Petco Health & Wellness Company, Inc.
For the period ended Jan 31, 2026. Filed Mar 13, 2026.
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A company's yearly report to the SEC, with audited financial statements. It is the fullest account a company gives of its business, its finances and the risks it sees.
FY2026 · Filed Mar 13, 2026
WOOF$2.96-0.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-K
Period ended 2025-02-01; filed 2025-03-31.
0000950170-25-047693
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-K
Period ended 2026-01-31; filed 2026-03-13.
0001193125-26-106114
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 169 previous paragraphs and 169 current paragraphs.
110 unchanged; 45 reworded; 10 added; 14 removed; 0 previous and 4 current paragraphs rearranged.
Tables are not compared: 9 previous and 9 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (10)
Current report
In 2025, with new leadership in place, we embarked on a purposeful strategy to sharpen our fundamentals with a specific focus on driving improved profitability and cash flow. This strategy is anchored upon four key pillars: providing a trusted store experience for our customers; offering new, trend-driven products that complement our evergreen assortment; scaling our unique and competitively differentiated services offering; and powering it all with an integrated omni-channel experience driven by a revamped membership offering, repeat delivery, and seamless digital-to-store engagement.
Current report
Income Tax Expense (Benefit)
Current report
As a percentage of net sales, SG&A expenses decreased from 37.9% in fiscal 2024 to 36.6% in fiscal 2025. The decrease in SG&A expenses between the periods was primarily due to lower payroll and other compensation costs, which included improved actuarial results from employee benefits optimization initiatives, as well as lower consulting costs. In addition, the Company incurred disposition costs relating to its Pupbox business during fiscal 2024.
Current report
Other Non-Operating Income
Current report
Income Tax Expense (Benefit)
Current report
On July 4, 2025, the One Big Beautiful Bill Act (“OBBBA”) was signed into law. OBBBA introduces significant changes to U.S. income-tax legislation. Key provisions affecting the Company include (i) 100 percent bonus depreciation for qualified property placed in service after January 19, 2025, (ii) immediate expensing of domestic research and experimental expenditures starting January 1, 2025, and (iii) an increase to the cap on the deductibility of business interest expense for taxable years starting after December 31, 2024. These provisions did not have a material impact to income taxes in our financial statements for fiscal 2025.
Current report
On February 2, 2026, the Company entered into an amendment to the First Lien Term Loan (“Amended First Lien Term Loan”) and issued $600.0 million in aggregate principal amount of senior secured notes (the “Senior Secured Notes”). Following the amendment, $900.0 million of principal remained on the Amended First Lien Term Loan.
Current report
Senior Secured Notes
Current report
The Senior Secured Notes bear interest at 8.25% per annum and mature on February 1, 2031. The Company issued the Senior Secured Notes pursuant to an indenture, dated as of February 2, 2026 (the “Indenture”). The Indenture contains covenants that, among other things, restrict the Company’s ability and the ability of its restricted subsidiaries to: incur additional indebtedness or guarantee indebtedness; pay dividends or make other distributions in respect of, or repurchase or redeem, capital stock; issue certain preferred stock or similar equity securities; make loans and investments; sell or otherwise dispose of assets; incur liens; enter into transactions with affiliates, enter into agreements restricting our subsidiaries’ ability to pay dividends; and consolidate, merge, or sell all or substantially all assets. These restrictions, however, are subject to a number of important exceptions and qualifications.
Current report
The Indenture also provides that the Senior Secured Notes may become subject to redemption under certain circumstances, including a change of control (as defined in the Indenture) of the Company. Prior to February 1, 2028, the Company may, at its option, redeem the Senior Secured Notes in whole or in part, at a redemption price equal to 100% of the principal amount of the Senior Secured Notes being redeemed plus the make-whole premium set forth in the Indenture, together with accrued and unpaid interest. On and after February 1, 2028, the Company may, at its option, redeem the Senior Secured Notes in whole or in part, at certain redemption prices (expressed as percentages of the principal amount thereof) set forth in the Indenture, together with accrued and unpaid interest.
Removed paragraphs (14)
Previous report
Our interest expense in fiscal 2022 was primarily associated with a first lien term loan facility and a revolving credit facility. In November 2022, we entered into a series of interest rate cap agreements to limit the maximum interest on a portion of our variable-rate debt and decrease our exposure to interest rate variability. In December 2022, we amended our first lien term loan facility and our revolving credit facility to replace the LIBOR-based rate with a SOFR-based rate as the interest rate benchmark. Refer to the discussion under “Liquidity and Capital Resources—Sources of Liquidity” for further information.
