Petco Reports Q2 2026 Results: Same-Store Sales Turn Positive as Services Drive Growth
Executive Summary: Petco Health and Wellness Company reported Q2 2026 net sales of $1.489 billion, with same-store sales rising 0.6% for the second consecutive quarter of positive growth. Adjusted EBITDA increased 7.3% to $122.2 million, driven by services growth of 3.6% and consumables growth. The company reaffirmed its full-year 2026 outlook while continuing aggressive debt reduction, paying down $75 million in Q2 and $170 million over nine months.
Key Facts
- Company
- Petco Health and Wellness Company (Nasdaq: WOOF)
- Country
- United States
- Industry
- Pet retail and services
- Category
- Market Trends
- Event
- Q2 2026 earnings release
- Date
- 2026-09-02
- Location
- San Antonio, Texas, USA
- Source
- Petco Investor Relations
What Happened
Petco released its Q2 2026 financial results on September 2, 2026, reporting net sales of $1.489 billion — essentially flat year-over-year (+0.05%). Same-store sales increased 0.6%, marking the second consecutive quarter of positive comparable growth after a prolonged downturn. Net income reached $38.7 million, up significantly from $14.0 million in the prior year quarter, while adjusted EBITDA rose 7.3% to $122.2 million.
The business split reveals a clear divergence: merchandise sales declined 0.7% to $1.217 billion, while services and other revenue grew 3.6% to $272 million. CEO Joel Anderson highlighted that consumables — including pet food — returned to growth, validating the company’s operational reset strategy. Gross margin expanded 37 basis points to 39.7%, partly aided by a $6.8 million IEEPA tariff refund.
Background
Petco has been undergoing an operational reset under CEO Joel Anderson, focused on reducing debt, improving inventory management, and returning to growth in core consumables. The pet retail trends landscape in the US has been challenging, with Petco’s larger rival Petsmart remaining private and online competitor Chewy capturing market share through autoship subscriptions. The petco vs petsmart competitive dynamic has shifted toward services and experiential retail as differentiators. Petco operates over 1,500 stores across the US, Mexico, and Chile.
Industry Context
The US pet industry growth rate has moderated from pandemic-era highs, with overall category growth in the low single digits. The pet business is increasingly bifurcating between product sales (under pressure from price sensitivity and channel shift) and services (grooming, veterinary, training), which are growing faster. Chewy reported Q3 2026 net sales of $3.12 billion, up 8.3%, with adjusted EBITDA margin of 5.8% — showing the online channel still outgrowing physical retail. Pet insurance cost trends also affect Petco’s ecosystem, as insured pet owners tend to spend more on veterinary services.
Market & Business Impact
For pet food manufacturers and B2B suppliers selling through Petco, the return to consumables growth is a positive signal — but the flat overall merchandise sales mean shelf space and purchase orders remain tight. The 3.6% services growth confirms that grooming, veterinary care, and training are the primary growth drivers for physical pet retail. Suppliers of grooming products, veterinary diets, and service-adjacent categories should see stronger demand.
Petco’s debt reduction — $170 million over nine months — improves the company’s financial flexibility but also signals continued cost discipline. The FY 2026 guidance for 15-20 net store closures means the footprint will continue to contract slightly. For how much does dog grooming cost as a market question, the service growth suggests Petco is capturing pricing in this category.
Companies & Brands Involved
Petco Health and Wellness Company (Nasdaq: WOOF) operates 1,377 stores at end of Q2 2026. CEO Joel Anderson leads the “Reach for the Sky” operational reset. Competitors include Chewy (NYSE: CHWY) and privately held Petsmart. Dog grooming near me searches continue to drive local traffic to Petco grooming services.
Data & Evidence
- Q2 2026 net sales: $1.489B (+0.05% YoY) — Source: Petco IR, September 2, 2026
- Same-store sales: +0.6% (2nd consecutive positive quarter) — Source: Petco IR
- Adjusted EBITDA: $122.2M (+7.3% YoY) — Source: Petco IR
- Gross margin: 39.7% (+37bps) — Source: Petco IR
- Services revenue: $272M (+3.6% YoY) — Source: Petco IR
- Merchandise revenue: $1.217B (-0.7% YoY) — Source: Petco IR
- Store count: 1,377; net closures this quarter: 1 — Source: Petco IR
- Debt reduction: $75M in Q2; $170M over 9 months; total debt $1.48B — Source: Petco IR
- FY 2026 outlook: Net sales flat to +1.5%; Adj. EBITDA $415M-$430M — Source: Petco IR
What This Means for the Pet Industry
Two consecutive quarters of positive same-store sales at Petco suggest the largest publicly traded pet retailer has stopped bleeding — but the growth is thin (+0.6%) and driven entirely by services, not products. For B2B suppliers, this means the physical retail channel for pet products remains under structural pressure. The divergence between services growth (+3.6%) and merchandise decline (-0.7%) is the key data point: if you sell pet food or accessories to Petco, expect flat to declining purchase orders. If you sell grooming supplies, veterinary diets, or training-related products, demand is growing. The petco vs petsmart battle is now fought on service quality and loyalty programs, not on product assortment.
Key Takeaways
- Petco reported Q2 2026 net sales of $1.489 billion with same-store sales up 0.6%, the second consecutive quarter of positive comparable growth.
- Adjusted EBITDA rose 7.3% to $122.2 million, with services revenue growing 3.6% while merchandise sales declined 0.7%.
- The company reduced debt by $75 million in Q2 and $170 million over nine months, bringing total debt to $1.48 billion.
- Petco reaffirmed its full-year 2026 outlook: net sales flat to +1.5%, adjusted EBITDA of $415-$430 million.
- Services (grooming, veterinary, training) are the clear growth engine, while product sales remain under pressure.
Frequently Asked Questions
What happened?
Petco released Q2 2026 earnings showing $1.489B in net sales, same-store sales up 0.6% (second consecutive positive quarter), adjusted EBITDA up 7.3% to $122.2M, driven by 3.6% services growth.
Which company is involved?
Petco Health and Wellness Company, traded on Nasdaq as WOOF, operating 1,377 stores across the US, Mexico, and Chile.
Where did it take place?
United States, with the earnings call held on September 2, 2026.
Why is this important for the pet industry?
Petco is one of the two largest US pet retailers. Its return to positive same-store sales signals stabilization in physical pet retail, but the growth is entirely services-driven, confirming the structural shift from products to services in the pet retail channel.
What pet industry segment is affected?
Pet retail (products and services), pet food distribution, grooming services, and veterinary care channels.
Sources
- Primary – Petco Investor Relations, https://ir.petco.com/news-releases/news-release-details/petco-reports-second-quarter-2026-results, September 2, 2026
- Secondary – GlobalPETS, https://globalpetindustry.com/, September 3, 2026
