Petco Health & Wellness Co. surged after its full-year earnings outlook beat expectations, signaling its new leader’s efforts to close underperforming stores is boosting profitability.
Earnings before interest, tax and other items will be $375 million to $390 million this year, according to a statement Wednesday. Analysts had expected $367 million.
Shares rose about 10 per cent in after hours trading in New York. They had fallen 36 per cent this year as of Wednesday’s close.
Petco plans to cut its store count by as much as 30 locations this year after a drop of 25 last year. Chief Executive Officer Joel Anderson, who took the helm in July, is also aiming to grow the traditionally brick-and-mortar retailer’s online store.
“Obviously we wouldn’t have closed those stores if they were profitable, so a lot of the improved Ebitda comes just from removing some stores that were dragging us backwards,” Anderson said during a call with analysts.
Anderson has brought in new executives for nearly every aspect of the business, including finance, technology, marketing and merchandising.
Petco expects sales to fall this year even as the overall pet industry grows. Peer Chewy Inc. said Tuesday that adoption rates are continuing to improve, especially for cats.
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