Previous report
Our interest expense in fiscal 2024 was primarily associated with a first lien term loan facility, a revolving credit facility, an interest rate swap, and interest rate caps and collars. During fiscal 2024, we entered into an interest rate collar agreement and an interest rate swap agreement to limit the maximum interest and to fix the interest on a portion of our variable-rate debt and decrease our exposure to interest rate variability. Refer to the discussion under “Liquidity and Capital Resources—Sources of Liquidity” for further information.
Previous report
Income Tax (Benefit) Expense
Previous report
Net Loss Attributable to Noncontrolling Interest
Previous report
The noncontrolling interest represents 50% of the net loss of our veterinary joint venture, which was a variable interest entity for which we were deemed to be the primary beneficiary. In May 2022, the Company completed the purchase of the remaining 50% of the issued and outstanding membership interests of the joint venture, which is now a wholly owned subsidiary of the Company.
Previous report
SG&A expenses increased $5.7 million, or 0.2%, to $2.32 billion for fiscal 2024 compared to $2.31 billion for fiscal 2023. As a percentage of net sales, SG&A expenses increased from 37.0% in fiscal 2023 to 37.9% in fiscal 2024. The increase in SG&A expenses period-over-period was to support our growth as we continue to invest in infrastructure and our people. The increase included higher payroll, fringe benefits, incentive compensation, and consulting fees associated with our ongoing transformation efforts, which were partially offset by a decrease in stock compensation and advertising expenses.
Previous report
Goodwill Impairment
Previous report
In fiscal 2023, the Company recorded a pre-tax goodwill impairment charge of $1.22 billion as a result of performing an interim impairment test due to the identification of certain triggering events. There was no goodwill impairment charge recorded in fiscal 2024. For more information refer to Note 6,"Goodwill," to the Notes to Consolidated Financial Statements included in Part II, Item 8 of this of this Annual Report on Form 10-K.
Previous report
Other Non-Operating (Income) Loss
Previous report
Income Tax (Benefit) Expense
Previous report
Net (Loss) Income Attributable to Class A and B-1 Common Stockholders
Previous report
Net loss attributable to Class A and B-1 common stockholders was $101.8 million for fiscal 2024 compared with a net loss attributable to Class A and B-1 common stockholders of $1,280.2 million for fiscal 2023. The change period-over-period was primarily driven by a goodwill impairment charge of $1,222.5 million in fiscal 2023.
Previous report
The decrease in capital expenditures between fiscal 2023 and fiscal 2022 was primarily driven by reductions in capital spend partially offset by proceeds received from the sale of our investment in Rover Group, Inc. Additionally, in fiscal 2022, we paid $35.0 million for the remaining 50% stake in our veterinary joint venture.
Previous report
Financing cash flows in fiscal 2022 primarily consisted of borrowings and repayments under the ABL Revolving Credit Facility, quarterly term loan repayments, and payments for tax withholdings on stock-based awards.
Reworded paragraphs (45)
Previous wording
Petco Health and Wellness Company, Inc. (“Petco”, the “Company”, “we”, “our” and “us”) is a pet specialty retailer focused on improving the lives of pets, pet parents, and our own partners. Through our omnichannel ecosystem, we provide our customers with a comprehensive offering of products and services to fulfill their pets’ needs through our more than 1,500 pet care centers in the U.S., Mexico, and Puerto Rico, including a network of in-store veterinary hospitals, our digital channel, and our flexible fulfillment options.
Current wording
Petco Health and Wellness Company, Inc. (“Petco”, the “Company”, “we”, “our” and “us”) is a leading pet specialty retailer focused on improving the lives of pets, pet parents, and our own partners. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico, Puerto Rico, and Chile.
Previous wording
Our multicategory strategy integrates our digital assets with our nationwide physical footprint to meet the needs of pet parents who are looking for a single source for all their pets' needs. Our e-commerce site and mobile app serve as hubs for pet parents to manage their pets’ needs, while enabling them to shop wherever, whenever, and however they want.
Current wording
Our multicategory strategy integrates our digital assets with our nationwide physical footprint to meet the needs of pet parents who are looking for a single source for all their pets’ needs. Petco.com, our e-commerce site, and the Petco app, our personalized mobile app, together serve as hubs for pet parents to book appointments and manage all of their pets’ needs, while enabling them to shop wherever, whenever, and however they want. We are focused on continually improving both our digital capabilities as well as our membership offering.
