1 2026 Overview
For the first quarter of 2026 compared to the first quarter of 2025:
Net sales of $1.5 billion increased 0.2%; comparable sales increased 0.7%. Gross profit increased to $574.4 million; gross margin rate increased 21 basis points to 38.4%. Operating income increased 50.5% to $24.6 million; operating margin increased 55 basis points to 1.6%. Net loss of $15.1 million versus a net loss of $11.7 million. Adjusted EBITDA2 of $97.3 million versus $89.4 million. The Company closed 4 net stores, ending the quarter with 1,378 stores. Sabrina Simmons, Chief Financial Officer of Petco, added, "Our strong first-quarter results—which marked a return to positive comparable sales growth—demonstrate that our operational and economic improvements are materializing. We are pleased to reaffirm our full-year outlook. As our strategic initiatives continue to take hold, we continue to be focused on strengthening our retail and financial fundamentals to support sustainable, profitable growth and remain committed to reducing our leverage ratio to 2x."1
Q1 2026 Balance Sheet and Cash Flow
Ending cash balance grew by $33.5 million to $166.8 million versus $133.3 million last year. Inventory fell 1.9% year-over-year versus the 0.2% increase in net sales. Cash used in operating activities was $31.0 million compared to $15.5 million last year. Free cash flow2 was an outflow of $69.1 million versus an outflow of $43.9 million last year. Total debt was $1.482 billion, down from $1.593 billion last year. 2026 Outlook
The company reaffirmed its full year 2026 net sales and EBITDA outlook and provided its outlook for the second quarter of 2026.
Assumptions in the outlook include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent, and that current or planned tariffs on imports into the U.S. from China and other countries as of June 3, 2026, will remain at current levels. Additionally, our outlook assumes the benefit of a partial IEEPA tariff refund received in May 2026, with no additional refunds assumed for the balance of the year, and now assumes that fuel prices remain elevated at approximately those experienced in the first quarter for the remainder of the year, compared to our prior outlook which assumed higher fuel prices for the first quarter only.
With respect to the second quarter specifically, the benefit of the tariff refund received in May 2026 is expected to be approximately offset by incremental tariffs and higher fuel costs anticipated in the period. The prior-year second quarter included an approximately $9 million SG&A benefit from a favorable semi-annual actuarial true-up related to employee optimization work, which the Company does not expect to recur in the second quarter of 2026.
Full Year 2026 Outlook
FY 2026 Outlook*
Net Sales
Flat to up 1.5% year over year
Adjusted EBITDA2
$415 million to $430 million
Net Interest Expense
~$125 million
Capital Expenditures
~$140 million
Depreciation & Amortization
~$200 million
Net Store Closures
~15-20
Second Quarter 2026 Outlook
Q2 2026 Outlook*
Net Sales 3
Up about 0.3% year over year, in line with consensus
Adjusted EBITDA 2
$110 million to $112 million
(1)
Leverage ratio is defined as net debt divided by Adjusted EBITDA
(2)
Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See "Non-GAAP Financial Measures" for additional information on non-GAAP financial measures and a reconciliation to the most comparable GAAP measures.
(3)
According to Company-compiled data as of May 28, 2026, the current Factset consensus of 10 sell-side analyst expectations for Q2 2026 net sales implies a year-over-year growth rate of 0.3%.
* Adjusted EBITDA is a non-GAAP financial measure and has not been reconciled to the most comparable GAAP outlook because it is not possible to do so without unreasonable efforts due to the uncertainty and potential variability of reconciling items, which are dependent on future events and often outside of management's control and which could be significant. Because such items cannot be reasonably predicted with the level of precision required, we are unable to provide outlook for the comparable GAAP measures. Forward-looking estimates of Adjusted EBITDA are made in a manner consistent with the relevant definitions and assumptions noted herein and in our filings with the Securities and Exchange Commission.
Earnings Conference Call Webcast Information:
Management will host an earnings conference call on June 3, 2026 at approximately 4:15 PM Eastern Time to discuss the company's financial results. A live webcast of the conference call will be available on the company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations. A replay of the webcast will be available through the same link approximately two hours after the conference call.
About Petco:
We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Chile. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide, and have helped find homes for over 7 million animals through in-store adoption events.
