Petco Health and Wellness Company (WOOF) investor relations material

Executive summary

• Net sales for Q3 2025 were $1.46 billion, down 3.1% year-over-year, with comparable sales down 2.2%.

• Operating income improved by $25.2 million to $29.2 million, and net income attributable to common stockholders was $9.3 million, compared to a net loss of $16.7 million a year ago.

• Adjusted EBITDA increased to $98.6 million, up $17.3 million year-over-year, with margin rising to 6.7%.

• Free cash flow for Q3 was $60.6 million, and year-to-date $70.6 million, reflecting improved operational discipline and transformation initiatives.

• Raised full-year adjusted EBITDA outlook, with sales growth anticipated in 2026 and continued focus on transformation and cost control.

Financial highlights

• Gross profit margin expanded by 75 basis points to 38.9% of net sales, driven by disciplined pricing and promotional strategies.

• SG&A expenses as a percentage of net sales decreased to 36.9% from 37.8% year-over-year, with operating margin expanding over 170 basis points.

• Interest expense declined by $3.0 million to $32.8 million for the quarter.

• Inventory down 10.5% year-over-year, with improved in-stock levels.

• Cash balance at quarter-end was $237.4 million, with total liquidity of $733 million.

Outlook and guidance

• Fiscal 2025 net sales expected to decline 2.5%–2.8% year-over-year; Q4 net sales projected to be down low single digits.

• Adjusted EBITDA guidance for FY 2025 raised to $395–$397 million; Q4 adjusted EBITDA expected between $93–$95 million.

• Full-year depreciation expected at $200 million, net interest expense at $125 million, and capital expenditures at $125–$130 million.

• About 20 net store closures anticipated for the year.

• Management expects current resources and anticipated cash flows to be sufficient to fund operations and capital investments for at least the next 12 months.