WOOF Stock Forecast & Price Target

Petco Health and Wellness Co Inc has demonstrated a positive financial trajectory, particularly evidenced by an expansion of gross margin by approximately 120 basis points year-over-year, surpassing forecasts due to improved performance in both product and service categories. The company's strategic moves, such as closing unprofitable stores and enhancing vendor partnerships, have allowed it to slightly elevate its full-year adjusted EBITDA guidance, reflecting effective operational momentum despite tariff-related challenges. Additionally, the combination of improved inventory management and pricing optimization has contributed to EBITDA margin expansion in the first half of the year, reinforcing the company's position for future growth as market dynamics evolve.

Petco Health and Wellness has experienced a concerning decline in net sales, down 2.3% year-over-year, including a 1.6% decrease in comparable sales, indicating a potential continued loss of market share. The company's guidance for net sales in 3Q 2025 suggests low-single digit declines, alongside pressures from margin challenges and difficulties in expanding its veterinary operations due to staffing issues. Additionally, the shift of consumer purchasing toward e-commerce primarily for commoditized products, such as pet food, has contributed to Petco losing market share to more agile online competitors.