Petco Health & Wellness Company, Inc.
For the period ended May 2, 2026. Filed Jun 5, 2026.
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A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
May 2, 2026 · Filed Jun 5, 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-Q
Period ended 2025-11-01; filed 2025-12-05.
0001193125-25-309620
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2026-05-02; filed 2026-06-05.
0001193125-26-259944
Item 2. 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 74 previous paragraphs and 75 current paragraphs.
46 unchanged; 21 reworded; 8 added; 7 removed; 0 previous and 0 current paragraphs rearranged.
Tables are not compared: 8 previous and 8 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 (8)
Current report
On February 20, 2026, the U.S. Supreme Court issued a decision invalidating certain tariffs previously imposed under the International Emergency Economic Power Act ("IEEPA"). We have applied for a refund of tariffs paid, following the processes established by U.S. Customs and Border Protection. We will continue to evaluate new information and will recognize any IEEPA tariff refunds or related receivables when they are realized or realizable.
Current report
Loss on Extinguishment and Modification of Debt
Current report
Loss on extinguishment and modification of debt was $11.8 million for the thirteen weeks ended May 2, 2026. This loss was recognized in conjunction with the February 2, 2026 debt refinancing transaction described under "Sources of Liquidity—Senior Secured Credit Facilities and Senior Secured Notes" below. There was no loss on debt extinguishment and modification for the thirteen weeks ended May 3, 2025. For more information, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes," to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Current report
Income Tax Expense
Current report
We compute our tax provision (benefit) for interim periods by applying the estimated annual effective tax rate to our year-to-date income (loss) before income taxes, adjusted for discrete items recognized during the quarter. However, due to the sensitivity of the estimated annual effective tax rate to changes in estimated annual pre-tax results, we determined that the actual effective tax rate method is the appropriate approach in the computation of the interim tax provision for the thirteen weeks ended May 2, 2026, as the use of the estimated annual effective tax rate would provide a distortive result.
Current report
Our actual effective tax rate was (17.0)%, resulting in income tax expense of $2.2 million for the thirteen weeks ended May 2, 2026, compared to an estimated annual effective tax rate of (4.5%), resulting in income tax expense of $0.5 million for the thirteen weeks ended May 3, 2025. The change in tax rate for the thirteen weeks ended May 2, 2026, was primarily driven by a reduction of equity-based compensation not expected to be deductible for tax purposes, along with a change in pre-tax earnings and the application of our actual effective tax rate in the current period compared to the use of our estimated annual effective tax rate in the prior year.
Current report
Senior Secured Credit Facilities and Senior Secured Notes
Current report
The Company had a secured term loan facility originally maturing on March 4, 2028 (the “First Lien Term Loan”), with an outstanding principal balance of $1,500.0 million as of January 31, 2026. On February 2, 2026, the Company entered into a refinancing amendment to the credit agreement governing 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.
Removed paragraphs (7)
Previous report
Other Non-Operating Income
Previous report
There was no other non-operating income or loss recognized during the thirteen and thirty-nine week periods ended November 1, 2025. Other non-operating income was $8.5 million and $5.8 million for the thirteen and thirty-nine weeks ended November 2, 2024, respectively. For more information, refer to Note 6, “Fair Value Measurements,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Previous report
Income Tax Benefit
Previous report
Our effective tax rates were (205.4)% and (76.2)%, resulting in income tax benefit of $6.3 million and $5.0 million for the thirteen and thirty-nine weeks ended November 1, 2025, respectively, compared to effective tax rates of 4.9% and 10.2%, resulting in income tax benefit of $0.9 million and $10.0 million for the thirteen and thirty-nine weeks ended November 2, 2024, respectively. The change in effective tax rates for the thirteen and thirty-nine weeks ended November 1, 2025 was primarily driven by a change in earnings and a decrease in the amount of compensation associated expenses not expected to be deductible for corporate income tax purposes.
Previous 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. We have considered the impact of the OBBBA on our annual effective tax rate. These provisions did not have a material impact to income taxes in our financial statements for the third quarter 2025.
Previous report
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 report
Senior Secured Credit Facilities
Reworded paragraphs (21)
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 all of their pets’ needs through our more than 1,500 pet care centers across the U.S., Mexico, and Puerto Rico, 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, 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. 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.
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
Macroeconomic factors, including interest rates, potential inflationary pressures, tariffs, and global economic and geopolitical developments 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 referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q.
