SEC Form 10-Q filed by Petco Health and Wellness Company Inc.

6/5/26 5:18:45 PM ET

$WOOF

Other Specialty Stores

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10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 2, 2026


☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39878

Petco Health and Wellness Company, Inc.

(Exact Name of Registrant as Specified in its Charter)


Delaware	81-1005932
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

10850 Via Frontera San Diego, California	92127
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (858) 453-7845

Securities registered pursuant to Section 12(b) of the Act:

     Title of each class

     Trading
Symbol(s)

     Name of each exchange on which registered

     Class A Common Stock, par value $0.001 per share

     WOOF

     The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Class A Common Stock outstanding as of June 3, 2026 was 247,774,472.

The number of shares of the registrant’s Class B-1 Common Stock outstanding as of June 3, 2026 was 37,790,781.

The number of shares of the registrant’s Class B-2 Common Stock outstanding as of June 3, 2026 was 37,790,781.

Table of Contents


		Page

PART I.	FINANCIAL INFORMATION	4

Item 1.	Financial Statements (Unaudited)	4
	Consolidated Balance Sheets	4
	Consolidated Statements of Operations	5
	Consolidated Statements of Comprehensive Loss	6
	Consolidated Statements of Equity	7
	Consolidated Statements of Cash Flows	8
	Notes to Unaudited Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24

PART II.	OTHER INFORMATION	25

Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	25
Item 3.	Defaults Upon Senior Securities	25
Item 4.	Mine Safety Disclosures	25
Item 5.	Other Information	25
Item 6.	Exhibits	26
Signatures		28

Forward-Looking Statements

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding: our expectations with respect to our revenue, expenses, profitability, and other operating results; our growth plans; our ability to compete effectively in the markets in which we participate; the execution on our transformation initiatives; and the impact of certain macroeconomic factors, including tariffs, inflationary and interest rate pressures, consumer spending patterns, global supply chain constraints, and global economic and geopolitical developments, on our business. Forward-looking and other statements in this Form 10-Q may also address our progress, plans, and goals with respect to sustainability initiatives, and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in our filings with the U.S. Securities and Exchange Commission (the “SEC”). Such plans and goals may change, and statements regarding such plans and goals are not guarantees or promises that they will be met. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Such forward-looking statements can generally be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “intends,” “will,” “shall,” “should,” “anticipates,” “opportunity,” “illustrative”, or the negative thereof or other variations thereon or comparable terminology. Although we believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this Form 10-Q is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of our operations or business or financial condition. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside of our control.

Forward-looking statements are subject to many risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in such forward-looking statements, including, without limitation, those identified in this Form 10-Q as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory, and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation, prevailing interest rates, and the impact of tariffs; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances, or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in Ukraine and the Middle East), government shutdowns, health crises, and pandemics; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; (xx) impairments of the carrying value of our goodwill and other intangible assets; (xxi) our ability to successfully implement our operational adjustments, achieve the expected benefits of our cost action plans, and drive improved profitability; (xxii) our ability to deliver sustainable, profitable growth; and (xxiii) the other risks, uncertainties and other factors referred to under “Risk Factors” and identified elsewhere in this Form 10-Q and our other filings with the SEC. The occurrence of any such factors could significantly alter the results set forth in these statements.

We caution that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. We undertake no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation, or other competent legal authority.

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While

we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)


	May 2, 2026			January 31, 2026
	(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	166,804		$	256,736
Receivables, less allowance for credit losses ($858 and $779, respectively)		36,928			45,812
Merchandise inventories, net		632,912			590,210
Prepaid expenses		64,036			51,747
Other current assets		60,164			75,281
Total current assets		960,844			1,019,786
Fixed assets		2,404,132			2,378,208
Less accumulated depreciation		(1,758,226	)		(1,722,060	)
Fixed assets, net		645,906			656,148
Operating lease right-of-use assets		1,265,299			1,288,593
Goodwill		980,064			980,064
Trade name		1,025,000			1,025,000
Other long-term assets		207,473			203,834
Total assets	$	5,084,586		$	5,173,425
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and book overdrafts	$	480,656		$	450,552
Accrued salaries and employee benefits		107,784			154,148
Accrued expenses and other liabilities		216,183			204,751
Current portion of operating lease liabilities		312,399			320,082
Current portion of long-term debt and other lease liabilities		13,245			4,608
Total current liabilities		1,130,267			1,134,141
Senior secured credit facilities, net, excluding current portion		874,116			1,488,527
Senior notes, net		590,146			—
Operating lease liabilities, excluding current portion		994,995			1,047,185
Deferred taxes, net		235,197			234,911
Other long-term liabilities		104,560			104,407
Total liabilities		3,929,281			4,009,171
Commitments and contingencies (Note 8)
Stockholders' equity:
Class A common stock, $0.001 par value: Authorized - 1.0 billion shares; Issued and outstanding - 247.4 million and 243.7 million shares, respectively		247			244
Class B-1 common stock, $0.001 par value: Authorized - 75.0 million shares; Issued and outstanding - 37.8 million shares		38			38
Class B-2 common stock, $0.000001 par value: Authorized - 75.0 million shares; Issued and outstanding - 37.8 million shares		—			—
Preferred stock, $0.001 par value: Authorized - 25.0 million shares; Issued and outstanding - none		—			—
Additional paid-in-capital		2,318,877			2,312,354
Accumulated deficit		(1,155,139	)		(1,139,993	)
Accumulated other comprehensive loss		(8,718	)		(8,389	)
Total stockholders’ equity		1,155,305			1,164,254
Total liabilities and stockholders’ equity	$	5,084,586		$	5,173,425