Previous wording
We strive to be a company that is improving millions of pet lives as well as the lives of pet parents and the partners who work for us. In tandem with Petco Love, a life-changing independent nonprofit organization, we work with and support thousands of local animal welfare groups across the country and, through in-store adoption events, we have helped find homes for nearly 7 million animals.
Current wording
We strive to be a company that is improving millions of pet lives as well as the lives of pet parents and the partners who work for us. In tandem with Petco Love, an independent 501(c)(3) nonprofit organization, we work with and support thousands of local animal welfare groups nationwide and, through these partnerships and in-store adoption events, we have helped find homes for over 7 million animals.
Previous wording
Our product offering leverages a broad assortment of national, owned brand, and exclusive merchandise, providing customers with a wide variety of nutritional options, including health-focused options free from artificial ingredients, complemented by a wide variety of pet care supplies and companion animals. While we offer pet parents a full spectrum of product choices, we maintain a number of premium products to address ongoing humanization and premiumization trends in the market. We integrate our product offering with our services business which includes veterinary care, grooming and training. Leveraging our experience in Vetco mobile clinics, we operate a network of full service, general practice veterinary hospitals complemented by prescription, and insurance offerings. We are increasingly linking our offerings with membership programs such as Vital Care Premier and pet health insurance in an effort to create deeper engagement with our customers, and with our Vital Care Core loyalty program members specifically, which members accounted for over 90% of transactions in fiscal 2024. Further enhancing the customer experience, our over 26,000 knowledgeable, passionate partners in our pet care centers provide important high-quality advice to our customers.
Current wording
Our product offering leverages a broad assortment of national brands, owned brands, and exclusive merchandise, providing customers with a wide variety of nutritional options at a range of price points. Our product offering is complemented by a wide variety of pet care supplies and companion animals. We integrate our product offering with our services business, comprised of veterinary care, grooming, and training, with a focus on treating the whole pet, including their physical, mental, and social well-being. Further enhancing the customer experience, our over 26,000 knowledgeable, passionate partners in our pet care centers provide important high-quality advice to our customers.
Previous wording
Macroeconomic factors, including rising interest rates, inflationary pressures, supply chain constraints, tariffs, and global economic and geopolitical developments have had varying impacts on our results of operations, such as decreases in sales of discretionary items like supplies, that are difficult to isolate and quantify. We cannot predict the duration or ultimate severity of these macroeconomic factors or the ultimate impact on our operations and liquidity. For more information regarding certain risks associated with these macroeconomic factors, please refer to the risk factors in Part I, Item 1A, "Risk Factors" of this Form 10-K.
Current wording
Macroeconomic factors, including interest rates, potential inflationary pressures, supply chain constraints, tariffs, and global economic and geopolitical developments, including geopolitical conflicts and tensions, have had varying impacts on our results of operations that are difficult to isolate and quantify. We cannot predict the duration or ultimate severity of these macroeconomic factors or the ultimate impact on our operations and liquidity. Please refer to the risk factors in Part I, Item 1A, "Risk Factors" of this Form 10-K.
Previous wording
Comparable sales allow us to evaluate how our overall ecosystem is performing by measuring the change in period-over-period net sales from locations and digital sites that have been open for the applicable period. We intend to improve comparable sales by continuing initiatives aimed to increase customer retention, frequency of visits, and basket size. General macroeconomic and retail business trends are also a key driver of changes in comparable sales.
Current wording
Comparable sales allow us to evaluate how our overall ecosystem is performing by measuring the change in period-over-period net sales from locations and digital sites that have been open for the applicable period. General macroeconomic and retail business trends are also a key driver of changes in comparable sales.
Previous wording
The U.S. pet care industry is large, serving millions of households with pets, and has exhibited steady growth driven by an increase in the pet population and trends in pet humanization and premiumization. Due to the essential, repeat nature of pet care, the industry has demonstrated resilience across economic cycles. However, during fiscal 2024, we continued to observe a softening discretionary spend and shifting consumer preferences for more value-centric products associated with the current inflationary macroeconomic environment. In response to this shifting demand, we have broadened our assortment to include more national brands and implemented strategic pricing actions to offer more balanced price points in an effort to appeal to a broader base of consumers.
Current wording
The U.S. pet care industry is large, serving millions of households with pets, and has exhibited healthy growth over time driven by an increase in the pet population and ongoing trends in pet humanization and premiumization. Due to the essential, repeat nature of pet care, the industry has demonstrated resilience across economic cycles.