Forward-Looking Statements:
This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding our Q2 and full year 2026 outlook, operational reset of our business, our competitive positioning, profitability, cash generation through our economic model, expense leverage, operating margin expansion, cost action plans and associated cost-savings, our path to sustainable, profitable growth and our expectations regarding tariffs and associated impacts. Such forward-looking statements can generally be identified by the use of forward-looking terms such as "believes," "expects," "may," "intends," "will," "shall," "should," "anticipates," "opportunity," "illustrative," "estimates," "projects", "forecasts" or the negative thereof or other variations thereon or comparable terminology. These statements are only predictions based on our current expectations and projections about future events and reflect our beliefs regarding such future events and do not represent historical facts or statements of current condition. Although Petco believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this earnings release is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of the operations or business or financial condition of Petco. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Petco. Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in the forward-looking statements, including, without limitation, those identified in this earnings release as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation, prevailing interest rates and the impact of tariffs; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in Ukraine and the Middle East), government shutdowns, health crises, and pandemics; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; (xx) impairments of the carrying value of our goodwill and other intangible assets; (xxi) our ability to successfully implement our operational adjustments, achieve the expected benefits of our cost action plans and drive improved profitability; (xxii) our ability to deliver sustainable, profitable growth and (xxiii) the other risks, uncertainties and other factors identified under "Risk Factors" in our most recent Annual Report on Form 10-K and elsewhere in Petco's Securities and Exchange Commission filings. The occurrence of any such factors could significantly alter the results set forth in these statements.
Petco cautions that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. Petco undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority
PETCO HEALTH AND WELLNESS COMPANY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited and subject to reclassification)
13 Weeks Ended
May 2,
2026
May 3,
2025
Net sales:
Products
$ 1,228,087
$ 1,241,891
Services and other
268,645
251,508
Total net sales
1,496,732
1,493,399
Cost of sales:
Products
757,778
766,285
Services and other
164,529
157,146
Total cost of sales
922,307
923,431
Gross profit
574,425
569,968
Selling, general and administrative expenses
549,799
553,609
Operating income
24,626
16,359
Interest income
(1,497)
(1,359)
Interest expense
32,785
33,494
Loss on extinguishment and modification of debt
11,840
—
Loss before income taxes and income from
equity method investees
(18,502)
(15,776)
Income tax expense
2,199
495
Income from equity method investees
(5,555)
(4,610)
Net loss attributable to Class A and B-1 common
stockholders
$ (15,146)
$ (11,661)
Net loss per Class A and B-1 common share:
Basic
$ (0.05)
$ (0.04)
Diluted
$ (0.05)
$ (0.04)
Weighted average shares used in computing net loss per Class A
and B-1 common share:
Basic
283,684
277,548
Diluted
283,684
277,548
PETCO HEALTH AND WELLNESS COMPANY, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited and subject to reclassification)
May 2,
2026
January 31,
2026
ASSETS
Current assets:
Cash and cash equivalents
$ 166,804
$ 256,736
Receivables, less allowance for credit losses1
36,928
45,812
Merchandise inventories, net
632,912
590,210
Prepaid expenses
64,036
51,747
Other current assets
60,164
75,281
Total current assets
960,844
1,019,786
Fixed assets
2,404,132
2,378,208
Less accumulated depreciation
(1,758,226)
(1,722,060)
Fixed assets, net
645,906
656,148
Operating lease right-of-use assets
1,265,299
1,288,593
Goodwill
980,064
980,064
Trade name
1,025,000
1,025,000
Other long-term assets
207,473
203,834
Total assets
$ 5,084,586
$ 5,173,425
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and book overdrafts
$ 480,656
$ 450,552
Accrued salaries and employee benefits
107,784
154,148
Accrued expenses and other liabilities
216,183
204,751
Current portion of operating lease liabilities
312,399
320,082
Current portion of long-term debt and other lease liabilities
13,245
4,608
Total current liabilities
1,130,267
1,134,141
Senior secured credit facilities, net, excluding current portion
874,116
1,488,527
Senior notes, net
590,146
—
Operating lease liabilities, excluding current portion
994,995
1,047,185
Deferred taxes, net
235,197
234,911
Other long-term liabilities
104,560
104,407
Total liabilities
