- Fourth-quarter 2025 net sales were $1.5 billion, down 2.4% year over year, with comparable sales declining 1.6%.
- Adjusted EBITDA for the quarter rose 10.6% to $106.3 million, exceeding company guidance.
- Full-year 2025 net sales totaled $6.0 billion, down 2.5%, while operating income rose to $120.4 million.
- Petco returned to profitability with $9.1 million in net income compared with a $101.8 million loss in 2024.
- The company reduced its leverage ratio to approximately 3x and refinanced debt with maturities extended to 2031.
- Petco expects fiscal 2026 net sales to range from flat to up 1.5% year over year.
Petco reported fourth-quarter and full-year 2025 financial results showing improved profitability and stronger cash generation while the retailer continues its broader turnaround strategy.
Joel Anderson, chief executive officer of Petco, said the company spent much of the year strengthening leadership and rebuilding the economic model supporting the business.
“In fiscal 2025, we strengthened our leadership team and rebuilt the foundation of our economic model, enabling us to exceed our profitability goals,” Anderson said. “With that work largely complete, we are entering the next phase of our strategy focused on driving sustainable, profitable top-line growth.”
The company sees opportunities across its core consumables, supplies and services categories, with plans to focus on product innovation and its store-based service ecosystem to gain market share. Petco expects a return to positive comparable sales in 2026.
Fourth-quarter results
For the fourth quarter of 2025, Petco reported net sales of $1.5 billion, a 2.4% decline compared with the same period in 2024. Comparable sales declined 1.6%.
Gross profit fell slightly to $580.8 million, although gross margin improved 37 basis points to 38.3%.
Operating income rose to $31.9 million, while operating margin increased to 2.1%.
The company reported a net loss of $2.6 million, narrowing from a $13.8 million loss a year earlier.
Adjusted EBITDA increased 10.6% to $106.3 million, exceeding the company’s outlook.
Petco closed seven net stores during the quarter and ended the year with 1,382 locations.
Full-year financial performance
For the full fiscal year 2025, Petco reported net sales of $6.0 billion, down 2.5% compared with 2024, with comparable sales declining 1.6%.
Despite lower sales, profitability improved significantly. Operating income rose to $120.4 million from $7.1 million in 2024, and operating margin increased to 2.0%.
The company reported net income of $9.1 million, compared with a net loss of $101.8 million the prior year.
Adjusted EBITDA increased 21.3% to $408.2 million.
Sabrina Simmons, Petco’s chief financial officer, said the company’s financial performance helped improve its balance sheet and liquidity.
“Petco once again delivered on our commitments while building a stronger foundation, improving profitability and cash generation through our economic model,” Simmons said. “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.”
Balance sheet improvements
Petco reported cash of $256.7 million at year-end, an increase of $91.0 million after voluntarily paying down $95 million in debt.
Inventory declined 9.7%, outpacing the 2.5% decline in sales.
Cash generated from operations increased 76.8% to $314.1 million, while free cash flow reached $187.0 million.
Total secured debt fell to approximately $1.5 billion, down from $1.595 billion in the prior year.
The company also refinanced its debt in February, extending maturities to 2031 through a combination of a $900 million variable-rate term loan and a $600 million fixed-rate bond.
2026 outlook
Petco expects fiscal 2026 net sales to range from flat to up 1.5% year over year.
The company forecasts adjusted EBITDA between $415 million and $430 million, with capital expenditures of approximately $140 million.
Petco also expects depreciation and amortization of about $200 million and net interest expense of approximately $125 million.
The retailer anticipates closing approximately 15 to 20 net stores during the year.
For the first quarter of 2026, Petco expects net sales to range from down 1% to flat year over year and adjusted EBITDA between $92 million and $94 million.
Information sourced from the company’s press release.
