Returns to Positive Comp Growth in Q1, Validating 'Reach for the Sky' Initiatives

Delivers Q1 Sales and Profitability Ahead of Previously Provided Outlook

Reaffirms Fiscal 2026 Outlook and Provides 2Q Outlook*

SAN DIEGO, June 3, 2026 /PRNewswire/ -- Petco (Nasdaq: WOOF), the retailer "where the pets go" to find everything they need to live their best lives, today reported its first quarter 2026 financial results.

"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," said Joel Anderson, Chief Executive Officer of Petco.

Q1 2026 Overview

For the first quarter of 2026 compared to the first quarter of 2025:

• Net sales of $1.5 billion increased 0.2%; comparable sales increased 0.7%.
• Gross profit increased to $574.4 million; gross margin rate increased 21 basis points to 38.4%. 
• Operating income increased 50.5% to $24.6 million; operating margin increased 55 basis points to 1.6%.
• Net loss of $15.1 million versus a net loss of $11.7 million.
• Adjusted EBITDA² of $97.3 million versus $89.4 million.
• The Company closed 4 net stores, ending the quarter with 1,378 stores.

Sabrina Simmons, Chief Financial Officer of Petco, added, "Our strong first-quarter results—which marked a return to positive comparable sales growth—demonstrate that our operational and economic improvements are materializing. We are pleased to reaffirm our full-year outlook. As our strategic initiatives continue to take hold, we continue to be focused on strengthening our retail and financial fundamentals to support sustainable, profitable growth and remain committed to reducing our leverage ratio to 2x."¹

Q1 2026 Balance Sheet and Cash Flow

• Ending cash balance grew by $33.5 million to $166.8 million versus $133.3 million last year.
• Inventory fell 1.9% year-over-year versus the 0.2% increase in net sales.
• Cash used in operating activities was $31.0 million compared to $15.5 million last year.
• Free cash flow² was an outflow of $69.1 million versus an outflow of $43.9 million last year.  
• Total debt was $1.482 billion, down from $1.593 billion last year.

2026 Outlook

The company reaffirmed its full year 2026 net sales and EBITDA outlook and provided its outlook for the second quarter of 2026.

Assumptions in the outlook include that economic conditions, currency rates and the tax and regulatory landscape remain generally consistent, and that current or planned tariffs on imports into the U.S. from China and other countries as of June 3, 2026, will remain at current levels. Additionally, our outlook assumes the benefit of a partial IEEPA tariff refund received in May 2026, with no additional refunds assumed for the balance of the year, and now assumes that fuel prices remain elevated at approximately those experienced in the first quarter for the remainder of the year, compared to our prior outlook which assumed higher fuel prices for the first quarter only.

With respect to the second quarter specifically, the benefit of the tariff refund received in May 2026 is expected to be approximately offset by incremental tariffs and higher fuel costs anticipated in the period. The prior-year second quarter included an approximately $9 million SG&A benefit from a favorable semi-annual actuarial true-up related to employee optimization work, which the Company does not expect to recur in the second quarter of 2026.

Full Year 2026 Outlook 

Second Quarter 2026 Outlook    

Earnings Conference Call Webcast Information:

Management will host an earnings conference call on June 3, 2026 at approximately 4:15 PM Eastern Time to discuss the company's financial results. A live webcast of the conference call will be available on the company's Investor Relations page at https://ir.petco.com/news-and-events/events-and-presentations. A replay of the webcast will be available through the same link approximately two hours after the conference call. 

About Petco:  

We're proud to be "where the pets go" to find everything they need to live their best lives for more than 60 years — from their favorite meals and toys, to trusted supplies and expert support from people who get it, because we live it. We believe in the universal truths of pet parenthood — the boundless boops, missing slippers, late night zoomies and everything in between. And we're here for it. Every tail wag, every vet visit, every step of the way. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico and Chile. Customers experience our exclusive selection of pet care products, services, expertise and membership offerings in stores and online at petco.com, and on the Petco app. In 1999, we founded Petco Love. Together, we support thousands of local animal welfare groups nationwide, and have helped find homes for over 7 million animals through in-store adoption events.

Forward-Looking Statements:

This earnings release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding our Q2 and full year 2026 outlook, operational reset of our business, our competitive positioning, profitability, cash generation through our economic model, expense leverage, operating margin expansion, cost action plans and associated cost-savings, our path to sustainable, profitable growth and our expectations regarding tariffs and associated impacts. Such forward-looking statements can generally be identified by the use of forward-looking terms such as "believes," "expects," "may," "intends," "will," "shall," "should," "anticipates," "opportunity," "illustrative," "estimates," "projects", "forecasts" or the negative thereof or other variations thereon or comparable terminology. These statements are only predictions based on our current expectations and projections about future events and reflect our beliefs regarding such future events and do not represent historical facts or statements of current condition. Although Petco believes that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this earnings release is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of the operations or business or financial condition of Petco. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside the control of Petco. Forward-looking statements are subject to a number of risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in the forward-looking statements, including, without limitation, those identified in this earnings release as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation, prevailing interest rates and the impact of tariffs; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in Ukraine and the Middle East), government shutdowns, health crises, and pandemics; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; (xx) impairments of the carrying value of our goodwill and other intangible assets; (xxi) our ability to successfully implement our operational adjustments, achieve the expected benefits of our cost action plans and drive improved profitability; (xxii) our ability to deliver sustainable, profitable growth and (xxiii) the other risks, uncertainties and other factors identified under "Risk Factors" in our most recent Annual Report on Form 10-K  and elsewhere in Petco's Securities and Exchange Commission filings. The occurrence of any such factors could significantly alter the results set forth in these statements.

Petco cautions that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. Petco undertakes no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority

 

 

 

NON-GAAP FINANCIAL MEASURES

The following information provides definitions and reconciliations of the non-GAAP financial measures presented in this earnings release to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles (GAAP). The company has provided this non-GAAP financial information, which is not calculated or presented in accordance with GAAP, as information supplemental and in addition to the financial measures presented in this earnings release that are calculated and presented in accordance with GAAP. Such non-GAAP financial measures should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the GAAP financial measures presented in this earnings release. The non-GAAP financial measures in this earnings release may differ from similarly titled measures used by other companies.

Adjusted EBITDA

Adjusted EBITDA is considered a non-GAAP financial measure under the Securities and Exchange Commission's (SEC) rules because it excludes certain amounts included in net income calculated in accordance with GAAP. Management believes that Adjusted EBITDA is a meaningful measure to share with investors because it facilitates comparison of the current period performance with that of the comparable prior period. In addition, Adjusted EBITDA affords investors a view of what management considers to be Petco's core operating performance as well as the ability to make a more informed assessment of such operating performance as compared with that of the prior period. Please see the company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026 filed with the SEC on March 13, 2026 for additional information on Adjusted EBITDA.

The table below reflects the calculation of Adjusted EBITDA for the thirteen weeks ended May 2, 2026 compared to the thirteen weeks ended May 3, 2025.

 

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures the ability to generate additional cash from business operations, is an important financial measure for use in evaluating the company's financial performance.

The table below reflects the calculation of Free Cash Flow for the thirteen weeks ended May 2, 2026 compared to the thirteen weeks ended May 3, 2025.

Net Debt 

The table below reflects the calculation for net debt as of May 2, 2026 compared to January 31, 2026 and May 3, 2025.

 

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SOURCE Petco - Investor Relations