The specialty chain for pet products and services, Petco Health and Wellness Company, Inc., reported its financial results for the second quarter of fiscal year 2025, reflecting a decline in net sales but with notable improvements in profitability and operational efficiency. The company, which trades on Nasdaq under the symbol WOOF, reached revenues of $1.48 billion, a 2.3% year-over-year decrease, aligned with its forecasts.
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However, in contrast to the drop in sales, Petco achieved a net income of $13.9 million, reversing the $24.8 million loss recorded in the same quarter of 2024. This improvement is attributed to greater operational discipline, cost efficiency, and strategies aimed at strengthening its economic model.
How did Petco’s earnings and margins evolve?
The quarter showed a gross margin increase of 120 basis points, reaching 39.3% of net sales. Additionally, adjusted EBITDA rose to $113.9 million, representing growth of more than $30 million compared to the second quarter of the previous year. The adjusted EBITDA margin rose to 7.6%, compared to 5.5% last year, reflecting a substantial improvement in the brand’s operating profitability.
These results allowed the company to raise its full-year earnings outlook, despite maintaining conservative expectations regarding sales performance, which are expected to continue showing slight declines.
What role does Mexico play in Petco’s financial performance?
One of the most relevant aspects of the report is the specific mention of operations in Mexico, which continues to have a strategic weight within Petco’s global structure. The company highlights the results of its joint venture in Mexico, which contributed $10.36 million to the adjusted EBITDA for the quarter (equivalent to 50% of the joint venture’s net income).
This participation represents a significant portion of the total financial improvement and reaffirms the importance of the Mexican market within Petco’s ecosystem, not only in volume but in profitability. The brand continues to expand its physical and digital presence in the country, strengthening its connection with local consumers through comprehensive services, adoptions, and specialized guidance.
How do economic conditions and tariffs affect Petco?
In its report, the company clarifies that its financial projections for the third quarter and the end of 2025 assume that import tariffs from China and other countries will not increase. Any changes in this policy could affect operating and sourcing costs, representing a significant external risk factor for the company.
Petco also mentions that its estimates rely on the stability of economic, exchange rate, and regulatory conditions in the markets where it operates, including the United States and Mexico.
What strategies are driving Petco’s brand transformation?
Joel Anderson, CEO of Petco, emphasized that the results of the first half of 2025 represent a solid foundation for the company’s transformation, which seeks to establish itself as a leader in the pet market, a sector that continues to grow globally.
Petco not only operates more than 1,500 stores in the United States, Mexico, and Puerto Rico, but also drives a robust digital ecosystem through its website and mobile app. Added to this are initiatives like Petco Love, a foundation that has helped more than 7 million animals find a home, thereby reinforcing its emotional connection with consumers.
The company continues to invest in customer experience, innovation in veterinary services, and loyalty programs, with the goal of achieving profitable and sustainable growth.