3,929,281
4,009,171
Commitments and contingencies
Stockholders' equity:
Class A common stock2
247
244
Class B-1 common stock3
38
38
Class B-2 common stock4
—
—
Preferred stock5
—
—
Additional paid-in-capital
2,318,877
2,312,354
Accumulated deficit
(1,155,139)
(1,139,993)
Accumulated other comprehensive loss
(8,718)
(8,389)
Total stockholders' equity
1,155,305
1,164,254
Total liabilities and stockholders' equity
$ 5,084,586
$ 5,173,425
¹ Allowances for credit losses are $858 and $779, respectively
² Class A common stock, $0.001 par value: Authorized - 1.0 billion shares;
Issued and outstanding - 247.4 million and 243.7 million shares, respectively
³ Class B-1 common stock, $0.001 par value: Authorized - 75.0 million shares;
Issued and outstanding - 37.8 million shares
⁴ Class B-2 common stock, $0.000001 par value: Authorized - 75.0 million shares;
Issued and outstanding - 37.8 million shares
⁵ Preferred stock, $0.001 par value: Authorized - 25.0 million shares;
Issued and outstanding - none
PETCO HEALTH AND WELLNESS COMPANY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited and subject to reclassification)
13 Weeks Ended
May 2,
2026
May 3,
2025
Cash flows from operating activities:
Net loss
$ (15,146)
$ (11,661)
Adjustments to reconcile net loss to net cash used in
operating activities:
Depreciation and amortization
49,041
49,811
Amortization of debt discounts and issuance costs
1,337
1,246
Provision for deferred taxes
288
(9,218)
Equity-based compensation
9,451
9,420
Loss on extinguishment and modification of debt
11,840
—
Income from equity method investees
(5,555)
(4,610)
Amounts reclassified out of accumulated other comprehensive loss
51
(212)
Non-cash operating lease costs
103,080
102,132
Changes in assets and liabilities:
Receivables
8,884
4,229
Merchandise inventories
(42,702)
7,857
Prepaid expenses and other assets
(8,299)
(1,673)
Accounts payable and book overdrafts
30,577
(19,028)
Accrued salaries and employee benefits
(46,362)
(51,130)
Accrued expenses and other liabilities
11,559
12,426
Operating lease liabilities
(139,677)
(103,780)
Other long-term liabilities
664
(1,263)
Net cash used in operating activities
(30,969)
(15,454)
Cash flows from investing activities:
Cash paid for fixed assets
(38,153)
(28,412)
Insurance recoveries
230
—
Proceeds from sale of assets
—
1,279
Cash received from partial surrender of officers' life insurance
74
—
Net cash used in investing activities
(37,849)
(27,133)
Cash flows from financing activities:
Borrowings under long-term debt agreements
1,500,000
—
Repayments of long-term debt
(1,500,000)
—
Debt refinancing costs and original issue discount
(28,442)
—
Payments for finance lease liabilities
(1,110)
(1,143)
Proceeds from employee stock purchase plan and stock option exercises
1,008
967
Tax withholdings on stock-based awards
(4,094)
(158)
Net cash used in financing activities
(32,638)
(334)
Net decrease in cash, cash equivalents and restricted cash
(101,456)
(42,921)
Cash, cash equivalents and restricted cash at beginning of period
269,412
181,665
Cash, cash equivalents and restricted cash at end of period
$ 167,956
$ 138,744
NON-GAAP FINANCIAL MEASURES
The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.
Adjusted EBITDA
Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission's (SEC) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Petco's core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 13, 2026 for additional information on Adjusted EBITDA.
The table below reflects the calculation of Adjusted EBITDA for the thirteen weeks ended May 2, 2026 compared to the thirteen weeks ended May 3, 2025.
(dollars in thousands)
13 Weeks Ended
Reconciliation of Net Loss Attributable to Class A and B-1
Common Stockholders to Adjusted EBITDA
May 2,
2026
May 3,
2025
Net loss attributable to Class A and B-1 common stockholders
$ (15,146)
$ (11,661)
Add (deduct):
Interest expense, net
31,288
32,135
Income tax expense
2,199
495
Depreciation and amortization
49,041
49,811
Income from equity method investees
(5,555)
(4,610)
Loss on extinguishment and modification of debt
11,840
—
Equity-based compensation
9,451
9,420
Mexico joint venture EBITDA (1)
12,916
10,198
Other costs (2)
1,297
3,661
Adjusted EBITDA
$ 97,331
$ 89,449
Net sales
$ 1,496,732
$ 1,493,399
Net margin (3)
(1.0 %)
(0.8 %)
Adjusted EBITDA Margin
6.5 %
6.0 %
(1)
Mexico joint venture EBITDA represents 50 percent of the entity's operating results for all periods, as adjusted to reflect the results on a basis comparable to Adjusted EBITDA. In the financial statements, this joint venture is accounted for as an equity method investment and reported net of depreciation and income taxes because such a presentation would not reflect the adjustments made in the calculation of Adjusted EBITDA, we include the 50 percent interest in the company's Mexico joint venture on an Adjusted EBITDA basis to ensure consistency. The table below presents a reconciliation of Mexico joint venture net income to Mexico joint venture EBITDA.
