Petco Health and Wellness Company reported second-quarter 2026 results on September 2, showing stabilization in sales and a 15% reduction in net debt to $1.19 billion.
The company posted Q2 2026 net sales of $1.49 billion, a 0.05% increase from the prior-year period. Comparable sales rose 0.6%, marking the second consecutive quarter of growth after declines of 1.4% in Q2 2025 and 2.2% in Q3 2025. Sales composition remained stable, with consumables accounting for 49% of total revenue at $731.3 million, while supplies and companion animals contributed 33% at $485.6 million. Services and other revenue grew to $272.4 million, representing 18% of the total.
Adjusted EBITDA increased to $122.2 million from $113.9 million in the prior-year quarter, including a $6.8 million tariff refund. Excluding this item, normalized adjusted EBITDA stood at $115.4 million. The adjusted EBITDA margin expanded to 8.2% from 7.6%, while the gross margin rate rose 37 basis points to 39.7%. Operating income grew to $47.8 million from $43.0 million, lifting the operating margin to 3.2% from 2.9%.
Free cash flow surged to $129.9 million in Q2 2026, more than doubling the $53.8 million reported in the same period last year. Year-to-date free cash flow totaled $61 million, up from $10 million in the prior-year period.
Net debt declined 15% year-over-year to $1.19 billion, while liquidity increased 14% to $781 million. The company made an additional $75 million in voluntary debt prepayments following the quarter’s end, bringing total prepayments to $170 million over the past nine months.
For full-year 2026, Petco guided for net sales growth of flat to 1.5%, adjusted EBITDA in the range of $415 million to $430 million, net interest expense of approximately $122 million, and capital expenditures around $140 million. The company also expects to close 15 to 20 net store locations.
For Q3 2026, Petco projects net sales growth of 0.4% to 1.0% year-over-year and adjusted EBITDA between $100 million and $103 million.
Shares rose 8.75% in after-hours trading to $2.86.
