WOOF Stock Forecast & Price Target

Petco Health and Wellness Co Inc demonstrated a notable improvement in its financial performance, evidenced by a gross margin expansion of approximately 120 basis points year-over-year, driven by product and service contributions. The company's strategic initiatives, such as closing unprofitable stores and optimizing pricing and promotions, have resulted in an upward adjustment of its full-year adjusted EBITDA guidance, despite facing tariff-related challenges. Furthermore, the firm has seen EBITDA margin expansion in the first half of the year, largely attributed to improved inventory management and pricing efficiency, positioning Petco favorably for future growth.

Petco Health and Wellness Co Inc has experienced a 2.3% decline in net sales year-over-year, reflecting a continued loss of market share amid heightened competition, particularly in the e-commerce segment. The company's guidance for 3Q2025 indicates further anticipated net sales declines in the low-single digits and suggests ongoing margin pressures from shifts in sales mix and distribution channels. Additionally, challenges related to vet hospital openings and competition from online peers may exacerbate the company’s difficulties, as evidenced by a significant drop in the proportion of sales from supplies and companion animals, which fell from approximately 44% to 34% in 2024.