See accompanying notes to consolidated financial statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Net sales:
Products	$	1,228,087		$	1,241,891
Services and other		268,645			251,508
Total net sales		1,496,732			1,493,399
Cost of sales:
Products		757,778			766,285
Services and other		164,529			157,146
Total cost of sales		922,307			923,431
Gross profit		574,425			569,968
Selling, general and administrative expenses		549,799			553,609
Operating income		24,626			16,359
Interest income		(1,497	)		(1,359	)
Interest expense		32,785			33,494
Loss on extinguishment and modification of debt		11,840			—
Loss before income taxes and income from equity method investees		(18,502	)		(15,776	)
Income tax expense		2,199			495
Income from equity method investees		(5,555	)		(4,610	)
Net loss attributable to Class A and B-1 common stockholders	$	(15,146	)	$	(11,661	)

Net loss per Class A and B-1 common share:
Basic	$	(0.05	)	$	(0.04	)
Diluted	$	(0.05	)	$	(0.04	)

Weighted average shares used in computing net loss per Class A and B-1 common share:
Basic		283,684			277,548
Diluted		283,684			277,548

See accompanying notes to consolidated financial statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands) (Unaudited)


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Net loss attributable to Class A and B-1 common stockholders	$	(15,146	)	$	(11,661	)
Other comprehensive loss, net of tax:
Foreign currency translation adjustment		(1,118	)		32
Unrealized gain (loss) on derivatives		752			(2,267	)
Losses (gains) on derivatives reclassified to income		37			(159	)
Total other comprehensive loss, net of tax		(329	)		(2,394	)
Comprehensive loss attributable to Class A and B-1 common stockholders	$	(15,475	)	$	(14,055	)

See accompanying notes to consolidated financial statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands) (Unaudited)


	Common stock
	Class A (shares)		Class B-1 (shares)		Class B-2 (shares)		Amount		Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss			Total stockholders’ equity
Balance at January 31, 2026		243,719		37,791		37,791	$	282	$	2,312,354		$	(1,139,993	)	$	(8,389	)	$	1,164,254
Equity-based compensation expense (Note 7)		—		—		—		—		9,451			—			—			9,451
Net loss		—		—		—		—		—			(15,146	)		—			(15,146	)
Foreign currency translation adjustment, net of tax		—		—		—		—		—			—			(1,118	)		(1,118	)
Unrealized gain on derivatives (Note 5), net of tax		—		—		—		—		—			—			752			752
Losses on derivatives reclassified to income (Note 5), net of tax		—		—		—		—		—			—			37			37
Issuance of common stock, net of tax withholdings		3,634		—		—		3		(2,928	)		—			—			(2,925	)
Balance at May 2, 2026		247,353		37,791		37,791	$	285	$	2,318,877		$	(1,155,139	)	$	(8,718	)	$	1,155,305


	Common stock
	Class A (shares)		Class B-1 (shares)		Class B-2 (shares)		Amount		Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss			Total stockholders’ equity
Balance at February 1, 2025		239,066		37,791		37,791	$	277	$	2,280,495		$	(1,149,059	)	$	(18,083	)	$	1,113,630
Equity-based compensation expense (Note 7)		—		—		—		—		9,445			—			—			9,445
Net loss		—		—		—		—		—			(11,661	)		—			(11,661	)
Foreign currency translation adjustment, net of tax		—		—		—		—		—			—			32			32
Unrealized loss on derivatives (Note 5), net of tax		—		—		—		—		—			—			(2,267	)		(2,267	)
Gains on derivatives reclassified to income (Note 5), net of tax		—		—		—		—		—			—			(159	)		(159	)
Issuance of common stock, net of tax withholdings		1,765		—		—		2		(1,692	)		—			—			(1,690	)
Balance at May 3, 2025		240,831		37,791		37,791	$	279	$	2,288,248		$	(1,160,720	)	$	(20,477	)	$	1,107,330

