Petco is leaning on services, fresh food and pet tarantulas - and it is paying off

By Bill Peters

Shares rally after hours, after the company spent last year overhauling its store selection

Petco said it expects a return to positive same-store sales this year.

Shares of Petco Health & Wellness jumped after hours on Wednesday after the pet-supplies retailer said it expects sales to rebound this year, as efforts to overhaul its store selections and lean more into services like dog grooming and training are starting to pay off.

The chain made that forecast as pet owners grapple with rising costs of pet care, and as Wall Street worries about the impact of tariffs on retailers, and the continued impact of inflation on lower-income consumers. However, other retailers have offered up more upbeat forecasts in recent weeks.

Petco's stock (WOOF) gained 5.4% after hours on Wednesday. As of the close of trading, shares were still down 2.4% over the past 12 months.

CEO Joel Anderson, who took that job in 2024, said the retailer's outlook for this year "assumes a return to positive comps," or comparable-store sales, which measure sales stores open at least a year. Wall Street expects a 0.6% same-store sales gain for the year, after a 1.6% dip in 2025.

During the company's earnings call on Wednesday, Anderson said Petco would add more fresh-food selections this year, bring in new nationally sold brands and focus more deeply on its store brands.

"We've been a primary destination for fresh food for a long time and are continuing to build on that foundation by expanding the assortment," he said. "This category at Petco experienced healthy growth in 2025, and we expect the momentum to continue in 2026."

He said the company was adding more freezers in stores. And he said the focus on its store brands would "allow us to go faster and fill in voids our national partners don't have visibility to." An expansion of its hospitals business would come next year, he said.

Elsewhere, he said, the company was adding to its selection of the pets it sells in its stores. In particular, he said he saw spiders like tarantulas "as a newer pet trend in the United States."

Since Anderson became CEO, he has tried to simplify Petco's product selection and focus more on best-selling brands. The company has also tried to focus on faster-growing areas like pet grooming and veterinary service. While inflation has squeezed consumers of all income levels over the past several years, some analysts say pet care could see more demand, as pets adopted during the pandemic get older.

Petco said it expects overall revenue to land within a range of flat to up 1.5% for the year. That middle of that range was a bit better than analysts' expectations. Revenue fell 2.5% last year.

Still, Petco said it expects to have around 15 to 20 fewer stores overall this year, following closures. And it said it still expects first-quarter sales to be anywhere from flat to down 1%.

For the fourth quarter, revenue fell 2.4% to $1.51 billion, roughly in line with Wall Street's estimates. Petco reported a 1-cent per-share loss, a bit worse than Wall Street's expectations.

-Bill Peters

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03-11-26 2104ET