In the third quarter of fiscal year 2025, Petco continued to demonstrate steady progress in its multi-phase transformation strategy aimed at revitalizing growth and profitability. Despite a slight decline in net sales, the pet specialty retailer reported improved financial outcomes that mark significant strides toward a stronger operational foundation.
Financial Highlights and Profitability Gains
For the 13-week period ending November 1, 2025, Petco reported net sales of $1.46 billion, representing a 3.1% decrease compared to $1.51 billion in the prior year. Comparable sales also dipped by 2.2% year-over-year. Gross profit slightly contracted to $569 million, down 1.2% from $576 million last year.
However, the company turned a notable corner by posting a GAAP net income of $9.3 million, flipping from a net loss of $16.7 million in the same quarter of the previous year. Operating income rose to $29.2 million compared to a loss of approximately $4 million the year before. Adjusted EBITDA surged 21.3%, climbing to $98.6 million from $81.3 million, underscoring improved operational efficiency and cost management.
Driving the decreased expenses was a 5.6% reduction in selling, general and administrative expenses, falling to $540 million from $572 million the year prior. These financial improvements reflect the effectiveness of the company’s restructuring efforts and tighter financial discipline.
Strategic Transformation: Phase Two Progressing Toward Phase Three
CEO Joel Anderson highlighted in the company’s earnings call on November 25 that Petco remains firmly on track within phase two of its transformation journey. This phase emphasizes bolstering profitability and reinforcing foundational business aspects to support long-term growth.
A pivotal element of this transformation has been cultivating a company culture centered on financial rigor, accountability, and a winning mindset. Over the past nine months, these cultural enhancements have helped the organization better align around its strategic objectives and operational execution.
With this foundation strengthened, Petco is shifting focus toward phase three, which prioritizes reigniting growth. Anderson shared that resources are now being strategically allocated to initiatives that will drive revenue expansion after several years of repositioning.
Key Growth Pillars Shaping the Road Ahead
Looking forward, Petco has identified four core pillars that will underpin its return to growth. These include:
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Product and Merchandise Differentiation
Emphasizing unique and compelling product offerings that set Petco apart in the competitive pet retail market. -
Trusted Store Experience
Continually enhancing in-store environments to build customer trust and engagement. -
Integrated Service at Scale
Scaling service offerings seamlessly across different channels to meet diverse customer needs. -
Seamless Omnichannel Experience
Providing customers with smooth and consistent shopping experiences whether online, in-store, or a blend of both.
These strategic focus areas are intended to drive sustainable growth and improve customer loyalty in the evolving pet retail landscape.
Q4 and Full-Year Outlook
For the fourth quarter, Petco anticipates a modest decline in net sales in the low single-digit range year-over-year. Adjusted EBITDA for the quarter is forecasted between $93 million and $95 million. For the full year 2025, the company projects net sales to decrease by approximately 2.5% to 2.8%, with adjusted EBITDA expected between $395 million and $397 million.
While some market challenges persist, the improved profitability and operational discipline achieved in 2025 have set a solid foundation. Petco’s management remains confident that these efforts will enable a robust growth trajectory in fiscal year 2026 and beyond.
Conclusion
Petco’s third-quarter results reflect a company actively reshaping itself through thoughtful transformation initiatives. By addressing cost structures, reinforcing cultural alignment, and strategically reallocating resources toward growth drivers, Petco is positioning itself to compete more effectively in the dynamic pet retail sector. As it moves into the next phase of its journey, investors and industry watchers will be closely observing how these foundational advances translate into sustained revenue growth and market share gains in the years ahead.