Previous wording
Our multi-channel ecosystem is designed to support our customers regardless of how customers choose to shop for their pet care needs. As we saw the major purchase trend shift and grow into areas like e-commerce, services, and veterinary care, we actively invested to build capabilities and offerings to effectively capitalize on the opportunity. Our business will be impacted by our ability to continue to understand and timely react to changing customer purchase trends.
Current wording
Our multi-channel ecosystem is designed to support our customers regardless of how customers choose to shop for their pet care needs. As we saw the major purchase trend shift and grow into areas like e-commerce, services, and veterinary care, we actively invested to build capabilities and offerings to capitalize on the opportunity. Our business will be impacted by our ability to continue to understand and timely react to changing customer purchase trends.
Previous wording
Our business is impacted by our ability to successfully attract new customers to any one of our channels, build their loyalty to encourage return visits, and expand their spend with Petco across multiple purchase channels (e.g., pet care centers, e-commerce, and services) and categories (e.g., pet food, supplies, and companion animals). This is the primary focus of our customer engagement efforts from digital, to performance marketing campaigns, to new product introductions, and to Petco partner cross- and up-selling activities in pet care centers. The ability to convert more of our customers to loyal, multi-channel shoppers will positively affect business performance.
Current wording
Our business is impacted by our ability to successfully attract new customers to any one of our channels, build their loyalty to encourage return visits, and expand their spend with Petco across multiple purchase channels (e.g., pet care centers, e-commerce, and services) and categories (e.g., pet food, supplies, and companion animals). This is the primary focus of our customer engagement efforts from our differentiated digital engine, to marketing campaigns, and to new product introductions. The ability to convert more of our customers to loyal, multi-channel shoppers will positively effect business performance.
Previous wording
We have made significant investments to support our innovation and business transformation strategies. These investments have included: expansion of our veterinary footprint, digital and e-commerce integration and expansion; enhanced supply chain capacity including additional distribution centers; data analytical capabilities; and marketing and advertising.
Current wording
We have made prudent investments to support our innovation and business transformation strategies. These investments have included: optimization of our veterinary footprint, digital and e-commerce integration; enhanced supply chain capacity including additional distribution centers; data analytical capabilities; technological enhancements; and marketing effectiveness.
Previous wording
Our operating results are impacted by our ability to convert revenue into healthy gross margin and operating margin. There are many factors that impact gross margin results, including (but not limited to) customer shipping preferences, sales mix of product, and potential tariffs. We have shifted our sales mix by broadening our assortment to include more value-oriented national brand products, which can have lower margins. Along with managing gross margin, the other lever in delivering operating margin is expense management. The Company has implemented cost optimization initiatives in the past and expects to continue to find opportunities to operate more efficiently in the future.
Current wording
Our operating results are impacted by our ability to convert revenue into healthy gross margin and operating margin. There are many factors that impact gross margin results, including (but not limited to) pricing and promotion strategies, customer shipping preferences, sales mix of product, and potential tariffs. Along with managing gross margin, the other lever in delivering operating margin is expense management, which is impacted by our ability to implement cost optimization initiatives and find opportunities to operate more efficiently.
Previous wording
In connection with the fiscal 2015 acquisition by our Sponsors, we recorded goodwill of approximately $3.0 billion and an indefinite-lived trade name asset of $1.1 billion. We evaluate these assets for impairment annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable. During the third quarter of fiscal 2023, we concluded indicators of impairment existed due to declines in the Company's share price, as well as current macroeconomic conditions, and performed an interim impairment test of our goodwill and indefinite-lived trade name, which resulted in a pre-tax goodwill impairment charge of $1,222.5 million. Please read the discussion of these assets under “Critical Accounting Policies and Estimates.”
Current wording
During the third quarter of fiscal 2023, we concluded indicators of impairment existed due to declines in the Company’s share price, as well as current macroeconomic conditions, and performed an interim impairment test of our goodwill and indefinite-lived trade name, which resulted in a pre-tax goodwill impairment charge of $1,222.5 million. Please read the discussion of these assets under “Critical Accounting Policies and Estimates.”
Previous wording
Our interest expense in fiscal 2023 was primarily associated with a first lien term loan facility, a revolving credit facility, and interest rate caps and collars. Throughout fiscal 2023, we entered into interest rate collar agreements to limit the maximum interest on a portion of our variable-rate debt and decrease our exposure to interest rate variability. Refer to the discussion under “Liquidity and Capital Resources—Sources of Liquidity” for further information.