See accompanying notes to consolidated financial statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Cash flows from operating activities:
Net loss	$	(15,146	)	$	(11,661	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		49,041			49,811
Amortization of debt discounts and issuance costs		1,337			1,246
Provision for deferred taxes		288			(9,218	)
Equity-based compensation		9,451			9,420
Loss on extinguishment and modification of debt		11,840			—
Income from equity method investees		(5,555	)		(4,610	)
Amounts reclassified out of accumulated other comprehensive loss		51			(212	)
Non-cash operating lease costs		103,080			102,132
Changes in assets and liabilities:
Receivables		8,884			4,229
Merchandise inventories		(42,702	)		7,857
Prepaid expenses and other assets		(8,299	)		(1,673	)
Accounts payable and book overdrafts		30,577			(19,028	)
Accrued salaries and employee benefits		(46,362	)		(51,130	)
Accrued expenses and other liabilities		11,559			12,426
Operating lease liabilities		(139,677	)		(103,780	)
Other long-term liabilities		664			(1,263	)
Net cash used in operating activities		(30,969	)		(15,454	)
Cash flows from investing activities:
Cash paid for fixed assets		(38,153	)		(28,412	)
Insurance recoveries		230			—
Proceeds from sale of assets		—			1,279
Cash received from partial surrender of officers' life insurance		74			—
Net cash used in investing activities		(37,849	)		(27,133	)
Cash flows from financing activities:
Borrowings under long-term debt agreements		1,500,000			—
Repayments of long-term debt		(1,500,000	)		—
Debt refinancing costs and original issue discount		(28,442	)		—
Payments for finance lease liabilities		(1,110	)		(1,143	)
Proceeds from employee stock purchase plan and stock option exercises		1,008			967
Tax withholdings on stock-based awards		(4,094	)		(158	)
Net cash used in financing activities		(32,638	)		(334	)
Net decrease in cash, cash equivalents and restricted cash		(101,456	)		(42,921	)
Cash, cash equivalents and restricted cash at beginning of period		269,412			181,665
Cash, cash equivalents and restricted cash at end of period	$	167,956		$	138,744
Supplemental cash flow disclosure:
Interest paid, net	$	21,271		$	31,112
Supplemental non-cash investing and financing activities disclosure:
Accounts payable and accrued expenses for capital expenditures	$	17,056		$	13,010

See accompanying notes to consolidated financial statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Summary of Significant Accounting Policies

Basis of Presentation

Petco Health and Wellness Company, Inc. (together with its consolidated subsidiaries, the “Company”) is a leading pet specialty retailer focused on improving the lives of pets, pet parents, and its own partners. The Company manages its business as one reportable operating segment.

In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Consolidated Financial Statements.

There have been no significant changes from the significant accounting policies disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

The accompanying consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. The accompanying consolidated financial statements and these Notes to Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026, from which the prior year balance sheet information herein was derived.

Use of Estimates

The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates are based on information that is currently available and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could vary from those estimates under different assumptions or conditions.

Derivative Instruments

The Company has entered into interest rate collar and interest rate swap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collars and swap are accounted for as cash flow hedges, and changes in the fair value are reported as a component of accumulated other comprehensive income (loss) ("AOCI").

Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows (in thousands):


	May 2, 2026		January 31, 2026
Cash and cash equivalents	$	166,804	$	256,736
Restricted cash included in other current assets		1,152		12,676
Total cash, cash equivalents and restricted cash in the statement of cash flows	$	167,956	$	269,412

2. Revenue Recognition

Net sales by product type and services were as follows (in thousands):


	Thirteen weeks ended
	May 2, 2026		May 3, 2025
Consumables	$	746,827	$	748,070
Supplies and companion animals		481,260		493,821
Services and other		268,645		251,508
Net sales	$	1,496,732	$	1,493,399

3. Senior Secured Credit Facilities

The Company had a $1,700.0 million secured term loan facility originally maturing on March 4, 2028 (the “First Lien Term Loan”). As of January 31, 2026, the outstanding principal balance of the First Lien Term Loan was $1,500.0 million. On February 2, 2026, the Company entered into a refinancing amendment to the credit agreement governing the First Lien Term Loan and issued $600.0 million in aggregate principal amount of senior secured notes (the “Senior Secured Notes”). Among other changes, the amendment provided that certain lenders would provide new term loans to the Company in an aggregate principal amount of $900.0 million (the “Amended First Lien Term Loan”), the proceeds of which, together with cash on hand and the proceeds from the Company's issuance of the Senior Secured Notes, would be used to repay the then outstanding principal on the First Lien Term Loan.

Interest under the Amended First Lien Term Loan is, at the Company’s option, either a base rate plus 3.25% or Term SOFR plus 4.25%, payable quarterly in arrears. The base rate is the greater of the bank prime rate, federal funds effective rate plus 0.5% or one month Term SOFR plus 1.0%. The Amended First Lien Term Loan matures on February 2, 2031. Principal payments are $2.25 million quarterly and commence on June 30, 2026.

The Company has a secured asset-based revolving credit facility (as amended from time to time, the “ABL Revolving Credit Facility”). The first tranche of the ABL Revolving Credit Facility, which had availability of up to $35.0 million, subject to a borrowing base, matured on March 4, 2026. The remaining tranche has availability of up to $546.0 million, subject to a borrowing base, maturing on March 29, 2029. Interest on the ABL Revolving Credit Facility is based on, at the Company's option, either the base rate subject to a 1% floor, or Term SOFR subject to a floor of 0%, plus an applicable margin.

As of May 2, 2026, the Company was in compliance with its covenants under the Amended First Lien Term Loan and the ABL Revolving Credit Facility.

