Petco Q1 Sales up 0.2% With 21bp Margin Gain, EBITDA Rising to $97m
WOOF•Petco posted Q1 net sales of $1.5 billion, up 0.2% with comps +0.7%, gross margin up 21bps to 38.4% and operating income jumping 50.5% to $24.6 million. Adjusted EBITDA rose to $97.3 million, debt dropped to $1.482 billion and FY26 outlook was reaffirmed at flat to +1.5% net sales and $415–430 million EBITDA.
1. Q1 Financial Performance
Petco posted net sales of $1.5 billion in Q1, up 0.2% year-over-year, with comparable sales growth of 0.7%. Gross profit climbed to $574.4 million, lifting gross margin by 21 basis points to 38.4%, while operating income surged 50.5% to $24.6 million despite a net loss of $15.1 million.
2. Balance Sheet and Cash Flow
Ending cash increased by $33.5 million to $166.8 million, while inventory declined 1.9% year-over-year. Free cash flow was negative $69.1 million and cash used in operations totaled $31.0 million, as total debt fell to $1.482 billion from $1.593 billion a year earlier.
3. Reaffirmed FY26 and Q2 Guidance
Management reaffirmed full-year 2026 net sales flat to +1.5% and adjusted EBITDA between $415 million and $430 million, with capital expenditures of $140 million and 15–20 net store closures expected. Q2 outlook calls for net sales growth of about 0.3% and adjusted EBITDA of $110 million to $112 million.