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 referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q.
Previous wording
a decrease in net sales from $1.51 billion to $1.46 billion, representing a period-over-period decrease of 3.1% and a comparable sales decrease of 2.2%;
Current wording
an increase in net sales from $1.49 billion to $1.50 billion, representing period-over-period growth of 0.2% and a comparable sales increase of 0.7%;
Previous wording
operating income of $29.2 million, compared to operating income of $4.0 million in the prior year period;
Current wording
operating income of $24.6 million, compared to operating income of $16.4 million in the prior year period;
Previous wording
net income attributable to Class A and B-1 common stockholders of $9.3 million, compared to net loss attributable to Class A and B-1 common stockholders of $16.7 million in the prior year period; and
Current wording
net loss attributable to Class A and B-1 common stockholders of $15.1 million, compared to net loss attributable to Class A and B-1 common stockholders of $11.7 million in the prior year period; and
Previous wording
an increase in Adjusted EBITDA from $81.2 million to $98.6 million.
Current wording
an increase in Adjusted EBITDA from $89.4 million to $97.3 million.
Previous wording
Thirteen and Thirty-nine Weeks Ended November 1, 2025 Compared with Thirteen and Thirty-nine Weeks Ended November 2, 2024
Current wording
Thirteen Weeks Ended May 2, 2026 Compared with Thirteen Weeks Ended May 3, 2025
Previous wording
Net sales decreased $47.0 million, or 3.1%, to $1.46 billion in the thirteen weeks ended November 1, 2025 compared to net sales of $1.51 billion in the thirteen weeks ended November 2, 2024. Net sales decreased $118.0 million, or 2.6%, to $4.45 billion in the thirty-nine weeks ended November 1, 2025 compared to net sales of $4.56 billion in the thirty-nine weeks ended November 2, 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.
Current wording
Net sales increased $3.3 million, or 0.2%, to $1.50 billion in the thirteen weeks ended May 2, 2026 compared to net sales of $1.49 billion in the thirteen weeks ended May 3, 2025. The sales increase primarily reflects growth in our services business, driven by our investments in customer acquisition and retention, as well as optimization of our veterinary footprint. We also experienced positive comparable sales trends in our consumables category, offset by a lower pet care center count. We continue to focus on profitability and margin through a disciplined approach to managing unit costs, pricing, and promotional strategies.
Previous wording
As a percentage of net sales, our gross profit rate was 38.9% for the thirteen weeks ended November 1, 2025 compared with 38.1% for the thirteen weeks ended November 2, 2024. As a percentage of net sales, our gross profit rate was 38.8% for the thirty-nine weeks ended November 1, 2025 compared with 38.0% for the thirty-nine weeks ended November 2, 2024. The increase between the periods reflects improved utilization of our services footprint, as well as more effective management of our inventory, unit costs, pricing, and promotional strategies. 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 38.4% for the thirteen weeks ended May 2, 2026 compared with 38.2% for the thirteen weeks ended May 3, 2025. We continue to focus on effectively utilizing our services footprint and managing our inventory, unit costs, pricing, and promotional strategies. 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
As a percentage of net sales, SG&A expenses were 36.9% for the thirteen weeks ended November 1, 2025 compared with 37.8% for the thirteen weeks ended November 2, 2024. As a percentage of net sales, SG&A expenses were 36.8% for the thirty-nine weeks ended November 1, 2025 compared with 38.2% for the thirty-nine weeks ended November 2, 2024. 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 the thirty-nine weeks ended November 2, 2024.
Current wording
As a percentage of net sales, SG&A expenses were 36.7% for the thirteen weeks ended May 2, 2026 compared with 37.1% for the thirteen weeks ended May 3, 2025. The decrease in SG&A expenses between the periods was primarily due to lower payroll and consulting costs, partially offset by an increase in advertising expenses.
Previous wording
Interest expense decreased $3.0 million, or 8.3%, to $32.8 million in the thirteen weeks ended November 1, 2025 compared with $35.8 million in the thirteen weeks ended November 2, 2024. Interest expense decreased $9.8 million, or 9.0%, to $99.6 million in the thirty-nine weeks ended November 1, 2025 compared with $109.4 million in the thirty-nine weeks ended November 2, 2024. The decrease was primarily driven by lower interest rates on the First Lien Term Loan during the thirteen and thirty-nine week periods ended November 1, 2025. For more information, refer to Note 4, “Senior Secured Credit Facilities,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Current wording
Interest expense decreased $0.7 million, or 2.1%, to $32.8 million in the thirteen weeks ended May 2, 2026 compared with $33.5 million in the thirteen weeks ended May 3, 2025. The decrease was primarily driven by a lower aggregate outstanding principal balance of indebtedness, partially offset by higher interest rates during the thirteen weeks ended May 2, 2026. For more information, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes" in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Previous 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.
