[Executive Summary & Outlook](index=1&type=section&id=Executive%20Summary%20%26%20Outlook) [Q2 2025 Highlights](index=1&type=section&id=Q2%202025%20Overview) Petco delivered on its commitments in Q2 2025, leading to a raised full-year earnings outlook. The company saw improvements in gross profit margin, operating income, GAAP net income, and Adjusted EBITDA, despite a slight decrease in net and comparable sales Q2 2025 Performance Metrics | Metric | Q2 2025 Performance | Change YoY | | :-------------------------- | :------------------ | :--------- | | Net sales | $1.5 billion | -2.3% | | Comparable sales | -1.4% | -1.4% | | Gross profit margin | 39.3% | +120 bps | | Operating income | $43.0 million | +$40.6 million | | GAAP net income | $14.0 million | +$38.8 million | | Adjusted EBITDA | $113.9 million | +$30.3 million | [Full Year 2025 Outlook](index=1&type=section&id=Full%20Year%202025%20Outlook) Petco maintained its full-year net sales outlook but raised its full-year 2025 earnings outlook, reflecting confidence in its transformation efforts and improved retail operating fundamentals. The outlook assumes current tariff levels remain consistent * The company **maintained its full year net sales outlook** and **raised its full year 2025 earnings outlook**[4](index=4&type=chunk) FY 2025 Outlook | Metric | Outlook | | :-------------------------- | :-------------------- | | Net Sales | Down low single digits year over year | | Adjusted EBITDA | $385 to $395 million | | Net interest expense | ~$130 million | | Capital Expenditures | $125 to $130 million | | Depreciation & Amortization | ~$200 million | | Net Store Closures | ~25 | [Third Quarter 2025 Outlook](index=1&type=section&id=Third%20Quarter%202025%20Outlook) Petco provided specific guidance for the third quarter of 2025, anticipating a continued slight decline in net sales but a solid Adjusted EBITDA range Q3 2025 Outlook | Metric | Outlook | | :-------------------------- | :-------------------- | | Net Sales | Down low single digits year over year | | Adjusted EBITDA | $92 million to $94 million | [Company Information](index=2&type=section&id=Company%20Information) [About Petco](index=2&type=section&id=About%20Petco) Petco is a leading pet care retailer with over 60 years of experience, operating more than 1,500 stores across the U.S., Mexico, and Puerto Rico, alongside online platforms. The company offers a wide range of pet products, services, and expertise, and supports animal welfare through its Petco Love foundation * Petco has been serving pet needs for **over 60 years**, offering meals, toys, supplies, and expert support[10](index=10&type=chunk) * The company operates **over 1,500 stores** across the U.S., Mexico, and Puerto Rico, with an online presence at petco.com and via the Petco app[10](index=10&type=chunk) * Petco founded **Petco Love** in **1999**, which supports local animal welfare groups and has facilitated **approximately 7 million animal adoptions**[10](index=10&type=chunk) [Forward-Looking Statements & Risks](index=2&type=section&id=Forward-Looking%20Statements%20%26%20Risks) This section outlines the nature of forward-looking statements within the earnings release, emphasizing that they are subject to significant uncertainties and contingencies. It also details a comprehensive list of risks that could cause actual results to differ materially from projections, including competition, consumer demand, macroeconomic pressures, and operational challenges * Forward-looking statements are based on current expectations and assumptions about future events and are subject to **significant uncertainties and contingencies**, many outside Petco's control[11](index=11&type=chunk)[12](index=12&type=chunk) * Key risks include **increased competition**, **reduced consumer demand**, **reliance on key vendors**, ability to attract and retain employees, **macroeconomic pressures** (inflation, interest rates, tariffs), and **operational challenges** like managing costs and IT systems[12](index=12&type=chunk) * Other risks involve **business interruptions**, **catastrophic events**, **maintaining brand perception**, **product safety concerns**, and the ability to successfully implement **operational adjustments and cost action plans**[12](index=12&type=chunk) [Financial Statements](index=4&type=section&id=Financial%20Statements) [Condensed Consolidated Statements of Operations](index=4&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) The condensed consolidated statements of operations show Petco's financial performance for the thirteen and twenty-six weeks ended August 2, 2025, compared to the prior year. The company reported a significant improvement in net income and operating income for both periods 13 Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | | :----------------------------------- | :---------------------------- | :---------------------------- | | Total net sales | $1,488,529 | $1,523,755 | | Gross profit | $585,319 | $580,725 | | Operating income (loss) | $43,022 | $2,468 | | Net income (loss) attributable to Class A and B-1 common stockholders | $13,972 | $(24,823) | | Basic Net income (loss) per share | $0.05 | $(0.09) | 26 Weeks Ended August 2, 2025 vs. August 3, 2024 | Metric | August 2, 2025 (in thousands) | August 3, 2024 (in thousands) | | :----------------------------------- | :---------------------------- | :---------------------------- | | Total net sales | $2,981,928 | $3,052,895 | | Gross profit | $1,155,287 | $1,159,385 | | Operating income (loss) | $59,381 | $(14,314) | | Net income (loss) attributable to Class A and B-1 common stockholders | $2,311 | $(71,306) | | Basic Net income (loss) per share | $0.01 | $(0.26) | [Consolidated Balance Sheets](index=5&type=section&id=CONSOLIDATED%20BALANCE%20SHEETS) The consolidated balance sheets provide a snapshot of Petco's financial position as of August 2, 2025, compared to February 1, 2025. Key changes include a slight increase in cash and cash equivalents, a decrease in merchandise inventories, and a reduction in total liabilities Consolidated Balance Sheet Highlights (in thousands) | Metric | August 2, 2025 | February 1, 2025 | | :-------------------------------- | :------------- | :--------------- | | Cash and cash equivalents | $188,748 | $165,756 | | Merchandise inventories, net | $608,506 | $653,329 | | Total current assets | $939,558 | $973,619 | | Fixed assets, net | $687,505 | $725,438 | | Total assets | $5,153,282 | $5,194,430 | | Total current liabilities | $1,058,566 | $1,139,163 | | Total liabilities | $4,014,179 | $4,080,800 | | Total stockholders' equity | $1,139,103 | $1,113,630 | [Consolidated Statements of Cash Flows](index=6&type=section&id=CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) The consolidated statements of cash flows for the twenty-six weeks ended August 2, 2025, show an increase in net cash provided by operating activities and a net decrease in cash, cash equivalents, and restricted cash compared to the prior year 26 Weeks Ended August 2, 2025 vs. August 3, 2024 (in thousands) | Cash Flow Activity | August 2, 2025 | August 3, 2024 | | :----------------------------------- | :------------- | :------------- | | Net cash provided by operating activities | $70,438 | $60,956 | | Net cash used in investing activities | $(58,091) | $(58,065) | | Net cash used in financing activities | $(4,280) | $(5,894) | | Net decrease in cash, cash equivalents and restricted cash | $8,067 | $(3,003) | | Cash, cash equivalents and restricted cash at end of period | $189,732 | $133,646 | [Non-GAAP Financial Measures](index=7&type=section&id=NON-GAAP%20FINANCIAL%20MEASURES) [Adjusted EBITDA](index=7&type=section&id=Adjusted%20EBITDA) Adjusted EBITDA is a non-GAAP financial measure used by management to assess core operating performance and facilitate period-over-period comparisons. Petco reported a significant increase in Adjusted EBITDA and Adjusted EBITDA Margin for both the thirteen and twenty-six weeks ended August 2, 2025 * Adjusted EBITDA is a **non-GAAP financial measure** that management believes is **meaningful for investors** to compare current and prior period performance and **assess core operating performance**[23](index=23&type=chunk) Adjusted EBITDA (in thousands) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :-------------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Adjusted EBITDA | $113,860 | $83,523 | $203,309 | $159,167 | | Adjusted EBITDA Margin | 7.6% | 5.5% | 6.8% | 5.2% | [Free Cash Flow](index=9&type=section&id=Free%20Cash%20Flow) Free Cash Flow, a non-GAAP measure, is calculated as net cash provided by operating activities less cash paid for fixed assets. It is considered an important indicator of the company's ability to generate additional cash from business operations. Petco reported a substantial increase in Free Cash Flow for both the thirteen and twenty-six weeks ended August 2, 2025 * Free Cash Flow is a **non-GAAP financial measure** calculated as **net cash provided by operating activities less cash paid for fixed assets**, used to evaluate the company's ability to **generate additional cash**[29](index=29&type=chunk) Free Cash Flow (in thousands) | Metric | 13 Weeks Ended Aug 2, 2025 | 13 Weeks Ended Aug 3, 2024 | 26 Weeks Ended Aug 2, 2025 | 26 Weeks Ended Aug 3, 2024 | | :-------------- | :------------------------- | :------------------------- | :------------------------- | :------------------------- | | Free Cash Flow | $53,788 | $41,982 | $9,922 | $927 |

