Petco Margin Grows Despite Sales Drop
Petco Health and Wellness (NASDAQ:WOOF) reported first quarter 2025 earnings on June 5, with net sales declining 2.3% year over year and comparable sales down 1.3%, while gross margin expanded 30 basis points year over year to 38.2%. Adjusted EBITDA rose $13.8 million for the quarter to $89.4 million (6% of sales), demonstrating material profitability improvement despite continued top-line headwinds and active cost management initiatives.Store count totaled 1,393 after 30 net closures over the last six quarters, with average unit cost (AUC) discipline and markdown optimization driving a 30 basis point gross margin improvement. SG&A discipline yielded more than 180 basis points of expense leverage, or approximately 60 basis points excluding last year's disposition costs, indicating operational streamlining amidst tepid demand.The demonstrable margin improvement (gross margin rate expanded to 38.2%) amid lower net sales (down 2.3%) reflects effective operational execution and provides evidence that structural cost and margin initiatives are contributing to earnings durability, even as revenue remains challenged.Continue reading
Petco Health and Wellness (NASDAQ:WOOF) reported first quarter 2025 earnings on June 5, with net sales declining 2.3% year over year and comparable sales down 1.3%, while gross margin expanded 30 basis points year over year to 38.2%. Adjusted EBITDA rose $13.8 million for the quarter to $89.4 million (6% of sales), demonstrating material profitability improvement despite continued top-line headwinds and active cost management initiatives.
Store count totaled 1,393 after 30 net closures over the last six quarters, with average unit cost (AUC) discipline and markdown optimization driving a 30 basis point gross margin improvement. SG&A discipline yielded more than 180 basis points of expense leverage, or approximately 60 basis points excluding last year's disposition costs, indicating operational streamlining amidst tepid demand.
The demonstrable margin improvement (gross margin rate expanded to 38.2%) amid lower net sales (down 2.3%) reflects effective operational execution and provides evidence that structural cost and margin initiatives are contributing to earnings durability, even as revenue remains challenged.
