Petco Health and Wellness Company, Inc. (WOOF) reported a net loss of $2.6 million for its fourth quarter of 2025, translating to a basic earnings per share of $‑0.01, a miss of the consensus estimate of $0.02. Net sales for the quarter were $1.52 billion, a 2.4% decline from the same period a year earlier, but slightly above the $1.51 billion consensus estimate. Adjusted EBITDA for the quarter rose to $106.3 million, up from $84.5 million in Q3 2025, while the full‑year adjusted EBITDA reached $408.2 million, a 21.3% increase from the prior year.
The loss was largely driven by one‑time restructuring charges and a deliberate exit from unprofitable product volume, which reduced overall sales but improved gross margins to 38.3% from 37.6% a year earlier. The company’s cost discipline and pricing power in its services and consumables segments helped lift adjusted EBITDA, offsetting the revenue decline. Management highlighted that the margin expansion was a result of disciplined pricing and vendor negotiations, and that the company is now operating with a lower leverage ratio of 3.0× compared with 4.2× at the start of 2025.
Petco reiterated its fiscal 2026 outlook, projecting net sales that are flat to 1.5% higher year‑over‑year and adjusted EBITDA of $415‑$430 million. The guidance reflects confidence in a gradual return to growth after a year of disciplined cost management, while the company maintains a debt‑to‑EBITDA ratio below 3.5×, currently at 3.0×. The guidance signals a cautious but optimistic view of the near‑term market, with management emphasizing the “Reach for the Sky” growth plan to drive sustainable, profitable top‑line growth.
"In fiscal 2025, we strengthened our leadership team and rebuilt the foundation of our economic model, enabling us to exceed our profitability goals," said Joel Anderson, Chief Executive Officer. "With that work largely complete, we are entering the next phase of our strategy focused on driving sustainable, profitable top‑line growth." "Petco once again delivered on our commitments while building a stronger foundation, improving profitability and cash generation through our economic model. These results enabled significant progress in achieving our goal of lowering our leverage ratio from 4.2X when we entered the year to 3X at the end of 2025. As we enter this next phase of growth, we see ongoing opportunity to improve our financial strength," added CFO Sabrina Simmons. "Q4 sales were in line with our outlook, and we performed better than our adjusted EBITDA quarterly goal." "Net sales were down 2.4% to $1.52 billion with comp sales down 1.6% for Q4, reflecting a strategic move away from unprofitable sales volume."
The content on EveryTicker is for informational purposes only and should not be construed as financial or investment advice. We are not financial advisors. Consult with a qualified professional before making any investment decisions. Any actions you take based on information from this site are solely at your own risk.