Petco Health & Wellness Company: Continue to bark our Overweight

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Petco Health & Wellness Company: Continue to bark our Overweight

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Petco Health & Wellness Company

Continue to bark our Overweight

Earnings Review

Industry outlook improving and services offer growth 08 June 2026

We maintain our Overweight on the WOOF 8.25s and Term Loan-B as industry sales High Yield Credit

have returned to modest growth in FY26, and we expect this accelerates as the year United States

progresses. Growth is largely being driven by cats as younger pet owners prefer their Retailing

lower maintenance costs and time commitments. BAC aggregated credit and debit card

data indicates that pet store spending has increased by an average of 1% over the last William M. Reuter

three months (see the latest BofA on USA report for methodology, limitations, and ResearchBofAS Analyst

disclaimers related to BAC aggregated credit and debit card data). In addition, Petco has +1 646 855 6363

william.m.reuter@bofa.com

been able to grow services, with a 7% increase in 1Q26. Last, net leverage ended 1Q26

Michael DeRienzo

at 3.2x and we estimate it declines to 2.8x at the end of FY26. The 8.25s trade wide of Research Analyst

the Single B HY Index and the Term Loan-B trades in line with the Single B Loan Index. BofAS

michael.derienzo@bofa.com

We expect solid results to cause spreads to tighten.

Petco Health & Wellness1Q was above our estimates

Company (WOOF)

1Q26 Adj EBITDA increased 9% to $97 million due to (1) modest sales growth and (2) Key Data 1Q2025A 1Q2026A LTM

gross margin expansion. Results were above our Adj EBITDA estimate of $91 million.

Operating (US$ mm)

Net sales were flat at $1.50 billion due to (1) the operation of 15 fewer stores year over Revenues 1,493 1,497 5,965

year and (2) 1% growth in comparable sales.