13 Weeks Ended
(in thousands)
May 2,
2026
May 3,
2025
Net income
$ 11,104
$ 9,220
Depreciation
8,306
6,597
Income tax expense
5,194
4,166
Foreign currency loss (gain)
144
(292)
Interest expense, net
1,083
704
EBITDA
$ 25,831
$ 20,395
50% of EBITDA
$ 12,916
$ 10,198
(2)
Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions.
(3)
We define net margin as net loss attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales.
Free Cash Flow
Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the company's financial performance.
The table below reflects the calculation of Free Cash Flow for the thirteen weeks ended May 2, 2026 compared to the thirteen weeks ended May 3, 2025.
(in thousands)
13 Weeks Ended
May 2,
2026
May 3,
2025
Net cash used in operating activities
$ (30,969)
$ (15,454)
Cash paid for fixed assets
(38,153)
(28,412)
Free Cash Flow
$ (69,122)
$ (43,866)
Net Debt
The table below reflects the calculation for net debt as of May 2, 2026 compared to January 31, 2026 and May 3, 2025.
(dollars in thousands)
May 2,
2026
January 31,
2026
May 3,
2025
Total debt:
Senior secured credit facilities, net, including current portion
WOOF stock is moving. Watch the price action here. Petco Q1 Details Petco Health and Wellness reported quarterly losses of five cents per share, which missed the analyst consensus estimate of losses of one cent, according to Benzinga Pro data.
Quarterly revenue came in at $1.5 billion, which just beat the Street estimate of $1.49 billion by 0.49%.
“As we look ahead, we are pleased with the momentum our initiatives are generating, positioning us to continue to deliver positive comps. We remain highly confident in our ability to drive consistent, long-term growth,” said Joel Anderson, CEO of Petco.
Looking AheadPetco Health and Wellness reaffirmed its fiscal 2026 sales outlook of $5.96 billion to $6.05 billion, versus the $6 billion analyst estimate.
WOOF Stock Price Activity: According to data from Benzinga Pro, Petco stock fell 9.84% to $2.75 in Wednesday's extended trading.
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The Squeeze is on for Petco Stock, Buy it When the Dust SettlesPetco Health and Wellness NASDAQ: WOOF reported a return to positive comparable sales in the first quarter of fiscal 2026, with management saying early results support the company’s “Reach for the Sky” strategy focused on product improvements, services growth, store experience and omnichannel execution.
Chief Executive Officer Joel Anderson said the company’s first-quarter performance “provide[s] an encouraging early validation” of the strategy, noting that Petco delivered a positive comp for the quarter while expanding profitability and outperforming its quarterly outlook for both top-line results and adjusted EBITDA.
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Will This Pet Retailer's Stock Break Out of the Doghouse?“We were particularly pleased to see the improvement in our consumables business, while our differentiated services business once again delivered strong results and continues to be a growth engine for us,” Anderson said.
Comparable sales turn positive Chief Financial Officer Sabrina Simmons said net sales rose 0.2% year over year to $1.5 billion. Comparable sales increased 0.7%, marking Petco’s return to positive comp growth. Simmons said the gap between comp sales and total sales reflected store closures, including 16 net closures in 2025 and four net closures in the first quarter. Petco ended the quarter with 1,378 U.S. stores.
High Call Option Volume: 3 Stocks to Keep on Your RadarGross profit was $574.4 million, and gross margin expanded 21 basis points to 38.4%. Selling, general and administrative expenses were $549.8 million, or 36.7% of net sales, improving by $3.8 million from a year earlier. Simmons said the expense improvement was driven by declines in general and administrative costs despite marketing investments tied to omnichannel initiatives.
