Petco Health 2026 Q1 Earnings Narrowed Losses by 74.9%

Petco Health (WOOF) reported its fiscal 2026 Q1 earnings on June 5th, 2025. The company met expectations by narrowing its net loss by 74.9% to $11.66 million, showcasing significant improvement in profitability. Petco reaffirmed its guidance for fiscal 2025, projecting a low single-digit decline in net sales and adjusted EBITDA between $375 million and $390 million, indicating confidence in its strategic direction amid challenging market conditions.

Revenue
Petco Health's total revenue in Q1 2026 was $1.49 billion, marking a 2.3% decrease from $1.53 billion in Q1 2025. Revenue from product sales contributed significantly at $1.24 billion, while services and other offerings added $251.51 million to the total net sales figure.

Earnings/Net Income
Petco Health improved its earnings per share, reducing losses from $0.17 in Q1 2025 to $0.04 in Q1 2026, marking a 76.5% improvement. The company's narrowed net loss of $11.66 million highlights effective cost management and operational efficiencies.

Price Action
Petco Health's stock saw a slight decrease of 1.09% during the latest trading day, even as it climbed by 1.12% over the past week, reflecting a positive monthly performance with a 13.84% increase.

Post-Earnings Price Action Review
The strategy of buying WOOF shares when revenues exceed expectations and holding for 30 days has historically resulted in poor performance. A backtest indicated a significant loss of 82.59%, with a Sharpe Ratio of -0.55, pointing to unfavorable risk-adjusted returns. The strategy's high risk is further emphasized by a maximum drawdown of 92.54%, making it an ineffective approach. These metrics highlight the challenges investors face in timing the market for WOOF based on earnings performance, suggesting that alternative investment strategies might be necessary to achieve better returns.

CEO Commentary
Joel D. Anderson, CEO & Director, emphasized Petco's commitment to profitability and operational discipline, highlighting that Phase 1 of their strategy is complete. With a focus on optimizing product assortments and enhancing customer experience, Anderson remains optimistic about the company's transformative efforts and assured shareholders of a united leadership team.

Guidance
Petco Health expects a low single-digit decline in net sales for the full year 2025, with adjusted EBITDA projected between $375 million and $390 million. For Q2 2025, net sales are anticipated to decrease slightly year-over-year, while adjusted EBITDA is expected to rise approximately 11% at the midpoint, ranging between $92 million and $94 million.

Additional News
Petco Health recently strengthened its leadership team with the appointment of three experienced executives. Sabrina Simmons, former CFO at Gap, Inc., was named Chief Financial Officer, effective February 17, 2025. Michael Romanko, previously at Five Below, joined as Chief Customer and Product Officer, and Jack Stout, formerly of 7-Eleven, became Chief Merchandising Officer. These strategic hires are part of Petco’s ongoing efforts to enhance its leadership capabilities, drive profitability, and foster growth. The new team is expected to focus on reinforcing retail fundamentals and improving customer experience across Petco’s operations.