Petco (WOOF) Is Down 8.0% After Q2 Profit Return and Store Closures Amid Lower Revenue

• Petco Health and Wellness Company reported a return to profitability for the second quarter of 2025, despite a drop in revenue to US$1.49 billion, and announced plans to close about 25 stores during the year.
• Alongside improved earnings, the company issued guidance for both the third quarter and full year suggesting overall net sales are expected to decline by a low single-digit percentage year over year.
• We’ll examine how Petco’s return to profitability and planned store closures could shape its investment narrative moving forward.

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Petco Health and Wellness Company Investment Narrative Recap

To be a Petco Health and Wellness Company shareholder, you need to believe in the company's ability to restore steady profitability through operational restructuring, even as revenue stays under pressure. The recent return to profitability, despite lower sales and upcoming store closures, helps address the urgent need to improve margins; however, the most important short-term catalyst, turnaround in same-store sales, remains unaddressed, while the biggest immediate risk continues to be declining net sales. On balance, this news does little to alter those fundamental dynamics.

Among the recent announcements, Petco’s plan to close about 25 stores during 2025 stands out in the context of profitability. While managing a smaller footprint could support margin gains, this move highlights ongoing caution about top-line growth potential, tying directly to the current catalyst and exposing the company’s reliance on in-store performance as it grapples with digital competition and a relatively flat pet industry.

But in contrast to the positive shift in bottom-line results, investors should be aware that persistent declines in total net sales could signal...

Read the full narrative on Petco Health and Wellness Company (it's free!)

Petco Health and Wellness Company's outlook anticipates $6.1 billion in revenue and $50.2 million in earnings by 2028. This reflects a projected annual revenue decline of 0.5% and a $78.4 million increase in earnings from the current level of -$28.2 million.

Uncover how Petco Health and Wellness Company's forecasts yield a $3.91 fair value, a 6% upside to its current price.

Exploring Other Perspectives

Fair value estimates from four Simply Wall St Community members range from US$0.85 to US$302.90, highlighting strikingly diverse outlooks. With sales growth risks central, you can explore these varying opinions for new insights on Petco’s long-term prospects.

Explore 4 other fair value estimates on Petco Health and Wellness Company - why the stock might be a potential multi-bagger!

Build Your Own Petco Health and Wellness Company Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Petco Health and Wellness Company research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.
• Our free Petco Health and Wellness Company research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Petco Health and Wellness Company's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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