Operating profit rose 50.5% year over year to $24.6 million, while adjusted EBITDA increased 8.8% to $97.3 million.
On the balance sheet, ending inventory declined 1.9% year over year, following a 5.2% decline in the prior year. Petco ended the quarter with $167 million in cash, up about $33 million from the prior-year quarter. Free cash flow was an outflow of $69 million, which Simmons said reflected seasonality, higher capital expenditures and planned inventory investments to support growth.
Total liquidity was $654.4 million, while total debt was $1.48 billion, down more than $100 million from the year-ago period. Simmons said the company remains focused on reducing its leverage ratio to two times.
Product strategy emphasizes cat, fresh food and newness Anderson said Petco is in the early stages of evolving its product mix but is already seeing evidence that new merchandise is resonating with customers. He highlighted outperformance in the cat category, saying Petco had anticipated increased demand and invested to position itself as a destination for cat owners.
Cat-related product additions are expected to expand in the second quarter, including furniture, beds, bowls and novelty items such as cat trees. Anderson also said Petco continues to lead in fresh and frozen pet food, adding incremental freezer capacity during the quarter to support momentum in the category.
“We have positioned Petco as a premier destination for pet nutrition, which we believe will serve us well as the pet humanization trend continues to pick up speed,” Anderson said.
Petco also saw strength in seasonal categories. Anderson said flea and tick had its strongest start to the season in five years, partly helped by weather patterns, and cited the company’s ability to capture sales across over-the-counter products, veterinary services and grooming packages. The company’s “Gardening with Your Pet” launch also performed above expectations, with live house plants performing well.
Looking ahead, Anderson said Petco is leaning into customer trends such as high-protein diets, new treats for dogs and cats, and supplements for areas including hip and joint care, liver health and holistic care. The company also relaunched its Well & Good grooming private-label brand with new formulas and packaging.
Services remain a growth engine Management emphasized Petco’s services business as a key differentiator, including veterinary hospitals, clinics, grooming and training. Anderson said grooming remains a “strong annuity business” and noted the company expanded care reminders into its app late in the first quarter to encourage repeat visits.
Petco also introduced a puppy-dog grooming package in the first quarter and plans to offer it throughout the year. In the second quarter, the company is rolling out Well & Good grooming products and a Disney Stitch grooming package.
On the veterinary side, Anderson said Petco is seeing improving productivity across its hospital footprint and remains on track to optimize about 25 significantly underutilized hospitals this year. The company expects to resume veterinary hospital expansion in 2027.
Anderson said “doctor days,” a measure combining additional veterinarian hiring and more hours per doctor, continue to improve. He also described cross-selling between clinics and stores as a major opportunity, citing strong performance in veterinary diet products during the quarter.
Omnichannel and loyalty initiatives advance Anderson said Petco improved digital traffic by reducing friction in the online checkout process. Omnichannel sales grew despite lapping what management described as unprofitable sales from the prior year. Buy online, pick up in store, or BOPUS, was up strongly year over year.
The company also plans to relaunch its loyalty program later in the quarter under the name Petco Perks. Anderson said the pilot showed that simplifying the program and making it more customer-friendly had a significant impact. The program will include personalized offers based on factors such as shopping frequency and customer lifetime value.
In stores, Anderson said Petco is working to build basket size through cross-selling and customer engagement. As an example, groomers are being given access to customer data, such as food purchase history, to support more personalized recommendations.
Full-year outlook reaffirmed Petco reaffirmed its fiscal 2026 outlook, expecting net sales to be flat to up 1.5% from last year and adjusted EBITDA of $415 million to $430 million. For the second quarter, Simmons said the company is comfortable with current consensus estimates for net sales, implying growth of about 0.3%, and expects adjusted EBITDA of $110 million to $112 million.
Simmons said Petco now expects fuel prices to remain near current levels for the rest of the year, while its outlook includes the benefit of a tariff refund received in May. She said the refund represents only a portion of IEEPA tariffs paid through February 2026 and that guidance assumes no additional tariff refunds beyond those received to date.
During the question-and-answer session, Anderson said Petco saw sequential improvement across consumables, supplies and companion animals, and services. He said market share declines had moderated significantly, though the company had not yet begun gaining market share.