Term Loan Facilities

In connection with the February 2, 2026 transaction, the Company recognized a loss on debt extinguishment and modification of $11.8 million, which consisted of a $4.0 million write-off of unamortized debt discount and issuance costs on the First Term Loan Facility and $7.8 million of third-party expenses. Fees relating to the Company’s entry into the Amended First Lien Term Loan consisted of arranger fees and other third-party expenses. Of those fees, $1.4 million was capitalized as debt issuance costs, along with $9.0 million of original issue discount. The remaining portion of original issue discount and debt issuance costs of the First Term Loan Facility previously capitalized is being amortized over the contractual term of the Amended First Lien Term Loan to interest expense using the effective interest rate in effect at issuance, as these amounts represent the portion that was not substantially modified.

As of May 2, 2026, the outstanding principal balance of the Amended First Lien Term Loan was $900.0 million ($886.1 million, net of the unamortized discount and debt issuance costs). As of January 31, 2026, the outstanding principal balance of the First Lien Term Loan was $1,500.0 million ($1,491.8 million, net of the unamortized discount and debt issuance costs). The weighted average interest rate on the borrowings outstanding was 8.1% and 7.3% as of May 2, 2026 and January 31, 2026, respectively. Debt issuance costs are being amortized over the contractual term to interest expense using the effective interest rate in effect at issuance. As of May 2, 2026, the estimated fair value of the Amended First Lien Term Loan was approximately $893.3 million, based upon Level 2 fair value hierarchy inputs. As of January 31, 2026, the estimated fair value of the First Lien Term Loan was $1,496.3 million, based upon Level 2 fair value hierarchy inputs.

Revolving Credit Facilities

As of May 2, 2026 and January 31, 2026, no amounts were outstanding under the ABL Revolving Credit Facility. As of May 2, 2026, $487.6 million was available under the ABL Revolving Credit Facility, which is net of $58.4 million of outstanding letters of credit issued in the normal course of business. As of May 2, 2026 and January 31, 2026, unamortized debt issuance costs of $3.0 million and $3.2 million, respectively, relating to the ABL Revolving Credit Facility were outstanding and were being amortized using the straight-line method over the remaining term of the agreement.

Interest on the ABL Revolving Credit Facility is based on, at the Company’s option, either the base rate subject to a 1% floor, or Term SOFR subject to a floor of 0%, plus an applicable margin. The applicable margin is currently equal to 25 basis points in the case of base rate loans and 125 basis points in the case of Term SOFR loans.

4. Senior Secured Notes

As part of the February 2, 2026 refinancing of the First Lien Term Loan described in Note 3, "Senior Secured Credit Facilities", the Company issued $600.0 million in aggregate principal amount of senior secured notes. The Senior Secured Notes bear interest at 8.25% per annum, payable semiannually in arrears, and mature on February 1, 2031. Approximately $10.3 million of arranger fees and other third-party expenses relating to the Company’s issuance of the Senior Secured Notes were capitalized as debt issuance costs.

As of May 2, 2026, the outstanding principal balance of the Senior Secured Notes was $600.0 million ($590.1 million, net of the unamortized debt issuance costs). As of May 2, 2026, the weighted average interest rate on the borrowings outstanding was 8.3%. Debt issuance costs are being amortized over the contractual term to interest expense using the effective interest rate in effect at issuance. As of May 2, 2026, the estimated fair value of the Senior Secured Notes was approximately $601.5 million, based upon Level 2 fair value hierarchy inputs.

5. Derivative Instruments

The interest rate swap and collars are accounted for as cash flow hedges because they are expected to be highly effective in hedging variable rate interest payments. Changes in the fair value of the cash flow hedges are

reported as a component of AOCI. As of May 2, 2026, AOCI included unrealized gains of $0.1 million ($0.1 million, net of tax). As of January 31, 2026, AOCI included unrealized losses of $1.0 million ($0.8 million, net of tax). Approximately $0.1 million of pre-tax losses and $0.2 million of pre-tax gains deferred in AOCI were reclassified to interest expense during the thirteen week periods ended May 2, 2026 and May 3, 2025, respectively.

The cash flow hedges are reflected in the Company’s consolidated balance sheets as follows (in thousands):


Assets (Liabilities)	Balance sheet location	May 2, 2026			January 31, 2026
Current asset portion of cash flow hedges	Other current assets	$	163		$	—
Non-current asset portion of cash flow hedges	Other long-term assets		—			—
Current liability portion of cash flow hedges	Accrued expenses and other liabilities		(72	)		(853	)
Non-current liability portion of cash flow hedges	Other long-term liabilities		—			—
Total cash flow hedges		$	91		$	(853	)

6. Fair Value Measurements

Assets and Liabilities Measured on a Recurring Basis

The following table presents information about assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):


	May 2, 2026
	Level 1		Level 2			Level 3
Assets (liabilities):
Money market mutual funds	$	114,652	$	—		$	—
Investments of officers' life insurance	$	—	$	16,415		$	—
Non-qualified deferred compensation plan	$	—	$	(13,975	)	$	—


	January 31, 2026
	Level 1		Level 2			Level 3
Assets (liabilities):
Money market mutual funds	$	216,676	$	—		$	—
Investments of officers' life insurance	$	—	$	16,109		$	—
Non-qualified deferred compensation plan	$	—	$	(13,447	)	$	—

The fair value of money market mutual funds is based on quoted market prices, such as quoted net asset values published by the fund as supported in an active market. Money market mutual funds included in the Company’s cash and cash equivalents were $113.5 million and $204.0 million as of May 2, 2026 and January 31, 2026, respectively. Also included in the Company’s money market mutual funds balances were $1.2 million and $12.7 million as of May 2, 2026 and January 31, 2026, respectively, which relate to the Company’s restricted cash, and are included in other current assets in the consolidated balance sheets.

