Q1 2026 Petco Health and Wellness Company Inc Earnings Call Transcript
Key Points
- Petco Health and Wellness Co Inc (WOOF) returned to positive comparable sales growth in Q1 2026, with a 0.7% increase, indicating the effectiveness of their growth initiatives.
- The company saw strong performance in its differentiated services business, which continues to be a growth engine, particularly in grooming and veterinary services.
- Petco's consumables business showed improvement, with notable outperformance in the cat category, driven by strategic investments in product offerings.
- The company expanded its profitability, with a 21 basis point increase in gross margin to 38.4%, and a 50.5% improvement in operating profit compared to the previous year.
- Petco reaffirmed its full-year outlook, demonstrating confidence in its ability to drive consistent top-line results and maintain financial discipline despite a dynamic macro environment.
- Petco Health and Wellness Co Inc (WOOF) experienced a net sales increase of only 0.2% to $1.5 billion, reflecting modest growth.
- The company closed 16 net stores in 2025 and four net closures in Q1 2026, which impacted the spread between comp and net sales.
- First-quarter free cash flow was an outflow of $69 million, attributed to increased capital expenditures and inventory investments.
- Petco's market share has not yet started to gain, with the company focusing more on moderating market share decline rather than growth.
- The company faces challenges from external factors such as fuel prices and tariff policies, which could impact future financial performance.
Good day and welcome to Petco's first-quarter 2026 earnings conference call. (Operator Instructions) Please note this event is being recorded.
I would now like to turn the conference over to Roxanne Meyer, Vice President, Investor Relations and Treasury. Please go ahead.
Good afternoon, and welcome to Petco's first-quarter fiscal 2026 earnings conference call. Joining me on the call today are Joel Anderson, Petco's Chief Executive Officer; and Sabrina Simmons, Petco's Chief Financial Officer.
In addition to the earnings release, we've posted a slide presentation on our website at ir.petco.com.
I'd like to remind everyone that on this call, we will make certain forward-looking statements, which are subject to a number of risks and uncertainties that could cause actual results to differ materially from such statements. These risks and uncertainties include those set out in our earnings materials and SEC filings.
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