Asked about consumer behavior, Anderson said Petco did not see material differences across income demographics or notable changes in customer behavior during the quarter. Simmons added that Petco does not plan pricing changes in reaction to any single event, saying the company continuously reviews pricing with a “customer first” lens.
“The Q1 served as an initial proof point of our inflection to growth,” Anderson said. “While the broader macro environment remains dynamic, we remain hyper-focused on controlling what we can control.”
About Petco Health and Wellness NASDAQ: WOOFPetco Health and Wellness Company, Inc NASDAQ: WOOF is a leading U.S. pet specialty retailer focused on delivering products, services and solutions that improve the health and well-being of pets. The company operates a network of retail locations that provide high-quality pet food, supplies and accessories, along with a growing digital platform that supports online ordering, subscription delivery and telehealth consultations for pets.
In addition to its retail offerings, Petco has built a full suite of in-store and virtual services, including grooming, training, dog daycare and veterinary care.
This instant news alert was generated by narrative science technology and financial data from MarketBeat in order to provide readers with the fastest reporting and unbiased coverage. Please send any questions or comments about this story to [email protected].
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Petco Health & Wellness (WOOF - Free Report) came out with quarterly earnings of $0.01 per share, beating the Zacks Consensus Estimate of a loss of $0.02 per share. This compares to a loss of $0.01 per share a year ago. These figures are adjusted for non-recurring items.
This quarterly report represents an earnings surprise of +150.00%. A quarter ago, it was expected that this pet store chain would post earnings of $0.02 per share when it actually produced earnings of $0.01, delivering a surprise of -50%.
Over the last four quarters, the company has surpassed consensus EPS estimates three times.
Petco, which belongs to the Zacks Retail - Miscellaneous industry, posted revenues of $1.5 billion for the quarter ended April 2026, surpassing the Zacks Consensus Estimate by 0.66%. This compares to year-ago revenues of $1.49 billion. The company has topped consensus revenue estimates two times over the last four quarters.
The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call.
Petco shares have added about 5.3% since the beginning of the year versus the S&P 500's gain of 11.2%.
What's Next for Petco?While Petco has underperformed the market so far this year, the question that comes to investors' minds is: what's next for the stock?
There are no easy answers to this key question, but one reliable measure that can help investors address this is the company's earnings outlook. Not only does this include current consensus earnings expectations for the coming quarter(s), but also how these expectations have changed lately.
Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions. Investors can track such revisions by themselves or rely on a tried-and-tested rating tool like the Zacks Rank, which has an impressive track record of harnessing the power of earnings estimate revisions.
Ahead of this earnings release, the estimate revisions trend for Petco was mixed. While the magnitude and direction of estimate revisions could change following the company's just-released earnings report, the current status translates into a Zacks Rank #3 (Hold) for the stock. So, the shares are expected to perform in line with the market in the near future. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
It will be interesting to see how estimates for the coming quarters and the current fiscal year change in the days ahead. The current consensus EPS estimate is $0.07 on $1.5 billion in revenues for the coming quarter and $0.19 on $6.02 billion in revenues for the current fiscal year.
Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Retail - Miscellaneous is currently in the top 44% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.
Casey's General Stores (CASY - Free Report) , another stock in the broader Zacks Retail-Wholesale sector, has yet to report results for the quarter ended April 2026. The results are expected to be released on June 9.
This convenience store chain is expected to post quarterly earnings of $3.39 per share in its upcoming report, which represents a year-over-year change of +28.9%. The consensus EPS estimate for the quarter has been revised 0.8% lower over the last 30 days to the current level.
Casey's General Stores' revenues are expected to be $4.34 billion, up 8.8% from the year-ago quarter.
Petco Health and Wellness Co (NASDAQ:WOOF) reported a wider-than-expected net loss in its first quarter even as revenue edged past estimates, sending shares down nearly 13% in premarket trading Thursday.
The pet retailer posted net sales of $1.5 billion for the quarter ended May 2025, up 0.2% year-over-year and slightly above the $1.49 billion analysts had forecast.
Comparable sales rose 0.7%, turning positive for the first time in five quarters.
Despite the top-line beat, Petco swung to a net loss of $15.1 million, well short of the $3.57 million loss analysts had expected. Adjusted EBITDA of $97.3 million rose 8.8% from a year earlier and surpassed consensus estimates of $90.4 million.
