Earnings
Home›Earnings›Results›Petco shares slide after flat revenue, tariff-benefit…
Petco shares slide after flat revenue, tariff-benefit lifts margins
In fiscal 2027 second-quarter trading, Petco reported net sales of $1.49 billion, while gross profit margin improvement included about $6.8 million tied to IEEPA tariff refunds.
Petco Health and Wellness shares fell even though the company delivered essentially flat results in its fiscal 2027 second quarter, with revenue not improving despite some operational and financial progress, according to MarketBeat Ratings. Petco reported net sales of $1.49 billion, roughly flat year over year, while comparable sales rose 0.6%. The retailer attributed topline softness in part to a rockier-than-expected rollout of a relaunched membership program, including heavier-than-anticipated point redemptions at the start of the relaunch that pulled sales forward and created short-term drag. Petco also said sales were tracking ahead of its internal targets before the relaunch. On profitability, gross profit rose to $591.1 million and gross margin was 39.7%, but MarketBeat Ratings noted that about $6.8 million of the margin improvement came from a net benefit tied to IEEPA tariff refunds, leaving normalized gross margin roughly flat if that item is excluded. Operating income increased 11.1% to $47.8 million, and net income rose to $38.7 million from $14 million a year earlier. Cash flow and leverage were also key positives. First-half free cash flow improved to $60.8 million from $9.9 million in the first half of 2025, and total debt declined to $1.48 billion from $1.59 billion a year earlier. After the quarter closed, Petco voluntarily prepaid another $75 million of debt, bringing total prepayments to $170 million over nine months as it works toward a leverage target of 2x net debt to Adjusted EBITDA.