Petco Health and Wellness Co (NASDAQ:WOOF) reported a wider-than-expected net loss in its first quarter even as revenue edged past estimates, sending shares down nearly 13% in premarket trading Thursday.
The pet retailer posted net sales of $1.5 billion for the quarter ended May 2025, up 0.2% year-over-year and slightly above the $1.49 billion analysts had forecast.
Comparable sales rose 0.7%, turning positive for the first time in five quarters.
Despite the top-line beat, Petco swung to a net loss of $15.1 million, well short of the $3.57 million loss analysts had expected. Adjusted EBITDA of $97.3 million rose 8.8% from a year earlier and surpassed consensus estimates of $90.4 million.
Gross margin came in at 38.4%, roughly in line with the 38.5% estimate, as the company benefited from product mix shifts and ongoing cost actions. Operating income reached $24.6 million.
Free cash flow was an outflow of $69.1 million, and net debt stood at $1.32 billion, reflecting a total debt load of $1.48 billion against cash of $166.8 million.
Management reaffirmed full-year 2026 guidance calling for net sales growth of flat to 1.5% and adjusted EBITDA of $415 million to $430 million. For the second quarter, the company guided for net sales growth of approximately 0.3% and adjusted EBITDA of $110 million to $112 million, citing tariff refunds and fuel costs as key near-term variables.
Jefferies reiterated a Buy rating on the stock following the results, calling it a solid start to the year and noting that comparable sales had flipped positive amid a series of new product, store, and seasonal initiatives. The bank said it views Petco as a self-help story in its early stages and believes the shares are undervalued relative to peers.