Petco reported first-quarter results Tuesday that showed a return to positive comparable sales growth but a wider net loss than the same period a year ago, sending Petco stock lower after the report.
The company posted net sales of $1.5 billion for the quarter ended May 2, up 0.2% from a year earlier, with comparable sales rising 0.7%. Petco recorded a net loss of $15.1 million, compared with a net loss of $11.7 million in the first quarter of 2025.
On an adjusted basis, the company earned $0.01 per share, topping the Zacks consensus estimate, which had called for a loss of $0.02 per share, according to Yahoo Finance. The quarter's $1.5 billion in revenue came in 0.66% above the Zacks consensus estimate. However, Investing.com reported the company missed earnings estimates by $0.06.
At the gross level, profit reached $574.4 million as margin widened by 21 basis points to 38.4%. A 50.5% jump in operating income brought that figure to $24.6 million. Adjusted EBITDA of $97.3 million represented an 8.8% increase from $89.4 million in the prior-year period. At quarter's end, the company operated 1,378 U.S. locations, a net reduction of four stores during the period.
CEO Joel Anderson attributed the results to the company's "Reach for the Sky" strategy, pointing to improvement in the consumables business and continued strength in services. "Our strong first-quarter results, highlighted by positive comparable sales and profitability that exceeded our outlook, provide clear, early validation that our Phase 3 'Reach for the Sky' strategy is working," Anderson said in a statement.
Store closures accounted for the divergence between comparable and total sales figures, CFO Sabrina Simmons explained, with 16 locations closed on a net basis in fiscal 2025 and an additional four shut in the most recent quarter. Free cash flow was an outflow of $69.1 million, compared with an outflow of $43.9 million a year earlier. Total debt fell to $1.482 billion from $1.593 billion in the year-ago period.
Petco reaffirmed its full-year 2026 outlook, projecting net sales flat to up 1.5% year over year and adjusted EBITDA of $415 million to $430 million. For the second quarter, the company projected net sales growth of about 0.3% year over year and adjusted EBITDA of $110 million to $112 million. The company said it plans to close 15 to 20 net stores for the full year.