Pet-focused retailer Petco (NASDAQ: WOOF) met Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 2.4% year on year to $1.52 billion. The company expects next quarter’s revenue to be around $1.49 billion, close to analysts’ estimates. Its GAAP loss of $0.01 per share was $0.02 below analysts’ consensus estimates.
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Petco (WOOF) Q4 CY2025 Highlights:
- Revenue: $1.52 billion vs analyst estimates of $1.51 billion (2.4% year-on-year decline, in line)
- EPS (GAAP): -$0.01 vs analyst estimates of $0.01 ($0.02 miss)
- Adjusted EBITDA: $106.3 million vs analyst estimates of $94.16 million (7% margin, 12.9% beat)
- Revenue Guidance for Q1 CY2026 is $1.49 billion at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the upcoming financial year 2026 is $422.5 million at the midpoint, above analyst estimates of $414.3 million
- Operating Margin: 2.1%, in line with the same quarter last year
- Free Cash Flow Margin: 7.7%, up from 3.8% in the same quarter last year
- Same-Store Sales fell 1.6% year on year (0.5% in the same quarter last year)
- Market Capitalization: $655.3 million
"In fiscal 2025, we strengthened our leadership team and rebuilt the foundation of our economic model, enabling us to exceed our profitability goals," said Joel Anderson, Chief Executive Officer of Petco.
Company Overview
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ: WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Revenue Growth
A company’s long-term sales performance is one signal of its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years.
With $5.96 billion in revenue over the past 12 months, Petco is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, Petco struggled to increase demand as its $5.96 billion of sales for the trailing 12 months was close to its revenue three years ago. This was mainly because it closed stores.
This quarter, Petco reported a rather uninspiring 2.4% year-on-year revenue decline to $1.52 billion of revenue, in line with Wall Street’s estimates. Company management is currently guiding for flat sales next quarter.
Looking further ahead, sell-side analysts expect revenue to remain flat over the next 12 months. Although this projection indicates its newer products will fuel better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
Over the last two years, Petco has generally closed its stores, averaging 1.4% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Note that Petco reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer's e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Petco’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and Petco is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Petco’s same-store sales fell by 1.6% year on year. This performance was more or less in line with its historical levels.
Key Takeaways from Petco’s Q4 Results
We were impressed by how significantly Petco blew past analysts’ EBITDA expectations this quarter. We were also glad its EBITDA guidance for next quarter exceeded Wall Street’s estimates. On the other hand, its EPS was in line. Overall, this print had some key positives. The stock traded up 14.2% to $2.81 immediately after reporting.
Indeed, Petco had a rock-solid quarterly earnings result, but is this stock a good investment here? If you’re making that decision, you should consider the bigger picture of valuation, business qualities, as well as the latest earnings. We cover that in our actionable full research report which you can read here (it’s free).