Current wording
We define net margin as net 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 $581.0 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 November 1, 2025 was $732.9 million, inclusive of cash and cash equivalents of $237.4 million and $495.5 million of availability on the ABL Revolving Credit Facility.
Current wording
Our primary sources of liquidity are funds generated by operating activities and available capacity for borrowings on our $546.0 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 May 2, 2026 was $654.4 million, inclusive of cash and cash equivalents of $166.8 million and $487.6 million of availability on the ABL Revolving Credit Facility.
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 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.
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 used in operating activities is impacted by our net loss adjusted for certain non-cash items, including: depreciation and amortization; 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 $160.5 million in the thirty-nine weeks ended November 1, 2025 compared with net cash provided by operating activities of $81.7 million in the thirty-nine weeks ended November 2, 2024. The increase in operating cash flows were primarily driven by a decrease in inventory purchases, lower payroll and fringe benefits, 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.
Current wording
Net cash used in operating activities was $31.0 million in the thirteen weeks ended May 2, 2026 compared with net cash used in operating activities of $15.5 million in the thirteen weeks ended May 3, 2025. The decrease in operating cash flows were primarily driven by a increase in inventory purchases as well as timing of invoice payments. This was partially offset by a decrease in cash paid for interest and lower payouts of prior year accrued incentive bonuses.
Previous wording
Net cash used in investing activities was $87.4 million and $89.5 million for the thirty-nine weeks ended November 1, 2025 and November 2, 2024, respectively, and consisted primarily of capital expenditures to support our business.
Current wording
Net cash used in investing activities was $37.8 million and $27.1 million for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively, and consisted primarily of capital expenditures to support our business.
Previous wording
Net cash used in financing activities was $5.4 million for the thirty-nine weeks ended November 1, 2025, compared with $7.8 million used in financing activities for the thirty-nine weeks ended November 2, 2024. Financing cash flows in the thirty-nine weeks ended November 1, 2025 were not material. Financing cash flows in the thirty-nine weeks ended November 2, 2024 consisted primarily of borrowings and repayments on the ABL Revolving Credit Facility.
Current wording
Net cash used in financing activities was $32.6 million for the thirteen weeks ended May 2, 2026, compared with $0.3 million used in financing activities for the thirteen weeks ended May 3, 2025. Financing cash flows in the thirteen weeks ended May 2, 2026 primarily consisted of payments of debt issuance costs and borrowings and repayments of debt in connection with the February 2, 2026 refinancing transaction discussed under "Sources of Liquidity" below. Financing cash flows in the thirteen weeks ended May 3, 2025 were not material.
Previous wording
The Company has a secured term loan facility maturing on March 4, 2028 (the “First Lien Term Loan”) and a secured asset-based revolving credit facility with availability of up to $581.0 million, subject to a borrowing base (as amended from time to time, the “ABL Revolving Credit Facility”). The first tranche of the ABL Revolving Credit Facility has availability of up to $35.0 million, subject to a borrowing base, maturing on March 4, 2026. The second tranche has availability of up to $546.0 million, subject to a borrowing base, maturing on March 29, 2029.
Current wording
The Company has a secured asset-based revolving credit facility (as amended from time to time, the “ABL Revolving Credit Facility”). The first tranche of the ABL Revolving Credit Facility, which had availability of up to $35.0 million, subject to a borrowing base, matured on March 4, 2026. The remaining tranche has availability of up to $546.0 million, subject to a borrowing base, maturing on March 29, 2029.
Previous wording
For more information regarding this indebtedness, refer to Note 4, “Senior Secured Credit Facilities,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Current wording
For more information regarding this indebtedness, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes," to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Previous wording
The Company has entered into interest rate cap, collar and swap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. For more information regarding derivative instruments, refer to Note 5,“Derivative Instruments,”to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.
Current wording
The Company has entered into interest rate collar and swap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. For more information regarding derivative instruments, refer to Note 5,“Derivative Instruments,”to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.