Petco EBITDA Jumps as Margins Expand
Petco Health and Wellness Company(NASDAQ:WOOF) reported results on July 29, 2025, with adjusted EBITDA reaching $114 million and operating income improved by over $40 million. Management raised full-year adjusted EBITDA (non-GAAP) guidance for fiscal 2025 (period ending Jan. 31, 2026) to a midpoint of $390 million, up approximately 16% year over year, while net sales (GAAP) declined 2.3% year over year due to strategic store closures and an exit from unprofitable sales, as the company progresses through the second phase of its transformation plan.
Gross margin increased by more than 120 basis points to 39.3% in the second quarter of 2025, driven by changes in promotional strategy, pricing discipline, and operational improvements in both products and services. The company closed 35 net stores from 2024 through the second quarter of 2025, reducing its U.S. store base to 1,388 locations at the end of the second quarter.
This deliberate reduction of unprofitable revenue channels in favor of margin expansion signals a business model reset, enhancing long-term earnings quality and lowering operating risk as the company manages for profitability rather than undisciplined growth.
Source Fool.com
