Petco Health & Wellness Co. reported its second consecutive quarter of positive comparable sales in Q2 2026, with sales up 0.6% year-over-year to $1.5 billion. Adjusted EBITDA reached $122 million, exceeding the company's outlook, or $115 million when excluding a $6.8 million tariff refund. This performance indicates progress in their "Reach for the Sky" strategy, with management highlighting improving trends in consumables, cat products, veterinary services, and cross-channel shopping.
The relaunch of the Petco Perks loyalty program significantly increased point redemptions, which negatively impacted Q2 net sales, particularly in services, by a mid-single-digit-million-dollar amount. However, management believes peak redemptions are past and expects personalization and loyalty benefits to emerge more meaningfully in 2027. Despite this, veterinary visits and doctor days grew double digits, and the company is expanding its Autoship sign-up capabilities to physical stores, aiming to grow customer spending.
Financially, Petco reaffirmed its full-year guidance, expecting net sales to range from flat to up 1.5% and adjusted EBITDA between $415 million and $430 million. The company's strong cash generation supported an additional $75 million voluntary debt repayment in Q2, bringing total debt paydown over the past nine months to $170 million, with total debt at $1.48 billion. Petco continues to address challenges such as a soft dog product category, store closures, and rising supply-chain costs, while investing in new assortments, private-label products, remodeled stores, and fresh food.
