Net sales slow for Petco

SAN DIEGO — Petco’s consumables category continues to lead for the retailer, representing 49% of total net sales, despite a steady decrease. The retailer shared this and more in its second quarter financial performance for the 13 week period ended Aug. 2.

Net sales for consumables in the second quarter were $730 million, a 2.01% decrease from $745 million in the second quarter of 2024 and a 2.41% decrease from $748 million from the first quarter of 2025. According to Petco, consumables actually performed better in-store, reflecting continued improvements in strategy. 

“Consumables performance in stores is stronger than the total reported figure as underlying improvements in stores is offset by the softness in e-commerce as we retool that channel,” shared Joel Anderson, chief executive officer of Petco during the company’s earnings call on Aug. 28. 

Speaking of retail strategy, Petco is focused on improving its physical store fleet and has closed 10 stores so far this year. The retailer is also focusing on e-commerce in an effort to enhance its omnichannel customer experience. 

“We recently welcomed a new leader for our e-commerce channel, and he has already identified several opportunities,” Anderson said. “I look forward to spending more time personally with the digital team to eliminate barriers and drive improvements with the goal of delivering a seamless omni experience that our customers are excited about. And we can then increase our marketing efforts to invite new customers back to petco.com.”

As part of this, Petco is focused on merchandising and plans to reinvent its overall product offerings by bringing in “product newness,” including a whole new category of pet-themed products.

“Merchandising excellence remains at the forefront of our work. You’ve heard me talk about allocating more space to our higher productivity SKUs, adding capacity on shelf and improving end-cap displays, all of which just launched over the last few months and are contributing to improved store performance,” Anderson shared. 

“We launched our very first product category aimed at humans online and in-stores selectively in response to a customer survey where 90% of our pet parents shared that they are interested in buying pet-themed products. Price under $20, products are designed to be giftable, affordable, and impulse worthy, celebrating the bond between pets and the people who love them,” he added. “This is just one example of the merchandise overhaul we are making to reinvent Petco’s overall product offering. Over time, you will begin to see newness throughout our entire assortment that will differentiate us from others and surprise our customers with unexpected ideas for their pets.”

Overall, net sales for the second quarter were reported at $1.49 billion, a 2.3% decrease from $1.52 billion in the prior year period. Comparable sales decreased 1.4%. Within net sales, product sales were $1.23 billion, a 2.38% decrease from $1.26 billion. Gross profit was $585.32 million, a 0.79% increase from $580.73 million. 

Selling, general and administrative (SG&A) expenses were $542.30 million, a 6.22% decrease from $578.26 million. Operating income was $43.02 million, a whopping 1,641% increase from $2.47 million in the prior year period. Adjusted EBITDA was $113.9 million, a 33.19% increase from $85.52 million.

Net sales for first half of the year were reported at $2.98 billion, a 2.29% decrease from $3.05 billion in the prior year period. Product sales were $2.47 billion, a 2.76% decrease from $2.54 billion. Gross profit was $1.15 billion, a slight 0.86% decrease from $1.16 billion. 

Selling, general and administrative (SG&A) expenses were $1.10 billion, a 5.98% decrease from $1.17 billion. Operating income was $59.38 million, a complete turnaround from a loss of $14.31 million in the prior year period. Adjusted EBITDA was $203.31 million, a 27.73% increase from $159.17 million.

“For the second quarter, we once again delivered against our commitments, enabling us to raise our earnings outlook for the full year,” Anderson said. “The first half of this year established a solid foundation for our transformation as we continued to strengthen our economic model and improve retail operating fundamentals. As we look ahead to the remainder of this year, we will continue to execute on our objectives while also leaning into select targeted investments that we believe will help set the stage for a return to sustainable profitable growth.”

In addition to its latest performance, Petco also shared its outlook for the third quarter and fiscal year. For the third quarter, the retailer expects net sales to be down by low single digits year-over-year and adjusted EBITDA is expected to be between $92 million and $94 million. 

For the rest of the fiscal 2025 year, net sales are expected to be down low single digits year-over-year, adjusted EBITDA is expected to be between $385 million and $395 million. Capital expenditures are expected eo be between $125 million and $130 million. Additionally, Petco also noted it expects about 25 net store closures for the entire year. 

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