The Company maintains a deferred compensation plan for key executives and other members of management, which is funded by investments in officers’ life insurance. The fair value of this obligation is based on participants’ elected investments, which reflect the closing market prices of similar assets.

The Company holds certain investments in equity securities without readily determinable fair values. When an upward or downward adjustment occurs, the resulting gains or losses are included in other non-operating income in the consolidated statements of operations.

Assets Measured on a Non-Recurring Basis

The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets, fixed assets and equity and other investments, are reported at carrying value, or at fair value as of the date of the Company’s acquisition of Petco Holdings, Inc. LLC on January 26, 2016, and are not required to be measured at fair value on a recurring basis. However, on a periodic basis (at least annually for goodwill and indefinite-lived intangibles or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable), non-financial assets are assessed for impairment. If impaired, the carrying values of the assets are written down to fair value using Level 3 inputs.

There were no triggering events identified and no indications of impairment of the Company’s goodwill, indefinite-lived trade name, or equity and other investments during the thirteen week periods ended May 2, 2026 and May 3, 2025. During the thirteen week periods ended May 2, 2026 and May 3, 2025, the Company recorded fixed asset and right-of-use asset impairment charges of $0.1 million and $0.6 million, respectively.

7. Stockholders’ Equity

Equity-Based Compensation

Equity-based compensation awards under the Company’s current equity incentive plan (as amended, the “2021 Equity Incentive Plan”) include restricted stock units (“RSUs,” which include performance-based stock units and market-based stock units), restricted stock awards (“RSAs”), non-qualified stock options, and other equity compensation awards. In addition, the Company has made equity-based compensation awards of RSUs and non-qualified stock options outside of the 2021 Equity Incentive Plan as employment inducement awards (collectively, the “Inducement Awards”). The Company also has an employee stock purchase plan (“ESPP”).

The Company’s controlling parent, Scooby LP, also maintains an incentive plan (the “2016 Incentive Plan”) under which it has awarded partnership unit awards to certain current and former employees, consultants, and non-employee directors of the Company that are restricted profit interests in Scooby LP subject to a distribution threshold (“Series C Units”). No additional Series C Units have been or will be awarded following the Company’s initial public offering. As of May 2, 2026, substantially all Series C Units are fully vested.

The following table summarizes the Company’s equity-based compensation expense by award type (in thousands):


	Thirteen weeks ended
	May 2, 2026		May 3, 2025
RSUs and RSAs	$	7,763	$	7,735
Options		1,403		1,365
ESPP		285		338
Other awards		—		(18	)
Total equity-based compensation expense	$	9,451	$	9,420

Activity under the 2021 Equity Incentive Plan and the Inducement Awards was as follows (shares and dollars in thousands):


	RSUs and RSAs			Options
Nonvested/outstanding, January 31, 2026		19,845			13,562
Granted		13,194			—
Vested and delivered/exercised		(4,651	)		(59	)
Forfeited/expired		(728	)		(95	)
Nonvested/outstanding, May 2, 2026		27,660			13,408
Unrecognized compensation expense as of May 2, 2026	$	57,084		$	7,272
Weighted average remaining expense period as of May 2, 2026	2.4 years			1.4 years

The ESPP allows eligible employees to contribute up to 15% of their base earnings towards purchases of Class A common stock, subject to an annual maximum. The purchase price will be 85% of the lower of (i) the fair market value of the stock on the associated lookback date and (ii) the fair market value of the stock on the last day of the related purchase period.

Loss Per Share

Potentially dilutive securities include potential Class A common shares related to outstanding stock options, unvested RSUs and RSAs, and the ESPP, calculated using the treasury stock method. The calculation of diluted shares outstanding excludes securities where the combination of the exercise or purchase price (in the case of options and the ESPP) and the associated unrecognized compensation expense is greater than the average market price of Class A common shares because the inclusion of these securities would be anti-dilutive.

All outstanding equity awards were excluded from the calculation of diluted loss per Class A and B-1 common share in the thirteen weeks ended May 2, 2026 and May 3, 2025, as their effect would be antidilutive in a net loss period.

8. Commitments and Contingencies

The Company is involved in legal proceedings and is subject to other claims and litigation arising in the ordinary course of its business. The Company has made accruals with respect to certain of these matters, where appropriate, which are reflected in the Company’s consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters, the Company has not made accruals because management has not yet determined that a loss is probable or because the amount of loss cannot be reasonably estimated. While the ultimate outcome of the matters cannot be determined, the Company currently does not expect that these matters will have a material adverse effect on its consolidated financial statements. The outcome of any litigation is inherently uncertain, however, and if decided adversely to the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be subject to liability that could have a material adverse effect on its consolidated financial statements.

