Pet-focused retailer Petco (NASDAQ:WOOF) met Wall Street’s revenue expectations in Q2 CY2026, but sales were flat year on year at $1.49 billion. Its GAAP profit of $0.13 per share was significantly above analysts’ consensus estimates. The company reaffirmed its full year net sales and adjusted EBITDA outlook.
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Petco (WOOF) Q2 CY2026 Highlights:
- Revenue: $1.49 billion vs analyst estimates of $1.49 billion (flat year on year, in line)
- EPS (GAAP): $0.13 vs analyst estimates of $0.05 (significant beat)
- Adjusted EBITDA: $122.2 million vs analyst estimates of $110.2 million (8.2% margin, 10.9% beat)
- Revenue Guidance for Q3 CY2026 is $1.47 billion at the midpoint, slightly below analyst estimates of $1.48 billion
- EBITDA guidance for the full year is $422.5 million at the midpoint, in line with analyst expectations
- Operating Margin: 3.2%, in line with the same quarter last year
- Free Cash Flow Margin: 8.7%, up from 3.6% in the same quarter last year
- Same-Store Sales were flat year on year (-1.4% in the same quarter last year)
- Market Capitalization: $736.8 million
Joel Anderson, Chief Executive Officer of Petco, stated, "We delivered stronger than expected profitability in the quarter while achieving our second consecutive quarter of positive comps. We were pleased to see growth in consumables, which highlights that our 'Reach for the Sky' strategy is gaining traction. Looking ahead to the second half, we are positioned to benefit from several growth drivers and are pleased to reaffirm our full-year sales and profitability outlook. We remain confident in our ability to generate sustainable, long-term growth."
Company Overview
Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.
Revenue Growth
A company’s long-term performance is an indicator of its overall quality. Any business can put up a good quarter or two, but the best consistently grow over the long haul.
With $5.97 billion in revenue over the past 12 months, Petco is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.
As you can see below, Petco struggled to generate demand over the last three years. Its sales dropped by 1.1% annually as it closed stores.
This quarter, Petco’s $1.49 billion of revenue was flat year on year and in line with Wall Street’s estimates. Company management is currently guiding for a 70% year-on-year increase in sales next quarter.
Looking further ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months. While this projection suggests its newer products will fuel better top-line performance, it is still below the sector average.
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Store Performance
Number of Stores
A retailer’s store count often determines how much revenue it can generate.
Petco has generally closed its stores over the last two years, averaging 1.6% annual declines.
When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.
Note that Petco reports its store count intermittently, so some data points are missing in the chart below.
Same-Store Sales
A company’s store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales gives us insight into this topic because it measures organic growth for a retailer’s e-commerce platform and brick-and-mortar shops that have existed for at least a year.
Petco’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and Petco is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).
In the latest quarter, Petco’s year on year same-store sales were flat. This performance was more or less in line with its historical levels.
Key Takeaways from Petco’s Q2 Results
It was good to see Petco beat analysts’ EPS expectations this quarter. We were also excited its EBITDA outperformed Wall Street’s estimates by a wide margin. Overall, we think this was a decent quarter with some key metrics above expectations. The stock traded up 10.3% to $2.90 immediately following the results.
Indeed, Petco had a rock-solid quarterly earnings result, but is this stock a good investment here? What happened in the latest quarter matters, but not as much as longer-term business quality and valuation, when deciding whether to invest in this stock. We cover that in our actionable full research report which you can read here (it’s free).