Petco Health and Wellness Company reported third‑quarter 2025 results on November 25, 2025, with net sales of $1.46 billion—a 3.1% year‑over‑year decline—and adjusted EBITDA of $99 million, up 21% from $81.2 million in Q3 2024. Earnings per share were $0.03, beating the consensus estimate of $0.02 by $0.01, or 50% of the expected earnings.
Gross and operating margins expanded sharply. Gross margin rose to 38.9%, an increase of 75 basis points, while operating margin climbed 170 basis points, reflecting disciplined cost control, pricing power in the services segment, and a favorable mix shift toward higher‑margin services and other offerings. The margin lift helped offset the revenue decline and contributed to the earnings beat.
Management guided for a full‑year 2025 net sales decline of 2.5%–2.8% and an adjusted EBITDA range of $395 million to $397 million, up from the prior outlook of $395 million to $397 million. For the fourth quarter, the company projected net sales down low single digits year‑over‑year and adjusted EBITDA of $93 million to $95 million, signaling confidence in maintaining profitability while navigating sales headwinds.
Segment performance showed consumables and supplies revenue falling, while services and other revenue grew, supporting the margin expansion. Petco also reported nine net store closures year‑to‑date, bringing the U.S. store count to 1,389. The store reduction is part of the company’s transformation strategy to focus on higher‑margin services and digital channels.
CEO Joel Anderson emphasized that the quarter delivered on profitability goals and that disciplined expense management and a stronger services mix are key to the turnaround. CFO Sabrina Simmons noted that tariffs are beginning to impact cost of goods sold, with a larger effect expected in Q4, but that operating margin expansion and cash‑flow improvements remain on track.
After the release, the company’s shares rose between 6.45% and 13.3% in after‑hours trading, driven by the EPS beat, margin expansion, and the raised full‑year EBITDA outlook, underscoring investor confidence in Petco’s execution of its transformation plan.
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