Current wording
Our interest expense in fiscal 2023 through fiscal 2025 was primarily associated with our First Lien Term Loan, ABL Revolving Credit Facility, and interest rate hedges. Refer to the discussion under “Liquidity and Capital Resources—Sources of Liquidity” for further information.
Previous wording
Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. Equity method investment activity is primarily related to a 50% joint venture with Grupo Gigante, S.A.B. de C.V. (the “Mexico joint venture”) to establish Petco locations in Mexico. The Company’s share of the investee’s results is presented as either income or loss from equity method investees in the accompanying consolidated statements of operations.
Current wording
Investments for which the Company exercises significant influence but does not have control are accounted for under the equity method. Equity method investment activity is primarily related to a 50% joint venture with Grupo Gigante, S.A.B. de C.V. (the “Mexico joint venture”) to establish Petco locations in Mexico and Chile. The Company’s share of the investee’s results is presented as either income or loss from equity method investees in the accompanying consolidated statements of operations.
Previous wording
Comparing fiscal 2024 (52 weeks) and fiscal 2023 (53 weeks), our results included the following:
Current wording
Comparing fiscal 2025 and fiscal 2024, our results included the following:
Previous wording
a decrease in net sales from $6.26 billion to $6.12 billion, representing a period-over-period decrease of 2.2% and comparable sales growth of 0.3%;
Current wording
a decrease in net sales from $6.12 billion to $5.96 billion, representing a period-over-period decrease of 2.5% and comparable sales decrease of 1.6%;
Previous wording
operating income of $7.1 million, compared to an operating loss of $1,180.3 million, resulting primarily from goodwill impairment of $1,222.5 million in the prior year period;
Current wording
operating income of $120.4 million, compared to operating income of $7.1 million in the prior year period;
Previous wording
net loss attributable to Class A and B-1 common stockholders of $101.8 million, compared to net loss attributable to Class A and B-1 common stockholders of $1,280.2 million in the prior year, impacted by goodwill impairment in the prior year period, and;
Current wording
net income attributable to Class A and B-1 common stockholders of $9.1 million, compared to net loss attributable to Class A and B-1 common stockholders of $101.8 million in the prior year, and;
Previous wording
A decrease in Adjusted EBITDA from $401.1 million to $336.5 million.
Current wording
an increase in Adjusted EBITDA from $336.5 million to $408.2 million.
Previous wording
Fiscal 2024 (52 weeks) Compared with Fiscal 2023 (53 weeks)
Current wording
Fiscal 2025 (52 weeks) Compared with Fiscal 2024 (52 weeks)
Previous wording
Net sales decreased $138.8 million, or 2.2%, to $6.12 billion in fiscal 2024 compared to net sales of $6.26 billion in fiscal 2023, primarily driven by $116.6 million attributable to the 53rd week in fiscal 2023. We continue to experience momentum in services, driven in part by our strategic investments in customer acquisition and retention, as well as a more mature veterinary hospital footprint. This was offset by a decrease in supplies and companion animals sales, driven by softening in discretionary spend.
Current wording
Net sales decreased $155.0 million, or 2.5%, to $5.96 billion in fiscal 2025 compared to net sales of $6.12 billion in fiscal 2024. The sales decrease primarily reflects lower transaction volume and a lower pet care center count, as well as a greater focus on profitability and margin through a more disciplined approach to managing unit costs, pricing, and promotional strategies. We continue to experience momentum in services, driven in part by our strategic investments in customer acquisition and retention, as well as efforts to optimize our existing veterinary hospital footprint.
Previous wording
Gross profit decreased $29.4 million, or 1.3%, to $2.32 billion in fiscal 2024 compared to gross profit of $2.35 billion for fiscal 2023. As a percentage of sales, our gross profit rate was 38.0% for fiscal 2024 compared to 37.6% for fiscal 2023. The increase was primarily due to supply chain cost efficiencies, decreased shipment volume on lower inventory levels, improved hospital margins, and growth in our Vital Care Premier membership program. These increases were partially offset by the full year impact of investments made in bringing additional brands into our consumables assortment. We are unable to quantify the factors impacting gross profit rate described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.
Current wording
As a percentage of net sales, our gross profit rate was 38.7% for fiscal 2025 compared to 38.0% for fiscal 2024. The increase between the periods reflects more effective management of our inventory, unit costs, pricing, and promotional strategies, as well as improved utilization of our services footprint. We are unable to quantify the factors impacting gross profit rate described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.
