Petco Health and Wellness Co Inc - Class A
Q2 2027 Earnings
Includes a $15.7 million income tax benefit (versus $0.7 million expense in the prior year) and a net $6.8 million benefit from IEEPA tariff refunds
Market Reaction
Did WOOF Beat Earnings? Q2 2027 Results
Petco Health & Wellness posted a decisive earnings beat in its fiscal second quarter, reporting GAAP EPS of $0.13 against a consensus estimate of $0.07, an 80.31% positive surprise, even as revenue of $1.49 billion came in fractionally below the $1.49 billion consensus by 0.22% and grew just 0.1% year over year. The profit outperformance was driven in meaningful part by one-time items, including a $15.71 million income tax benefit compared to a $0.75 million expense in the prior year and a net $6.80 million benefit from IEEPA tariff refunds, and management noted that normalized Adjusted EBITDA would have been $115.40 million absent the tariff proceeds. The quarter also marked a second consecutive period of positive comparable sales growth at 0.6%, though a membership program relaunch briefly disrupted sales trends. Looking ahead, Petco reaffirmed its full-year fiscal 2026 guidance of flat to 1.5% net sales growth and Adjusted EBITDA of $415 million to $430 million, while guiding Q3 net sales growth of 0.4% to 1.0% and Adjusted EBITDA of $100 million to $103 million, assuming no additional tariff refunds for the remainder of the year.
- Second consecutive quarter of positive comparable sales growth at 0.6%
- Growth in consumables category highlighting 'Reach for the Sky' strategy traction
- Net $6.8 million benefit from IEEPA tariff refunds
- Gross margin rate increased 37 basis points to 39.7%
- Operating income increased 11.1% year-over-year
- Adjusted EBITDA increased to $122.2 million from $113.9 million
- Income tax benefit of $15.7 million versus $0.7 million expense last year
“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.”
Petco Health & Wellness CEO, on the earnings call
Forward Guidance & Outlook
Petco reaffirmed its full-year fiscal 2026 outlook: net sales flat to up 1.5% year-over-year and Adjusted EBITDA of $415 million to $430 million (including $6.8 million net IEEPA tariff refunds). Net interest expense is expected at approximately $122 million, capital expenditures at approximately $140 million, depreciation & amortization at approximately $200 million, and net store closures of approximately 15-20. For Q3 2026, the company guided net sales growth of 0.4% to 1.0% and Adjusted EBITDA of $100 million to $103 million. The outlook assumes current tariff levels remain in place and no additional IEEPA tariff refunds are received for the balance of the year. The outlook provides flexibility to continue investing behind growth initiatives in the second half while absorbing ongoing supply chain headwinds.
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Figures from SEC filings and company reports. Not investment advice.