Petco Health and Wellness Company (WOOF) investor relations material

Executive summary

• Achieved positive comparable sales growth of 0.7% in Q1 2026, with net sales up 0.2% year-over-year to $1.5 billion, marking a return to positive comps and outperforming quarterly outlook.

• Operating income rose 50.5% to $24.6 million, with operating margin expanding by 55 basis points to 1.6%.

• Adjusted EBITDA improved to $97.3 million from $89.4 million year-over-year.

• Net loss attributable to common stockholders widened to $15.1 million from $11.7 million year-over-year.

• Growth driven by improvements in consumables, strong performance in differentiated services, and successful execution of innovation and omni-channel strategies.

Financial highlights

• Net sales: $1.5 billion for Q1 2026, up 0.2% year-over-year; comparable sales up 0.7%.

• Gross profit was $574.4 million, with gross margin expanding 21 basis points to 38.4%.

• SG&A expenses were $549.8 million (36.7% of net sales), leveraging 34 basis points year-over-year.

• Free cash flow was negative $69.1 million, reflecting increased capital expenditures and inventory investments.

• Total debt reduced by over $100 million year-over-year to $1.48 billion; liquidity at $654.4 million.

Outlook and guidance

• Reaffirmed full-year 2026 outlook: net sales expected to be flat to up 1.5% year-over-year; Adjusted EBITDA guidance at $415–$430 million.

• Q2 2026 net sales projected to grow about 0.3% year-over-year; Adjusted EBITDA expected at $110–$112 million.

• Assumptions include stable economic, regulatory, and tariff conditions, with fuel prices remaining elevated.

• Tariff refund benefit in Q2 expected to be offset by incremental tariffs and higher fuel costs.

• Net store closures projected at 15 to 20 for the year, weighted to the back half.