Petco’s first quarter results for 2025 prompted a significant negative market reaction, with investors responding to continued sales declines and lack of clear top-line progress. Management attributed the quarter’s performance to ongoing operational changes, including a renewed focus on retail fundamentals, product assortment resets in core categories, and cost efficiency efforts. CEO Joel Anderson emphasized the importance of “delivering profitable sales growth, while operating with discipline,” citing operational improvements in merchandising and services. CFO Sabrina Simmons highlighted early success in expanding gross margins and leveraging selling, general, and administrative expenses, while acknowledging that traffic softness continued to weigh on results.
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Petco (WOOF) Q1 CY2025 Highlights:
- Revenue: $1.49 billion vs analyst estimates of $1.5 billion (2.3% year-on-year decline, in line)
- Adjusted EPS: $0.02 vs analyst estimates of -$0.01 (significant beat)
- Adjusted EBITDA: $89.45 million vs analyst estimates of $80.68 million (6% margin, 10.9% beat)
- Revenue Guidance for Q2 CY2025 is $1.49 billion at the midpoint, below analyst estimates of $1.50 billion
- EBITDA guidance for the full year is $382.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 1.1%, up from -1.1% in the same quarter last year
- Locations: 1,393 at quarter end, down from 1,423 in the same quarter last year
- Same-Store Sales fell 1.3% year on year, in line with the same quarter last year
- Market Capitalization: $856.5 million
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Petco’s Q1 Earnings Call
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Sachin Verma (UBS) asked how pet adoption trends are influencing the outlook. CEO Joel Anderson responded that 2025 is a "self-help story" not dependent on industry growth, and current adoption rates remain stable.
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Simeon Gutman (Morgan Stanley) questioned the timing of visible benefits from brand and product assortment changes. Anderson acknowledged that while internal progress is underway, external impacts will not be seen until later in the year or in 2026.
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Steven Zaccone (Citi) sought clarification on gross margin expansion and the impact of category resets. CFO Sabrina Simmons said margin improvement remains a key goal, with category resets expected to benefit results in the second half of the year.
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Kaumil Gajrawala (Jefferies) probed for insights on consumer behavior across Petco’s divisions. Anderson emphasized that services are more resilient due to their needs-based nature, while discretionary categories remain under pressure.
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Peter Benedict (Baird) asked about inflation and price strategy. Anderson and Simmons explained that tariff impacts are embedded in guidance and pricing changes are made surgically at the SKU level to maintain competitiveness and customer value.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) early signs of traffic recovery and transaction growth following the completion of merchandising resets, (2) further progress on margin expansion and cost discipline through operational improvements, and (3) updates on loyalty programs and customer segmentation efforts as the company prepares for broader growth initiatives in 2026. The impact of ongoing tariff mitigation strategies and changes in consumer discretionary spending will also be important to track.
Petco currently trades at $3.05, down from $3.65 just before the earnings. Is the company at an inflection point that warrants a buy or sell? Find out in our full research report (it’s free).
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