9. Reportable Segment

The Company has one reportable segment managed on a consolidated basis. The measure of segment profit or loss is consolidated net income (loss) that is reported on the consolidated statement of operations. The measure of segment assets is reported on the consolidated balance sheet as total assets.

The following represents segment information for the Company’s single operating segment, for the periods presented (in thousands):


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Revenue	$	1,496,732		$	1,493,399
Add (deduct):
Cost of sales		(922,307	)		(923,431	)
Advertising and marketing expenses		(39,087	)		(35,446	)
Stock compensation - general and administrative		(9,342	)		(9,323	)
Other general and administrative expenses (1)		(501,370	)		(508,840	)
Interest income		1,497			1,359
Interest expense		(32,785	)		(33,494	)
Loss on extinguishment and modification of debt		(11,840	)		—
Income tax expense		(2,199	)		(495	)
Income from equity method investees		5,555			4,610
Consolidated net loss	$	(15,146	)	$	(11,661	)

(1)

Other general & administrative expenses include pet care center expenses, support center labor and occupancy costs, legal, accounting, information technology, consulting costs, and depreciation and amortization.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the corresponding Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “2025 Form 10-K”). The discussion and analysis below contains certain forward-looking statements about our business and operations that are subject to the risks, uncertainties, and other factors referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q. These risks, uncertainties, and other factors could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. The risks described in this Form 10-Q and in other documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”), including the section entitled “Forward-Looking Statements” in this Form 10-Q, should be carefully reviewed. All amounts herein are unaudited.

Overview

Petco Health and Wellness Company, Inc. (“Petco”, the “Company”, “we”, “our” and “us”) is a leading pet specialty retailer focused on improving the lives of pets, pet parents, and our own partners. We nurture the pet-human bond in the aisles of more than 1,500 Petco stores across the U.S., Mexico, and Chile.

Our multicategory strategy integrates our digital assets with our nationwide physical footprint to meet the needs of pet parents who are looking for a single source for all their pets' needs. Petco.com, our e-commerce site, and the Petco app, our personalized mobile app, together serve as hubs for pet parents to book appointments and manage all of their pets’ needs, while enabling them to shop wherever, whenever, and however they want. We are focused on continually improving both our digital capabilities as well as our membership offering.

We strive to be a company that is improving millions of pet lives as well as the lives of pet parents and the partners who work for us. In tandem with Petco Love, an independent 501(c)(3) nonprofit organization, we work with and support thousands of local animal welfare groups nationwide and, through these partnerships and in-store adoption events, we have helped find homes for over 7 million animals.

Macroeconomic factors, including interest rates, potential inflationary pressures, supply chain constraints, tariffs, and global economic and geopolitical developments, including geopolitical conflicts and tensions, have had varying impacts on our results of operations that are difficult to isolate and quantify. We cannot predict the duration or ultimate severity of these macroeconomic factors or the ultimate impact on our operations and liquidity. Please refer to the risk factors referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q.

On February 20, 2026, the U.S. Supreme Court issued a decision invalidating certain tariffs previously imposed under the International Emergency Economic Power Act ("IEEPA"). We have applied for a refund of tariffs paid, following the processes established by U.S. Customs and Border Protection. We will continue to evaluate new information and will recognize any IEEPA tariff refunds or related receivables when they are realized or realizable.

How We Assess the Performance of Our Business

In assessing our performance, we consider a variety of performance and financial measures, including the following:

Comparable Sales

Comparable sales is an important measure throughout the retail industry and includes both retail and digital sales of products and services. A new location or digital site is included in comparable sales beginning on the first day of the fiscal month following 12 full fiscal months of operation and is subsequently compared to like time periods from the previous year. Relocated pet care centers become comparable pet care centers on the first day of operation if the original pet care center was open longer than 12 full fiscal months. If, during the period presented, a pet care center was closed, sales from that pet care center are included up to the first day of the month of closing. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this filing regarding our comparable sales may not be comparable to similar data made available by other retailers.

Comparable sales allow us to evaluate how our overall ecosystem is performing by measuring the change in period-over-period net sales from locations and digital sites that have been open for the applicable period. We intend to improve comparable sales by continuing initiatives aimed to increase customer retention, frequency of visits, and basket size. General macroeconomic and retail business trends are also a key driver of changes in comparable sales.

Non-GAAP Financial Measures

Management and our board of directors review, in addition to GAAP (as defined herein) measures, certain non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. Further explanations of these non-GAAP measures, along with reconciliations to their most comparable GAAP measures, are presented below under “Reconciliation of Non-GAAP Financial Measures to GAAP Measures.”

Executive Summary

Comparing the thirteen weeks ended May 2, 2026 with the thirteen weeks ended May 3, 2025 (unless otherwise noted), our results included the following:

•

an increase in net sales from $1.49 billion to $1.50 billion, representing period-over-period growth of 0.2% and a comparable sales increase of 0.7%;

•

operating income of $24.6 million, compared to operating income of $16.4 million in the prior year period;

•

net loss attributable to Class A and B-1 common stockholders of $15.1 million, compared to net loss attributable to Class A and B-1 common stockholders of $11.7 million in the prior year period; and

•

an increase in Adjusted EBITDA from $89.4 million to $97.3 million.

