Petco Health 2026 Q1 Earnings Narrowed Losses Reflect Improved Profitability

Petco Health (WOOF) reported its fiscal 2026 Q1 earnings on Jun 06th, 2025. Despite facing challenges, the company narrowed its losses significantly, with a net loss reduction of 74.9% year-over-year, and earnings per share improving to a loss of $0.04 from a loss of $0.17 in the previous year. Petco maintained its fiscal 2025 guidance, anticipating net sales to decline by low single digits and adjusted EBITDA to range between $375 million and $390 million. The company successfully reduced its net loss, demonstrating better operational efficiency in a competitive pet market.

Revenue
Petco Health's total revenue declined by 2.3% to $1.49 billion in Q1 2026, compared to $1.53 billion in Q1 2025. The consumables segment contributed $748.07 million, while products generated $1.24 billion. Services and other added $251.51 million, and supplies and companion animals brought in $493.82 million. Overall, the company's segments collectively reflected a challenging market environment.

Earnings/Net Income
Petco Health saw a significant improvement in its earnings per share, narrowing losses to $0.04 per share in 2026 Q1 from a loss of $0.17 per share in 2025 Q1, marking a 76.5% improvement. This reduction reflects enhanced operational efficiency and cost management efforts by the company.

Post Earnings Price Action Review
The strategy of investing in Petco Health shares when revenues exceed expectations and holding for 30 days resulted in a poor performance, with a substantial loss of 82.68%. The analysis indicated a high-risk approach that underperformed significantly compared to the benchmark. The strategy's Sharpe Ratio stood at -0.55, and the maximum drawdown reached -92.54%, highlighting the volatility and lack of returns. This outcome suggests that investors should be cautious when adopting such strategies, as they involve substantial risk without the guarantee of rewards. The findings underline the importance of thorough market analysis and risk assessment before committing to investment strategies based on earnings expectations.

CEO Commentary
Joel D. Anderson, CEO & Director, expressed that Petco is focused on reinventing its brand and regaining market share in a fragmented pet market. He highlighted that the first quarter performance was in line with expectations, particularly in profitability, showcasing the team's commitment to delivering profitable sales growth. Anderson emphasized the ongoing efforts in Phases 1 and 2 of their strategy, which includes improving retail fundamentals and enhancing service offerings. He is optimistic about the team's ability to unlock Petco's full potential and noted that the positive momentum observed in Q1 strengthens his confidence in their strategic direction.

Guidance
For the full year 2025, Petco expects net sales to decline by low single digits, factoring in 20 to 30 net store closures. Adjusted EBITDA is projected to range between $375 million and $390 million. For the second quarter, net sales are anticipated to decrease low single digits compared to the previous year, with adjusted EBITDA estimated between $92 million and $94 million, marking an 11% year-over-year increase at the midpoint.

Additional News
In recent developments, Petco Health appointed Joe Venezia as Chief Revenue Officer, effective November 17, 2024. Venezia, bringing over 25 years of retail experience, will focus on driving revenue and enhancing customer experience. Additionally, Petco announced a partnership with Uber Eats to offer pet essentials through on-demand delivery from all Petco locations in the contiguous United States. This collaboration marks a significant expansion of Petco's digital footprint. Moreover, Petco has strengthened its leadership team with the appointment of Sabrina Simmons as Chief Financial Officer, Michael Romanko as Chief Customer and Product Officer, and Jack Stout as Chief Merchandising Officer, reflecting the company's commitment to enhancing its operational capabilities.