Pet-focused retailer Petco (NASDAQ: WOOF) met Wall Streets revenue expectations in Q3 CY2025, but sales fell by 3.1% year on year to $1.46 billion. Its GAAP profit of $0.03 per share was significantly above analysts’ consensus estimates.

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"Once again, we delivered on Petco's profitability goals as we continue to execute on our multi-phased transformation," said Joel Anderson, Petco's Chief Executive Officer.

Company Overview

Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ: WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.

Revenue Growth

A company’s long-term sales performance can indicate its overall quality. Any business can have short-term success, but a top-tier one grows for years.

With $6 billion in revenue over the past 12 months, Petco is a mid-sized retailer, which sometimes brings disadvantages compared to larger competitors benefiting from better economies of scale.

As you can see below, Petco struggled to increase demand as its $6 billion of sales for the trailing 12 months was close to its revenue three years ago (we compare to 2019 to normalize for COVID-19 impacts). This was mainly because it closed stores.

This quarter, Petco reported a rather uninspiring 3.1% year-on-year revenue decline to $1.46 billion of revenue, in line with Wall Street’s estimates.

Looking ahead, sell-side analysts expect revenue to remain flat over the next 12 months. This projection is underwhelming and implies its newer products will not accelerate its top-line performance yet.

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Store Performance

Number of Stores

A retailer’s store count influences how much it can sell and how quickly revenue can grow.

Petco has generally closed its stores over the last two years, averaging 1.2% annual declines.

When a retailer shutters stores, it usually means that brick-and-mortar demand is less than supply, and it is responding by closing underperforming locations to improve profitability.

Note that Petco reports its store count intermittently, so some data points are missing in the chart below.

Same-Store Sales

A company's store base only paints one part of the picture. When demand is high, it makes sense to open more. But when demand is low, it’s prudent to close some locations and use the money in other ways. Same-store sales is an industry measure of whether revenue is growing at those existing stores and is driven by customer visits (often called traffic) and the average spending per customer (ticket).

Petco’s demand within its existing locations has barely increased over the last two years as its same-store sales were flat. This performance isn’t ideal, and Petco is attempting to boost same-store sales by closing stores (fewer locations sometimes lead to higher same-store sales).

In the latest quarter, Petco’s same-store sales fell by 2.2% year on year. This decrease represents a further deceleration from its historical levels. We hope the business can get back on track.

Key Takeaways from Petco’s Q3 Results

It was good to see Petco beat analysts’ EPS expectations this quarter. We were also glad its EBITDA outperformed Wall Street’s estimates. On the other hand, its EBITDA guidance for next quarter missed. Zooming out, we think this was a mixed quarter. The stock traded up 7.3% to $3.17 immediately after reporting.

Should you buy the stock or not? When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here, it’s free for active Edge members.