Previous wording
Interest expense decreased $7.4 million, or 4.9%, to $143.5 million in fiscal 2024 compared with $150.9 million in fiscal 2023. The decrease was primarily driven by lower interest rates on the First Lien Term Loan and pre-tax gains recognized in interest expense related to the Company's cash flow hedges during fiscal 2024. For more information refer to Note 7, “Senior Secured Credit Facilities,” and Note 8,"Derivative Instruments," in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Current wording
Interest expense decreased $12.3 million, or 8.6%, to $131.2 million in fiscal 2025 compared with $143.5 million in fiscal 2024. The decrease was primarily driven by lower interest rates on the First Lien Term Loan. For more information refer to Note 7, “Senior Secured Credit Facilities,” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Previous wording
In fiscal 2023, the Company recognized $0.9 million of losses on partial extinguishment of debt. This loss was recognized in conjunction with voluntary principal repayments on the First Lien Term Loan during fiscal 2023. The Company did not recognize any losses on extinguishment or modification of debt in fiscal 2024. For more information refer to Note 7, “Senior Secured Credit Facilities,” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Current wording
In fiscal 2025, the Company recognized $0.6 million of losses on partial extinguishment of debt. This loss was recognized in conjunction with voluntary principal repayments on the First Lien Term Loan during fiscal 2025. The Company did not recognize any losses on extinguishment or modification of debt in fiscal 2024. For more information refer to Note 7, “Senior Secured Credit Facilities,” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Previous wording
Other non-operating income was $4.8 million for fiscal 2024 and was primarily related to remeasurements of an equity investment without a readily determinable fair value. Other non-operating income was $4.7 million for fiscal 2023, and was related to remeasurements of the fair value of the Company's investment in Rover Group, Inc. For more information refer to Note 9,“Fair Value Measurements,”to the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Current wording
There was no other non-operating income or loss recognized during fiscal 2025. Other non-operating income was $4.8 million for fiscal 2024, and was primarily related to remeasurements of an equity investment without a readily determinable fair value. For more information refer to Note 9, “Fair Value Measurements,” to the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K.
Previous wording
Our effective tax rate was 6.8% for fiscal 2024, resulting in income tax benefit of $7.5 million, compared to an effective tax rate of 2.1% and income tax benefit of $27.6 million for fiscal 2023. The increase in effective tax rate in fiscal 2024 as compared to fiscal 2023 is primarily driven by non-deductible goodwill impaired during fiscal 2023, in addition to a shortfall in tax deductions resulting from the exercise and vesting of equity-based compensation awards.
Current wording
Our effective tax rate was 40.9% for fiscal 2025, resulting in income tax expense of $6.3 million, compared to an effective tax rate of 6.8% resulting in income tax benefit of $7.5 million for fiscal 2024. The increase in effective tax rate in fiscal 2025 as compared to fiscal 2024 is primarily driven by an increase in earnings and a decrease in the amount of compensation associated expenses not expected to be deductible for corporate income tax purposes in fiscal 2025.
Previous wording
Adjusted EBITDA is not a substitute for net (loss) income, the most comparable GAAP measure, and is subject to a number of limitations as a financial measure, so it should be used in conjunction with GAAP financial measures and not in isolation. There can be no assurances that we will not modify the presentation of Adjusted EBITDA in the future. In addition, other companies in our industry may define Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Current wording
Adjusted EBITDA is not a substitute for net income (loss), the most comparable GAAP measure, and is subject to a number of limitations as a financial measure, so it should be used in conjunction with GAAP financial measures and not in isolation. There can be no assurances that we will not modify the presentation of Adjusted EBITDA in the future. In addition, other companies in our industry may define Adjusted EBITDA differently, limiting its usefulness as a comparative measure.
Previous wording
Acquisition and divestiture-related integration costs include direct costs resulting from acquiring, integrating, or divesting businesses. These include third-party professional and legal fees, losses on sales of divestitures, and other integration-related costs that would not have otherwise been incurred as part of the Company’s operations.
Current wording
Acquisition and divestiture-related costs include direct costs resulting from acquiring, integrating, or divesting businesses. These include third-party professional and legal fees, losses on sales of divestitures, and other integration-related costs that would not have otherwise been incurred as part of the Company’s operations.
Previous wording
Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions.
Current wording
Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions. In fiscal 2025, other costs were primarily driven by $9.7 million of severance and $2.5 million relating to legal matters. In fiscal 2024, other costs were primarily driven by $15.8 million of severance and $7.7 relating to legal matters and strategic initiatives.
Previous wording
We define net margin as net (loss) income attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales.
Current wording
We define net margin as net income (loss) attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales.