Results of Operations

The following tables summarize our results of operations and the percent of net sales of line items included in our consolidated statements of operations (dollars in thousands):


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Net sales:
Products	$	1,228,087		$	1,241,891
Services and other		268,645			251,508
Total net sales		1,496,732			1,493,399
Cost of sales:
Products		757,778			766,285
Services and other		164,529			157,146
Total cost of sales		922,307			923,431
Gross profit		574,425			569,968
Selling, general and administrative expenses		549,799			553,609
Operating income		24,626			16,359
Interest income		(1,497	)		(1,359	)
Interest expense		32,785			33,494
Loss on extinguishment and modification of debt		11,840			—
Loss before income taxes and income from equity method investees		(18,502	)		(15,776	)
Income tax expense		2,199			495
Income from equity method investees		(5,555	)		(4,610	)
Net loss attributable to Class A and B-1 common stockholders	$	(15,146	)	$	(11,661	)


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Net sales:
Products		82.1	%		83.2	%
Services and other		17.9			16.8
Total net sales		100.0			100.0
Cost of sales:
Products		50.6			51.3
Services and other		11.0			10.5
Total cost of sales		61.6			61.8
Gross profit		38.4			38.2
Selling, general and administrative expenses		36.7			37.1
Operating income		1.7			1.1
Interest income		(0.1	)		(0.1	)
Interest expense		2.2			2.3
Loss on extinguishment and modification of debt		0.8			—
Loss before income taxes and income from equity method investees		(1.2	)		(1.1	)
Income tax expense		0.1			0.0
Income from equity method investees		(0.3	)		(0.3	)
Net loss attributable to Class A and B-1 common stockholders		(1.0	)%		(0.8	)%


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
Operational Data:
Comparable sales change		0.7	%		(1.3	)%
Total pet care centers (U.S.) at end of period		1,378			1,393
Adjusted EBITDA (in thousands)	$	97,331		$	89,449

Thirteen Weeks Ended May 2, 2026 Compared with Thirteen Weeks Ended May 3, 2025

Net Sales and Comparable Sales


	Thirteen weeks ended
(dollars in thousands)	May 2, 2026		May 3, 2025		$ Change			% Change
Consumables	$	746,827	$	748,070	$	(1,243	)		(0.2	%)
Supplies and companion animals		481,260		493,821		(12,561	)		(2.5	%)
Services and other		268,645		251,508		17,137			6.8	%
Net sales	$	1,496,732	$	1,493,399	$	3,333			0.2	%

Net sales increased $3.3 million, or 0.2%, to $1.50 billion in the thirteen weeks ended May 2, 2026 compared to net sales of $1.49 billion in the thirteen weeks ended May 3, 2025. The sales increase primarily reflects growth in our services business, driven by our investments in customer acquisition and retention, as well as optimization of our veterinary footprint. We also experienced positive comparable sales trends in our consumables category, offset by a lower pet care center count. We continue to focus on profitability and margin through a disciplined approach to managing unit costs, pricing, and promotional strategies.

We are unable to quantify certain factors impacting sales described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.

Gross Profit

As a percentage of net sales, our gross profit rate was 38.4% for the thirteen weeks ended May 2, 2026 compared with 38.2% for the thirteen weeks ended May 3, 2025. We continue to focus on effectively utilizing our services footprint and managing our inventory, unit costs, pricing, and promotional strategies. We are unable to quantify the factors impacting gross profit rate described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.

Selling, General and Administrative (“SG&A”) Expenses

As a percentage of net sales, SG&A expenses were 36.7% for the thirteen weeks ended May 2, 2026 compared with 37.1% for the thirteen weeks ended May 3, 2025. The decrease in SG&A expenses between the periods was primarily due to lower payroll and consulting costs, partially offset by an increase in advertising expenses.

Interest Expense

Interest expense decreased $0.7 million, or 2.1%, to $32.8 million in the thirteen weeks ended May 2, 2026 compared with $33.5 million in the thirteen weeks ended May 3, 2025. The decrease was primarily driven by a lower aggregate outstanding principal balance of indebtedness, partially offset by higher interest rates during the thirteen weeks ended May 2, 2026. For more information, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes" in the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Loss on Extinguishment and Modification of Debt

Loss on extinguishment and modification of debt was $11.8 million for the thirteen weeks ended May 2, 2026. This loss was recognized in conjunction with the February 2, 2026 debt refinancing transaction described under "Sources of Liquidity—Senior Secured Credit Facilities and Senior Secured Notes" below. There was no loss on debt extinguishment and modification for the thirteen weeks ended May 3, 2025. For more information, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes," to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Income Tax Expense

We compute our tax provision (benefit) for interim periods by applying the estimated annual effective tax rate to our year-to-date income (loss) before income taxes, adjusted for discrete items recognized during the quarter. However, due to the sensitivity of the estimated annual effective tax rate to changes in estimated annual pre-tax results, we determined that the actual effective tax rate method is the appropriate approach in the computation of the interim tax provision for the thirteen weeks ended May 2, 2026, as the use of the estimated annual effective tax rate would provide a distortive result.

