- Net sales increased 0.2% to $1.5 billion, while comparable sales rose 0.7% year over year.
- Gross profit reached $574.4 million, with gross margin expanding 21 basis points to 38.4%.
- Operating income increased 50.5% to $24.6 million, and adjusted EBITDA rose to $97.3 million.
- Total debt declined by more than $110 million compared to the prior year.
- Petco reaffirmed its fiscal 2026 outlook and expects second-quarter sales growth of approximately 0.3%.
Petco reported first-quarter 2026 financial results that marked a return to positive comparable sales growth, while profitability exceeded previously issued guidance.
Chief Executive Officer Joel Anderson said the company’s performance provides early evidence that its Phase 3 “Reach for the Sky” transformation strategy is gaining traction. The quarter was driven by improvement in the consumables category, while Petco’s services business continued to outperform and serve as a key growth driver.
Sales and Margin Improvement
For the quarter ended May 2, 2026, net sales increased 0.2% to approximately $1.5 billion, while comparable sales increased 0.7%.
Gross profit increased to $574.4 million, resulting in a gross margin of 38.4%, up 21 basis points from the prior-year period. Operating income rose 50.5% to $24.6 million, and operating margin improved to 1.6%.
Adjusted EBITDA increased to $97.3 million from $89.4 million during the first quarter of 2025.
Petco reported a net loss of $15.1 million, compared with a net loss of $11.7 million in the prior-year quarter.
The company ended the quarter with 1,378 stores after closing four net locations.
Balance Sheet and Cash Flow
Petco ended the quarter with $166.8 million in cash, an increase of $33.5 million compared with the same period last year.
Inventory declined 1.9% year over year despite the increase in sales. Total debt decreased to $1.482 billion from $1.593 billion a year earlier.
Cash used in operating activities totaled $31.0 million, while free cash flow was negative $69.1 million for the quarter.
According to Chief Financial Officer Sabrina Simmons, the company’s operational and financial improvements are beginning to translate into measurable results.
Outlook Remains Unchanged
Petco reaffirmed its full-year 2026 guidance, projecting net sales ranging from flat to up 1.5% compared with fiscal 2025. The company continues to expect adjusted EBITDA between $415 million and $430 million.
Additional guidance assumptions include approximately $125 million in net interest expense, $140 million in capital expenditures, roughly $200 million in depreciation and amortization, and 15 to 20 net store closures during the year.
For the second quarter of 2026, Petco expects net sales growth of approximately 0.3% year over year and adjusted EBITDA between $110 million and $112 million.
Management noted that guidance assumes current tariff levels remain in place and incorporates the benefit of a partial tariff refund received in May 2026. The company also expects elevated fuel costs to persist throughout the remainder of the year.
Information sourced from the company’s press release.