Previous wording
Our primary sources of liquidity are funds generated by operating activities and available capacity for borrowings on our $581 million ABL Revolving Credit Facility. Our ability to fund our operations, to make planned capital investments, to make scheduled debt payments and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business, and other factors, some of which are beyond our control. Our liquidity as of February 1, 2025 was $681.4 million inclusive of cash and cash equivalents of $165.8 million and $515.6 million of availability on the ABL Revolving Credit Facility. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under the ABL Revolving Credit Facility, will be sufficient to finance our operations, meet our current cash requirements, and fund anticipated capital investments for at least the next 12 months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.
Current wording
Our primary sources of liquidity are funds generated by operating activities and available capacity for borrowings on our $581 million ABL Revolving Credit Facility. Our ability to fund our operations, to make planned capital investments, to make scheduled debt payments and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business, and other factors, some of which are beyond our control. Our liquidity as of January 31, 2026 was $724.2 million inclusive of cash and cash equivalents of $256.7 million and $467.5 million of availability on the ABL Revolving Credit Facility. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under the ABL Revolving Credit Facility, will be sufficient to finance our operations, meet our current cash requirements, and fund anticipated capital investments for at least the next 12 months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.
Previous wording
Purchase obligations and commitments consist of open purchase orders, as well as non-cancellable commitments for information technology, marketing and other products and services used in the normal course of business. We also have a commitment for naming rights to the baseball stadium. As of February 1, 2025, our purchase obligations and commitments were $321.1 million of which $270.5 million is considered short-term.
Current wording
Purchase obligations and commitments consist of open purchase orders, as well as non-cancellable commitments for information technology, marketing and other products and services used in the normal course of business. We also have a commitment for naming rights to a baseball stadium. Refer to Note 14, “Commitments and Contingencies—Baseball Stadium Naming Rights Commitment” in the Notes to Consolidated Financial Statements included in Part II, Item 8 of this Annual Report on Form 10-K for more information. As of January 31, 2026, our purchase obligations and commitments were $372.8 million of which $319.8 million is considered short-term.
Previous wording
Our primary source of operating cash is sales of products and services to customers, which are substantially all on a cash basis, and therefore provide us with a significant source of liquidity. Our primary uses of cash in operating activities include: purchases of inventory; freight and warehousing costs; employee-related expenditures; occupancy-related costs for our pet care centers, distribution centers and corporate support centers; credit card fees; interest under our debt agreements; and marketing expenses. Net cash provided by operating activities is impacted by our net (loss) income adjusted for certain non-cash items, including: depreciation, amortization, impairments and write-offs; amortization of debt discounts and issuance costs; deferred income taxes; equity-based compensation; impairments of goodwill and intangible assets; other non-operating (income) loss; and the effect of changes in operating assets and liabilities.
Current wording
Our primary source of operating cash is sales of products and services to customers, which are substantially all on a cash basis, and therefore provide us with a significant source of liquidity. Our primary uses of cash in operating activities include: purchases of inventory; freight and warehousing costs; employee-related expenditures; occupancy-related costs for our pet care centers, distribution centers and corporate support centers; credit card fees; interest under our debt agreements; and marketing expenses. Net cash provided by operating activities is impacted by our net income (loss) adjusted for certain non-cash items, including: depreciation, amortization, impairments and write-offs; amortization of debt discounts and issuance costs; deferred income taxes; equity-based compensation; impairments of goodwill and intangible assets; other non-operating income; and the effect of changes in operating assets and liabilities.
Previous wording
Net cash provided by operating activities was $215.7 million in fiscal 2023 compared with $346.0 million in fiscal 2022. The decrease in operating cash flow was driven by an increase in inventory purchases, higher payroll and fringe benefits as well as increases in cash paid for interest and operating leases. This was partially offset by an increase in sales, effective management of accounts payable, and lower payouts of prior year accrued incentive bonuses.
Current wording
Net cash provided by operating activities was $314.1 million in fiscal 2025 compared with net cash provided by operating activities of $177.7 million in fiscal 2024. The increase in operating cash flows were primarily driven by a decrease in inventory purchases, lower cash paid for operating leases, lower cash paid for income taxes, and lower operational costs, such as consulting fees. This was partially offset by lower sales and higher payouts of prior year accrued incentive bonuses as well as timing of invoice payments.
Previous wording
Net cash provided by operating activities was $177.7 million in fiscal 2024 compared with net cash provided by operating activities of $215.7 million in fiscal 2023. The decrease in operating cash flow was primarily driven by lower sales and the timing of invoice payments. This was partially offset by decreases in inventory purchases, advertising, freight, and cash paid for operating leases.
