Petco Health and Wellness Company (WOOF) Q1 2026 earnings summary

Executive summary

• Multi-phased transformation underway to restore retail fundamentals and drive profitable growth, with phase I complete and phase II focused on execution and operational improvements.

• Q1 2025 net sales were $1.49 billion, down 2.3% year-over-year, with comparable sales down 1.3%.

• Adjusted EBITDA increased to $89.4 million from $75.6 million in the prior year period, exceeding guidance.

• Operating income was $16.4 million, reversing an operating loss of $16.8 million in the prior year period.

• Leadership is focused on building a best-in-class operating model, optimizing product assortment, and enhancing customer experience.

Financial highlights

• Gross margin rate expanded by over 30 basis points to 38.2%, with gains in both products and services.

• Adjusted EBITDA margin improved to 6.0% from 4.9% year-over-year.

• Net loss attributable to shareholders improved to $(11.7) million from $(46.5) million year-over-year.

• Free cash flow was $(43.9) million, slightly lower than the prior year’s $(41.1) million.

• Liquidity at quarter-end was $647.9 million, including $133.3 million in cash and $514.6 million available under the ABL Revolving Credit Facility.

Outlook and guidance

• Full-year 2025 outlook reiterated: net sales expected to be down low single digits, including 20-30 net store closures.

• Adjusted EBITDA guidance for 2025 is $375–$390 million.

• Q2 net sales expected to be down low single digits; adjusted EBITDA projected at $92–$94 million.

• Guidance assumes tariffs remain at current levels and stable economic conditions.

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