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

Executive summary

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

• Adjusted EBITDA increased $13.8 million to $89.4 million, with margin improving to 6.0% from 4.9% year-over-year.

• Operating income reached $16.4 million, reversing a prior year loss; net loss improved to $11.7 million from $46.5 million.

• Multi-phased transformation underway, including leadership changes, operational resets, and focus on retail fundamentals and ROIC.

• Services, especially grooming and veterinary, remain the fastest-growing segment, supporting gross margin expansion.

Financial highlights

• Gross profit margin expanded by 30 basis points to 38.2% of net sales, driven by improved services utilization and inventory management.

• SG&A expenses decreased to 37.1% of net sales from 38.9%, reflecting lower payroll, advertising, and occupancy costs.

• Net loss per share improved to $(0.04) from $(0.17) year-over-year.

• Free cash flow was negative $43.9 million, primarily due to incentive payouts.

• Liquidity at quarter-end was $647.9 million, including $133.3 million in cash.

Outlook and guidance

• FY 2025 net sales expected to decline low single digits year-over-year; Adjusted EBITDA forecasted at $375–$390 million.

• Q2 2025 net sales also expected to decline low single digits; Adjusted EBITDA guidance of $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.