Petco Health and Wellness Company (NASDAQ:WOOF) reported a quarterly loss and declining sales for the fourth quarter, while projecting only modest revenue growth for the year ahead. Despite the weaker earnings performance, the company’s shares surged about 16% in premarket trading after its adjusted EBITDA outlook came in above analyst expectations.
The pet retailer posted a fourth-quarter loss of $0.01 per share, compared with Wall Street forecasts for a profit of $0.02 per share. Revenue declined 2.4% year-over-year to $1.5 billion, slightly below the $1.51 billion expected by analysts. Comparable sales fell 1.6% during the quarter.
However, adjusted EBITDA for the quarter reached $106 million, exceeding the consensus estimate of $94 million.
Gross profit decreased 1.4% to $580.8 million, while gross margin improved by 37 basis points to 38.3%. Operating income rose 83.2% to $31.9 million, with operating margin increasing to 2.1%. Net loss narrowed significantly to $2.6 million from $13.8 million in the same period a year earlier.
Chief Executive Officer Joel Anderson said the company spent 2025 strengthening its leadership team and restructuring its economic model, setting the stage for the next phase of its strategy focused on improving profitability.
“Our outlook reflects our strategic initiatives and assumes a return to positive comps in 2026,” Anderson said in earnings statement.
For fiscal 2026, Petco expects net sales to range from flat to an increase of 1.5% year-over-year, with the forecast assuming comparable sales will return to growth during the year.
The company projects adjusted EBITDA between $415 million and $430 million for the year, above analyst estimates of $404.4 million.
In the first quarter of 2026, Petco expects net sales to range between a 1% decline and flat growth compared with the prior year.
Bank of America analyst Robert Ohmes maintained an Underperform rating on the stock after the results.
“While Petco continues to make progress to support business health and profitability, we see continued same-store sales/traffic softness in the near-term as well as longer-term risk that market share erosion could continue as consumers migrate to online and broadline competitors with greater convenience and/or value offerings,” he said.
Separately, Morgan Stanley analysts said the company’s “execution is solid and strategy is on track, but turnaround remains complex and competitive dynamics add pressure, which may prolong share gains.”
Petco also said it completed the refinancing of its debt in February, extending maturities to 2031. The refinancing provides greater financial flexibility through a combination of fixed- and floating-rate instruments, including a $900 million variable-rate term loan and a $600 million fixed-rate bond.