Current wording
Net cash provided by operating activities was $177.7 million in fiscal 2024 compared with $215.7 million in fiscal 2023. The decrease in operating cash flows were primarily driven by lower sales and the timing of invoice payments. This was partially offset by decreases in inventory purchases, advertising, freight, and cash paid for operating leases.
Previous wording
Net cash used in investing activities was $123.9 million, $207.4 million, and $320.3 million for fiscal 2024, fiscal 2023, and fiscal 2022, respectively, and consisted primarily of capital expenditures supporting our growth and initiatives.
Current wording
Net cash used in investing activities was $124.6 million, $123.9 million, and $207.4 million for fiscal 2025, fiscal 2024, and fiscal 2023, respectively, and consisted primarily of capital expenditures to support our business.
Previous wording
The decrease in capital expenditures between fiscal 2024 and fiscal 2023 was primarily driven by reductions in new pet care centers and hospitals. In fiscal 2025, we expect to spend approximately $130 million to $140 million in capital expenditures.
Current wording
The decrease in capital expenditures between fiscal 2024 and fiscal 2023 was primarily driven by reductions in new pet care centers and hospitals.
Previous wording
Net cash used in financing activities was $8.8 million for fiscal 2024, compared with $85.4 million used in financing activities in fiscal 2023 and $33.8 million used in financing activities in fiscal 2022.
Current wording
Net cash used in financing activities was $101.7 million for fiscal 2025, compared with $8.8 million used in financing activities in fiscal 2024 and $85.4 million used in financing activities in fiscal 2023.
Previous wording
On March 4, 2021, the Company completed a refinancing transaction by entering into the $1,700.0 million First Lien Term Loan maturing on March 4, 2028 and the ABL Revolving Credit Facility, originally maturing on March 4, 2026 with availability of up to $500.0 million, subject to a borrowing base.
Current wording
On March 4, 2021, the Company completed a refinancing transaction by entering into the $1,700.0 million First Lien Term Loan originally maturing on March 4, 2028 and the ABL Revolving Credit Facility, originally maturing on March 4, 2026 with availability of up to $500.0 million, subject to a borrowing base.
Previous wording
On December 12, 2022, the Company amended the First Lien Term Loan to replace the LIBOR-based rate with a SOFR-based rate as the interest rate benchmark. Interest on the First Lien Term Loan is based on, at the Company’s option, either a base rate or Adjusted Term SOFR, subject to a 0.75% floor, payable upon maturity of the SOFR contract, in either case plus the applicable rate. The base rate is the greater of the bank prime rate, federal funds effective rate plus 0.5% or Adjusted Term SOFR plus 1.0%. The applicable rate is 2.25% per annum for a base rate loan or 3.25% per annum for an Adjusted Term SOFR loan. Principal and interest payments commenced on June 30, 2021. Principal payments are typically $4.25 million quarterly.
Current wording
Interest on the First Lien Term Loan was based on, at the Company’s option, either a base rate or Adjusted Term SOFR, subject to a 0.75% floor, payable upon maturity of the SOFR contract, in either case plus the applicable rate. The base rate was the greater of the bank prime rate, federal funds effective rate plus 0.5% or Adjusted Term SOFR plus 1.0%. The applicable rate was 2.25% per annum for a base rate loan or 3.25% per annum for an Adjusted Term SOFR loan. Principal and interest payments commenced on June 30, 2021. Principal payments were typically $4.25 million quarterly.
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Rearranged current paragraphs (4)
Current report — wording carried from elsewhere
In connection with the fiscal 2015 acquisition of us by our Sponsors, we recorded goodwill of approximately $3.0 billion and an indefinite-lived trade name asset of $1.1 billion. We evaluate these assets for impairment annually and whenever events or changes in circumstances indicate that the carrying value may not be recoverable.
Current report — wording carried from elsewhere
Capital expenditures were relatively even between fiscal 2025 and fiscal 2024. In fiscal 2026, we expect to spend approximately $140 million in capital expenditures.
Current report — wording carried from elsewhere
Financing cash flows in fiscal 2025 primarily consisted of $95.3 million in principal repayments on the term loan.
Current report — wording carried from elsewhere
The Company voluntarily repaid $75.0 million of the principal of the First Lien Term Loan using existing cash on hand during fiscal 2023. The repayments were applied to remaining principal payments in order of scheduled payment date.