Gross margin came in at 38.4%, roughly in line with the 38.5% estimate, as the company benefited from product mix shifts and ongoing cost actions. Operating income reached $24.6 million.
Free cash flow was an outflow of $69.1 million, and net debt stood at $1.32 billion, reflecting a total debt load of $1.48 billion against cash of $166.8 million.
Management reaffirmed full-year 2026 guidance calling for net sales growth of flat to 1.5% and adjusted EBITDA of $415 million to $430 million. For the second quarter, the company guided for net sales growth of approximately 0.3% and adjusted EBITDA of $110 million to $112 million, citing tariff refunds and fuel costs as key near-term variables.
Jefferies reiterated a Buy rating on the stock following the results, calling it a solid start to the year and noting that comparable sales had flipped positive amid a series of new product, store, and seasonal initiatives. The bank said it views Petco as a self-help story in its early stages and believes the shares are undervalued relative to peers.
Petco stock is feeling bearish pressure. Why is WOOF stock dropping? Q1 HighlightsPetco reported a loss of 5 cents per share, missing the consensus estimate of a 1 cent-loss. Meanwhile, it reported revenue of $1.49 billion, beating the consensus estimate of $1.48 billion.
Petco said ending cash balance increased by $33.5 million year-over-year to $166.8 million. Inventory declined 1.9% from the prior-year period, while total debt decreased to $1.482 billion from $1.593 billion a year earlier.
Cash used in operating activities was $31 million, compared to $15.5 million in the year-ago quarter. Free cash flow was an outflow of $69.1 million versus an outflow of $43.9 million last year.
"Our strong first-quarter results, highlighted by positive comparable sales and profitability that exceeded our outlook, provide clear, early validation that our Phase 3 ‘Reach for the Sky' strategy is working," said Joel Anderson, CEO of Petco.
CFO Sabrina Simmons said the company’s first-quarter results marked a return to positive comparable sales growth and that Petco remains focused on strengthening its retail and financial fundamentals while reducing its leverage ratio to 2x.
GuidancePetco affirmed its fiscal-year 2026 revenue guidance of $5.96 billion to $6.05 billion, versus the consensus estimate of $6.00 billion. The company sees second-quarter revenue of $1.493 billion, versus the consensus estimate of $1.496 billion.
Long-Term Trend Remains BearishAt $2.71, Petco is back under its short- and intermediate-term trend lines, trading 2.6% below the 20-day SMA ($2.73), 4.9% below the 50-day SMA ($2.80), and 12.4% below the 200-day SMA ($3.04). That positioning matters because rallies have had trouble sticking while price remains below the 200-day, and the longer-term "death cross" (50-day SMA below the 200-day SMA) that formed in December 2025 still frames the bigger picture as bearish.
Momentum is the more interesting part of the setup right now: MACD is above its signal line and the histogram is positive, which points to improving momentum versus the prior downswing even if the trend hasn't fully flipped. In plain English, MACD being above the signal line suggests selling pressure is easing, but bulls still need price to reclaim key moving averages to confirm a more durable turn.
The stock is also sitting in the lower half of its 52-week range ($2.24 to $4.50), with the most recent swing low in May and a swing high in March acting as the most relevant reference points for where supply and demand have recently shown up. If the premarket weakness holds into regular trading, traders will be watching whether this pullback becomes another "lower high" sequence or a base-building attempt.
Key Resistance: $2.80 — lines up with the 50-day SMA and a level the stock needs to reclaim to improve the near-term trend Key Support: $2.24 — the 52-week low zone and the clearest downside reference if selling accelerates Petco Shares SlideWOOF Price Action: At the time of publication, Petco shares are trading 16.72% lower at $2.54, according to data from Benzinga Pro.
Image via Shutterstock
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Petco Health and Wellness (WOOF) remains rated Hold as Q1 2026 shows stabilization but not a clear turnaround. Comparable sales turned positive at +0.7% y/y, but net sales were flat and product sales declined. Services grew 6.8% y/y, supporting differentiation, while consumables showed stabilization but stayed slightly negative in dollar terms.
Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.
Petco Health and Wellness NASDAQ: WOOF is a misunderstood company amid a turnaround, with signs of traction. It faces competition from companies such as Chewy NASDAQ: CHWY, whose digital services and automated shipments resonate with consumers, but it isn’t out of the game.
