Petco Health and Wellness Co Inc - Class A
Q1 2027 Earnings
Market Reaction
S&P 500 over the same 30 days: −1.54%.
Did WOOF Beat Earnings? Q1 2027 Results
Petco Health & Wellness posted a mixed first quarter for fiscal 2026, delivering a narrow revenue beat but falling well short of profit expectations as a costly debt restructuring weighed on the bottom line. The pet retailer reported net sales of $1.50 billion, edging past the $1.49 billion consensus by 0.70% and rising 0.2% year over year, with services strength and consumables improvement providing the lift. However, earnings per share came in at -$0.05, missing the $0.03 consensus estimate by 287.27%, as an $11.84 million loss on debt extinguishment and modification inflated losses during the quarter. The refinancing activity, which involved borrowing and repaying $1.50 billion to reshape the company's debt structure, drove a wider net loss of $15.15 million compared to $11.66 million a year ago, even as adjusted EBITDA improved to $97.33 million from $89.45 million. Looking ahead, Petco reaffirmed its full-year fiscal 2026 adjusted EBITDA guidance of $415 million to $430 million and maintained its net sales growth outlook of flat to up 1.5%.
- Return to positive comparable sales growth of 0.7%
- Improvement in consumables business
- Outperformance of differentiated services business
- Gross margin expansion of 21 basis points to 38.4%
- SG&A decreased to $549.8 million from $553.6 million year over year
- Adjusted EBITDA margin expanded to 6.5% from 6.0%
- Inventory fell 1.9% year over year despite 0.2% net sales increase
“Our strong first-quarter results, highlighted by positive comparable sales and profitability that exceeded our outlook, provide clear, early validation that our Phase 3 'Reach for the Sky' strategy is working. We were particularly pleased to see the improvement in our consumables business, while our differentiated services business continues to outperform and is a key engine of our growth. This solid start to the year demonstrates the power of our distinct, wholly owned omnichannel ecosystem. As we look ahead, we are pleased with the momentum our initiatives are generating, positioning us to continue to deliver positive comps. We remain highly confident in our ability to drive consistent, 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; adjusted EBITDA of $415 million to $430 million; net interest expense of approximately $125 million; capital expenditures of approximately $140 million; depreciation and amortization of approximately $200 million; and approximately 15-20 net store closures. For Q2 2026, the company guided net sales growth of approximately 0.3% year over year (in line with consensus) and adjusted EBITDA of $110 million to $112 million. Assumptions include current tariff levels remaining in place, benefit of a partial IEEPA tariff refund received in May 2026 offset by incremental tariffs and higher fuel costs, and the non-recurrence of an approximately $9 million prior-year Q2 SG&A benefit from a favorable actuarial true-up. The company remains committed to reducing its leverage ratio to 2x.
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Figures from SEC filings and company reports. Not investment advice.