Petco Health and Wellness Co Inc - Class A
Q2 2025 Earnings
Market Reaction
S&P 500 over the same 30 days: +2.66%.
Did WOOF Beat Earnings? Q2 2025 Results
Petco Health and Wellness delivered a sharper-than-expected profit recovery in its fiscal second quarter of 2025, posting GAAP diluted EPS of $0.05 against a consensus estimate of $0.02, a beat of 120.26%, even as revenue of $1.49 billion fell fractionally short of the $1.49 billion consensus and slipped 2.3% from a year earlier. The primary engine behind the earnings improvement was a combination of gross margin expansion of roughly 120 basis points to 39.3% of net sales and a meaningful pullback in SG&A expenses, which fell to $542.30 million from $578.26 million, helping swing the company to GAAP net income of $13.97 million from a net loss of $24.82 million in the year-ago period. Comparable sales declined 1.4%, reflecting continued softness in pet retail demand. Looking ahead, Petco raised its full-year Adjusted EBITDA outlook to $385 million to $395 million while holding its net sales guidance at down low single digits, and guided Q3 Adjusted EBITDA to $92 million to $94 million; the company also faces multiple pending securities class action lawsuits alleging misleading statements about its growth prospects in prior periods.
- Gross profit margin expanded approximately 120 basis points to 39.3% of net sales
- SG&A expenses decreased year over year from $578.3 million to $542.3 million
- Adjusted EBITDA margin improved to 7.6% from 5.5% year over year
- Comparable sales decreased 1.4% year over year
- Services and other revenue increased modestly year over year
- Interest expense declined year over year from $36.8 million to $33.3 million
- Mexico joint venture EBITDA contribution improved to $10.4 million from $9.9 million
“For the second quarter we once again delivered against our commitments, enabling us to raise our earnings outlook for the full year. The first half of this year established a solid foundation for our transformation as we continued to strengthen our economic model and improve retail operating fundamentals.”
Petco Health & Wellness CEO, on the earnings call
Forward Guidance & Outlook
Petco raised its full-year 2025 earnings outlook while maintaining net sales guidance. Full-year net sales are expected to be down low single digits year over year. Full-year Adjusted EBITDA is now expected at $385 million to $395 million. Net interest expense is expected at approximately $130 million, capital expenditures at $125 million to $130 million, depreciation and amortization at approximately $200 million, and net store closures of approximately 25. For Q3 2025, the company expects net sales down low single digits year over year and Adjusted EBITDA of $92 million to $94 million. The outlook assumes tariffs on U.S. imports from China and other countries remain at August 28, 2025 levels.
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Figures from SEC filings and company reports. Not investment advice.