Petco reported lower sales but improved profitability in the last fiscal year, as efforts to strengthen its operating model lift its earnings.

For FY2025, the pet retailer’s net sales declined 2.5 per cent to $6 billion, while adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) rose 21.3 per cent to $408.2 million.

Gross profit slipped slightly to $2.3 billion, operating income rose to $120.4 million from $7.1 million the previous year, while net income reached $9.1 million compared with a loss of $101.8 million the year prior.

“We strengthened our leadership team and rebuilt the foundation of our economic model, enabling us to exceed our profitability goals,” said Petco CEO Joel Anderson.

“With that work largely complete, we are entering the next phase of our strategy focused on driving sustainable, profitable top-line growth.”

Meanwhile, in the fourth quarter, the company reported net sales of $1.5 billion, down 2.4 per cent from the same period a year earlier.

Gross profit declined 1.4 per cent to $580.8 million, and operating income sharply rose by 83.2 per cent to $31.9 million.

The company, however, narrowed its net loss to $2.6 million versus $13.8 million a year earlier. 

Petco closed a net seven stores during the quarter, ending the year with 1382.

Anderson said the company sees growth opportunities across several core product and service categories as it focuses on innovation and its in-store ecosystem.

“As we look ahead, we see significant opportunities across core consumables, supplies, and services,” he added.

“We are confident that our focus on driving product newness and innovation, as well as leveraging our differentiated, high-touch store ecosystem, will help us grow market share. Our outlook assumes a return to positive comparable sales next year.”

For this fiscal year, Petco expects net sales to range from flat to up 1.5 per cent year-over-year, with adjusted EBITDA projected between $415 million and $430 million.

The company plans capital expenditure of about $140 million and expects to close between 15 and 20 net stores.

• Further reading: Petco results: Sales down, but margin, profit up.