Petco (WOOF) Q2 Fiscal 2026 Earnings Call: Positive Comps, Guidance Reaffirmed
Source Tradingkey
Petco Q2 Fiscal 2026 Earnings Call Summary
Key Takeaways
- Petco (WOOF) reported Q2 fiscal 2026 net sales of $1.5 billion and comparable sales growth of 0.6%, marking its second consecutive quarter of positive comps.
- Adjusted EBITDA was $122 million, including a $6.8 million net tariff refund. Excluding that benefit, normalized adjusted EBITDA was $115 million, above the prior-year result and management’s outlook.
- Gross margin expanded 37 basis points to 39.7%. Excluding the tariff refund, the normalized gross margin rate was approximately flat year over year.
- Management reaffirmed full-year guidance for net sales ranging from flat to up 1.5% and adjusted EBITDA of $415 million to $430 million.
- Petco voluntarily repaid an additional $75 million of debt on September 1. Including this payment, debt reduction over the past nine months totaled $170 million.
- The Petco Perks relaunch generated higher-than-expected point redemptions, reducing Q2 sales by an estimated mid-single-digit millions. Management said peak redemption activity is now behind the company.
Core Financial Data
| Metric | Q2 fiscal 2026 result | Change or context |
|---|---|---|
| Net sales | $1.5 billion | Slightly higher year over year |
| Comparable sales | +0.6% | Second consecutive quarter of positive comps |
| Gross profit | $591 million | Included a $6.8 million net tariff refund |
| Gross margin | 39.7% | Up 37 basis points year over year; approximately flat excluding the tariff refund |
| SG&A | $543 million | 36.5% of net sales; up $1 million year over year |
| Operating profit | $48 million | Up from $43 million a year earlier |
| Operating margin | 3.2% | Up from 2.9% |
| Adjusted EBITDA | $122 million | 8.2% of net sales; included the tariff refund |
| Normalized adjusted EBITDA | $115 million | Excluded the tariff refund; above last year and management’s outlook |
| Ending inventory | Down 1% YoY | Followed a 9.5% decline in the prior-year period |
| Year-to-date free cash flow improvement | $51 million | Year-over-year increase |
| Cash balance | $293 million | More than $100 million higher year over year |
| Total liquidity | $781 million | At quarter-end |
| Total debt | $1.48 billion | Down $113 million year over year |
| U.S. store count | 1,377 | One net closure during Q2 |
Business and Operating Performance
Disclaimer: For information purposes only. Past performance is not indicative of future results.
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