Core Viewpoint - Berger Montague is investigating potential securities fraud claims against Petco Health and Wellness Company, following a federal securities class action lawsuit related to misleading statements about its pandemic-driven growth and product strategy [1][2]. Summary by Relevant Sections Allegations of Misleading Statements - The complaint alleges that Petco made false and misleading statements regarding the sustainability of its pandemic-driven growth and premium product strategy, which led to a significant decline in its stock price, including a drop of over 20% on August 24, 2023 [2]. Impact on Stock Price and Investor Confidence - The lawsuit indicates that the alleged misstatements contributed to substantial losses for Petco, particularly during the Class Period from January 14, 2021, to June 5, 2025, with continued downward revisions to earnings guidance and multiple leadership changes affecting investor confidence [2][3]. Changes in Product Strategy - Petco's efforts to adjust its product mix by introducing lower-cost pet food options contradicted prior public statements, highlighting the severity of the Company's challenges and further impacting investor sentiment [3].

Core Viewpoint - Johnson Fistel, PLLP has initiated an investigation into Petco Health and Wellness Company, Inc. for potential breaches of fiduciary duties and violations of federal securities laws [1][2] Group 1: Investigation Details - The investigation follows a recently filed securities fraud class action complaint alleging that six of Petco's officers made materially false and misleading statements regarding the company's business and operations [2] - Specific allegations include that Petco's pandemic-related growth was unsustainable and that the company's business model focused on premium pet food was overstated [2] - The complaint claims that the defendants downplayed the severity of issues affecting Petco's business and overstated the company's ability to achieve sustainable, profitable growth [2] Group 2: Shareholder Rights - Current stockholders who held Petco stock before January 14, 2021, are encouraged to contact Johnson Fistel to discuss their legal rights, which may include pursuing changes to corporate governance practices and seeking recovery of funds [3] - The investigation may allow shareholders to request a court-approved incentive award at no cost [3] Group 3: About Johnson Fistel - Johnson Fistel, PLLP is a nationally recognized shareholder rights law firm with multiple offices across the United States, representing individual and institutional investors in derivative and class action lawsuits [4]

Core Viewpoint - Berger Montague is investigating potential securities law violations involving Petco Health and Wellness Company, with a class action lawsuit filed for investors who acquired Petco securities between January 14, 2021, and June 5, 2025 [1][2] Group 1: Legal Action and Allegations - A class action lawsuit has been initiated on behalf of investors who purchased Petco securities during the specified Class Period [1][2] - The complaint alleges that Petco made materially false and misleading statements regarding its pandemic-related advantages and the sustainability of its premium pet food business model [3] - It is claimed that the Company overstated its ability to achieve profitable growth while downplaying operational challenges, leading to significant stock price declines [3] Group 2: Stock Performance Impact - Petco's stock price experienced a drop of over 20% on August 24, 2023, following a downward revision of its financial guidance [3] - Further declines in stock price occurred after subsequent disclosures and changes in leadership [3]

Core Points - A class action securities lawsuit has been filed against Petco Health and Wellness Company, Inc. for alleged securities fraud affecting investors between January 14, 2021, and June 5, 2025 [1] - The lawsuit claims that Petco's pandemic-related business advantages were not sustainable and that the company's business model, which focuses on premium pet food, was overstated [2] - Defendants are accused of downplaying the severity of issues within the company and overstating Petco's ability to achieve sustainable, profitable growth [2] Case Details - The lawsuit highlights that Petco's differentiated product strategy was exaggerated and that necessary changes to address underlying issues were not adequately communicated [2] - It is alleged that the public statements made by the defendants were materially false and misleading throughout the relevant period [2] Next Steps - Investors who suffered losses in Petco during the specified timeframe have until August 29, 2025, to request appointment as lead plaintiff, although participation in any recovery does not require this [3] - Class members may be entitled to compensation without any out-of-pocket costs or fees [3] Why Levi & Korsinsky - Levi & Korsinsky has a strong track record in securing significant settlements for shareholders and is recognized as one of the top securities litigation firms in the United States [4]

Core Viewpoint - A class action lawsuit has been filed against Petco Health and Wellness Company, Inc. for allegedly making materially false and misleading statements regarding its business operations and prospects during the pandemic [2][4]. Group 1: Lawsuit Details - The lawsuit is on behalf of all individuals and entities who purchased or acquired Petco securities between January 14, 2021, and June 5, 2025, with a deadline of August 29, 2025, for investors to apply as lead plaintiffs [2][4]. - Allegations include that Petco's pandemic-related growth was unsustainable and that the company overstated its product strategy and ability to deliver sustainable growth [4]. Group 2: Legal Representation - Bragar Eagel & Squire, P.C. is representing the investors in this class action lawsuit and encourages affected individuals to contact them for more information [5][6].

