Petco’s Service and Fresh Food Pivot Drives Sales Rebound, Boosting Stock After Hours

Petco Health & Wellness (PETC) posted a surge in after-hours trading following a positive sales outlook, as the retailer confirmed that its transformation strategy is delivering results. The company cited improved performance across its service offerings, including on-site dog grooming and training, which contributed to a 12% increase in same-store sales during Q4 2025. This marks a reversal from prior years of stagnation and reflects a successful pivot toward higher-margin services. Fresh pet food sales, a key component of Petco’s expansion, rose 28% year-over-year, outpacing the broader pet supplies market. These offerings, available in-store and through delivery, have become a differentiating factor amid rising consumer demand for premium, ingredient-transparent options. Additionally, Petco expanded its inventory of exotic pets, including tarantulas and reptiles, which now represent a 3% share of non-food category revenue, indicating a strategic push into niche, high-engagement segments. The company’s adjusted EBITDA margin improved to 14.3% in Q4, up from 11.8% in the same period last year, signaling stronger operational efficiency. Management reiterated expectations for full-year 2026 revenue growth of 5.5% to 6.5%, supported by continued investment in service capabilities and store remodels. The stock, trading under the ticker PETC, rose 7.2% after hours, with investor attention focused on the sustainability of the turnaround. The broader retail and consumer discretionary sectors are watching Petco’s trajectory closely, as its model could signal a viable path for brick-and-mortar pet retailers facing pressure from e-commerce. The success of services and fresh food may encourage similar moves by competitors, particularly in the $120 billion U.S. pet care market.