Petco Health and Wellness Today
WOOF
Petco Health and Wellness
$2.74 -0.10 (-3.36%)
As of 03:58 PM Eastern
This is a fair market value price provided by Massive. Learn more.
52-Week Range$2.24▼
$4.51P/E Ratio136.82
Price Target$3.89
The turnaround focuses on five critical areas: products, services, private-label brands, digitization, and store-count rationalization.
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The net result is improving results, including a return to positive comps, and an outlook for positive free cash flow in the foreseeable future.
Free cash flow is a sore point for this market. Petco was laden with debt before its IPO and is suffering in the high-interest-rate environment. Debt maintenance cuts deeply into cash flow, but it is a problem that management is working on.
Q1 results reflected that work, including year-over-year improvements in capitalization and a decline in debt. Debt remains high but is expected to continue falling in the upcoming quarters.
Petco Regains Traction in Q1, Reaffirms GuidancePetco’s Q1 results were mixed relative to analysts' forecasts, with revenue slightly above forecasts and GAAP earnings far below. Critical details included systemwide net sales growth, reported as 0.2% despite net store closures. Store closures will continue to be a headwind this year, impacting overall growth by as much as 550 basis points over time.
The more pertinent detail was the comparable store sales, which were also positive. Comp sales increased by 0.7%, underpinned by services expansion.
Service expansion is a pillar of Petco’s turnaround strategy. It not only differentiates it from digital-native operations like Chewy, but also provides cross-selling opportunities while consumers are in-store. Other pillars include a lean into fresh and frozen foods and private-label penetration. Both provide avenues for revenue and margin, which are critical to the debt-reduction story. Additionally, Petco is working to unlock cash flow at the point of sale by streamlining and improving both in-store and digital operations.
Margin news was good. The company widened its gross and operating margin, evidence of core improvements. The only bad news is that debt costs continue to overshadow cash flow and profitability, resulting in net losses and negative free cash flow in the quarter.
Looking ahead, guidance is the test, with expectations that strength will persist in upcoming quarters. Guidance for full-year net sales growth was reaffirmed at 0.75%, which will confirm the business inflection when achieved. Longer-term, growth is expected to accelerate as store closures slow and comp store sales improve.
Analysts and Institutions Limit Risk, Point to Double-Digit UpsideAnalyst and institutional trends reflect optimism in Petco’s turnaround and confidence in its future. MarketBeat tracks 12 analysts who rate the stock a consensus Hold, with a 40% upside target. While 12 analysts covering the name is a relatively small number, it is sufficient for a moderate level of conviction, as reflected in institutional ownership. They own approximately 95% of the stock and have been accumulating shares as the price has wallowed at long-term lows.
The chart price action reflects high institutional ownership and accumulation. Market action has traded sideways within a relatively narrow range for years, bouncing numerous times from the lower end. The likely outcome is that this market will continue to trade within this range until concrete evidence emerges that the turnaround will stick.
Insiders Will Limit Upside as Prices Revert to HighsSomething to note about Petco’s institutional ownership is that approximately half is held by a single entity. Scoobie Aggregator is a joint venture that owned the company prior to its IPO. It was liquidating the position when shares traded at higher levels but paused late in 2021. The risk is that Scoobie Aggregator takes advantage of price strength to take money off the table, but that is unlikely until shares revert to much higher price points. Short interest is not a serious threat at this time.
This year’s risks include rising fuel costs, tariff exposure, consumer habits, competition, and execution. Fuel costs hurt not only consumers but have also been cutting into Petco’s operational health. It has exposure with incoming and outgoing shipments at its distribution centers, but it mitigates it in several ways. One is with Break Through Fuel, a digital platform that optimizes fuel surcharges based on consumption rather than flat rates.
Competition may be the biggest hurdle for this market. Petco operates in a tight market, competing with big-box retailers like Walmart NYSE: WMT and pure-play niche retailers like Chewy and PetSmart. PetSmart is a direct competitor, operating in the same footprint and market areas. It, too, is shifting toward a services-oriented pet wellness ecosystem to combat online competitors.
Should You Invest $1,000 in Petco Health and Wellness Right Now?Before you consider Petco Health and Wellness, you'll want to hear this.
MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Petco Health and Wellness wasn't on the list.
While Petco Health and Wellness currently has a Hold rating among analysts, top-rated analysts believe these five stocks are better buys.
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