Core Viewpoint - A class action securities lawsuit has been filed against Petco Health and Wellness Company, Inc. for alleged securities fraud affecting investors between January 14, 2021, and June 5, 2025 [1][2]. Group 1: Lawsuit Details - The lawsuit claims that Petco's pandemic-related business advantages were not sustainable and that its business model, which focuses on premium pet food, was overstated [2]. - It is alleged that the defendants downplayed the severity of issues affecting Petco's business and the necessary changes to address these issues, which could negatively impact comparable sales [2]. - The lawsuit asserts that the defendants misrepresented Petco's ability to achieve sustainable and profitable growth, leading to materially false and misleading public statements [2]. Group 2: Next Steps for Investors - Investors who suffered losses in Petco during the specified timeframe have until August 29, 2025, to request appointment as lead plaintiff, although participation in any recovery does not require serving as a lead plaintiff [3]. - Class members may be entitled to compensation without any out-of-pocket costs or fees, and there is no obligation to participate [3]. Group 3: Firm Background - Levi & Korsinsky, LLP has a history of securing hundreds of millions of dollars for shareholders and has been recognized as one of the top securities litigation firms in the United States for seven consecutive years [4].

Core Viewpoint - A shareholder class action lawsuit has been filed against Petco Health and Wellness Company, alleging that the company made materially false and misleading statements regarding its business operations and prospects, particularly concerning the sustainability of its pandemic-related growth and its premium product strategy [1] Summary by Relevant Sections - **Allegations Against Petco** - The lawsuit claims that Petco's pandemic-related growth was unsustainable and that its business model focused on premium pet food was flawed [1] - It is alleged that the strength of Petco's differentiated product strategy was overstated [1] - The defendants are accused of downplaying the severity of the issues and the necessary changes to address them, which could negatively impact Petco's comparable sales [1] - The lawsuit asserts that Petco's ability to achieve sustainable and profitable growth was overstated [1] - **Legal Information for Affected Shareholders** - Shareholders who purchased Petco shares between January 14, 2021, and June 5, 2025, and suffered significant losses are encouraged to discuss their legal rights [2] - The deadline for shareholders to request to be appointed as lead plaintiff in the case is August 29, 2025 [3] - **Law Firm Background** - Holzer & Holzer, LLC is noted as a top-rated securities litigation law firm, specializing in representing shareholders in class action and derivative litigation [3] - The firm has a history of recovering hundreds of millions of dollars for shareholders affected by corporate misconduct since its founding in 2000 [3]

Group 1 - The core issue involves potential securities fraud claims against Petco Health and Wellness Company, linked to a class action lawsuit regarding misleading statements about its pandemic-related growth and the sustainability of its premium pet food business model [1][2] - Petco's stock price experienced significant declines, including a drop of over 20% on August 24, 2023, following a downward revision of its financial outlook, compounded by leadership changes and ongoing operational challenges [2][3] - The lawsuit highlights that Petco's shift to include "value" pet food brands and multiple executive departures indicated deeper operational weaknesses, leading to increased losses for investors [3] Group 2 - The class period for the lawsuit is defined as January 14, 2021, through June 5, 2025, allowing investors who acquired Petco stock during this timeframe to seek lead plaintiff status by August 29, 2025 [3] - Berger Montague, the firm investigating the claims, has a long history in securities class action litigation, representing investors for over five decades [5]

Core Viewpoint - Petco Health and Wellness Company, Inc. is facing a class action lawsuit due to allegations of misleading statements regarding its business model and growth prospects during the pandemic [1] Allegations Summary - Allegation 1: Petco's pandemic-related growth was unsustainable, and its business model focused on premium pet food was flawed [1] - Allegation 2: The strength of Petco's differentiated product strategy was overstated [1] - Allegation 3: Defendants downplayed the severity of issues and the necessary changes to address them, impacting comparable sales [1] - Allegation 4: Defendants exaggerated Petco's ability to achieve sustainable, profitable growth [1] - Allegation 5: Public statements made by defendants were materially false and misleading [1] Class Action Details - Class period for the lawsuit is from January 14, 2021, to June 5, 2025 [1] - Deadline for shareholders to register for the class action is August 29, 2025 [1] - Shareholders can enroll in a portfolio monitoring software for updates on the case [1]