Petco Health & Wellness Company, Inc. has recently released its 10-Q report, providing insights into its financial performance for the thirteen and twenty-six weeks ended August 2, 2025. The company, founded in 1965 and headquartered in San Diego, California, operates as a health and wellness company focused on enhancing the lives of pets, pet parents, and its Petco partners in the United States, Mexico, and Puerto Rico. It offers a wide range of services, including veterinary care, grooming, training, tele-health, and pet health insurance, as well as pet consumables, supplies, and services through various digital platforms.
In the Management’s Discussion and Analysis of Financial Condition and Results of Operations, Petco highlights important measures used to assess its performance. The company reported a decrease in net sales from $1.52 billion to $1.49 billion, representing a period-over-period decrease of 2.3% and a comparable sales decrease of 1.4%. However, it also reported an increase in operating income from $2.5 million to $43.0 million and an increase in Adjusted EBITDA from $83.5 million to $113.9 million for the same periods.
The breakdown of net sales for the thirteen weeks ended August 2, 2025, compared to the same period in 2024, shows a decrease in consumables and supplies and companion animals categories by 2.0% and 4.5%, respectively. However, services and other categories experienced a 1.1% increase. The company attributed the sales decrease primarily to lower transaction volume and a lower pet care center count, as well as a greater focus on profitability and margin through a more disciplined approach to managing unit costs, pricing, and promotional strategies.
Petco’s gross profit rate increased to 39.3% for the thirteen weeks ended August 2, 2025, compared with 38.1% for the same period in 2024. The company attributed this increase to improved utilization of its services footprint, as well as more effective management of inventory, unit costs, pricing, and promotional strategies.
Moreover, Petco reported a decrease in selling, general and administrative expenses (SG&A) as a percentage of net sales, which decreased to 36.4% for the thirteen weeks ended August 2, 2025, compared with 37.9% for the same period in 2024. The decrease in SG&A expenses was primarily due to lower payroll and other compensation costs, including improved actuarial results from employee benefits optimization initiatives, as well as lower consulting costs.
Additionally, the company reported a decrease in interest expense by 9.5% to $33.3 million for the thirteen weeks ended August 2, 2025, compared with $36.8 million for the same period in 2024. This decrease was primarily driven by lower interest rates on the First Lien Term Loan during the thirteen and twenty-six week periods ended August 2, 2025.
Petco also highlighted the impact of the One Big Beautiful Bill Act (“OBBBA”) on its effective tax rates, resulting in income tax expense of $0.7 million and $1.2 million for the thirteen and twenty-six weeks ended August 2, 2025, respectively, compared to income tax benefit of $4.7 million and $9.1 million for the same periods in 2024.
As a result of these announcements, the company's shares have moved 23.53% on the market, and are now trading at a price of $3.99. If you want to know more, read the company's complete 10-Q report here.