Our actual effective tax rate was (17.0)%, resulting in income tax expense of $2.2 million for the thirteen weeks ended May 2, 2026, compared to an estimated annual effective tax rate of (4.5%), resulting in income tax expense of $0.5 million for the thirteen weeks ended May 3, 2025. The change in tax rate for the thirteen weeks ended May 2, 2026, was primarily driven by a reduction of equity-based compensation not expected to be deductible for tax purposes, along with a change in pre-tax earnings and the application of our actual effective tax rate in the current period compared to the use of our estimated annual effective tax rate in the prior year.

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

The following information provides definitions and reconciliations of certain non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Such non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the most comparable GAAP measures. The non-GAAP financial measures presented may differ from similarly-titled measures used by other companies.

Adjusted EBITDA

We present Adjusted EBITDA, a non-GAAP financial measure, because we believe it enhances an investor’s understanding of our financial and operational performance by excluding certain material non-cash items, unusual or non-recurring items that we do not expect to continue in the future, and certain other adjustments we believe are or are not reflective of our ongoing operations and performance. Adjusted EBITDA enables operating performance to be reviewed across reporting periods on a consistent basis. We use Adjusted EBITDA as one of the principal measures to evaluate and monitor our operating financial performance and to compare our performance to others in our industry. We also use Adjusted EBITDA in connection with establishing discretionary annual incentive compensation targets, to make budgeting decisions, to make strategic decisions regarding the allocation of capital, and to report our quarterly results as defined in our debt agreements, although under such agreements the measure is calculated differently and is used for different purposes.

Adjusted EBITDA is not a substitute for net income (loss), the most comparable GAAP measure, and is subject to a number of limitations as a financial measure, so it should be used in conjunction with GAAP financial measures and not in isolation. There can be no assurances that we will not modify the presentation of Adjusted EBITDA in the future. In addition, other companies in our industry may define Adjusted EBITDA differently, limiting its usefulness as a comparative measure. Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Reconciliation of Non-GAAP Financial Measures to GAAP Measures” included in the 2025 Form 10-K for more information regarding how we define Adjusted EBITDA.

The table below reflects the calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented:


	Thirteen weeks ended
(dollars in thousands)	May 2, 2026			May 3, 2025
Net loss attributable to Class A and B-1 common stockholders	$	(15,146	)	$	(11,661	)
Interest expense, net		31,288			32,135
Income tax expense		2,199			495
Depreciation and amortization		49,041			49,811
Income from equity method investees		(5,555	)		(4,610	)
Loss on extinguishment and modification of debt		11,840			—
Equity-based compensation		9,451			9,420
Mexico joint venture EBITDA (1)		12,916			10,198
Other costs (2)		1,297			3,661
Adjusted EBITDA	$	97,331		$	89,449
Net sales	$	1,496,732		$	1,493,399
Net margin (3)		(1.0	)%		(0.8	)%
Adjusted EBITDA Margin		6.5	%		6.0	%

(1)

Mexico joint venture EBITDA represents 50% of the entity’s operating results for the periods presented, as adjusted to reflect the results on a basis comparable to our Adjusted EBITDA. In the financial statements, this joint venture is accounted for as an equity method investment and reported net of depreciation and income taxes. Because such a presentation would not reflect the adjustments made in our calculation of Adjusted EBITDA, we include our 50% interest in our Mexico joint venture on an Adjusted EBITDA basis to ensure consistency. The table below presents a reconciliation of Mexico joint venture net income to Mexico joint venture EBITDA:


	Thirteen weeks ended
(dollars in thousands)	May 2, 2026		May 3, 2025
Net income	$	11,104	$	9,220
Depreciation		8,306		6,597
Income tax expense		5,194		4,166
Foreign currency loss (gain)		144		(292	)
Interest expense, net		1,083		704
EBITDA	$	25,831	$	20,395
50% of EBITDA	$	12,916	$	10,198

(2)

Other costs include, as incurred: restructuring costs and restructuring-related severance costs; legal reserves associated with significant, non-ordinary course legal or regulatory matters; and costs related to certain significant strategic transactions.

(3)

We define net margin as net loss attributable to Class A and B-1 common stockholders divided by net sales and Adjusted EBITDA margin as Adjusted EBITDA divided by net sales.

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company’s financial performance.

The table below reflects the calculation of Free Cash Flow for the periods presented:


	Thirteen weeks ended
	May 2, 2026			May 3, 2025
(dollars in thousands)
Net cash used in operating activities	$	(30,969	)	$	(15,454	)
Cash paid for fixed assets		(38,153	)		(28,412	)
Free Cash Flow	$	(69,122	)	$	(43,866	)

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are funds generated by operating activities and available capacity for borrowings on our $546.0 million ABL Revolving Credit Facility. Our ability to fund our operations, to make planned capital investments, to make scheduled debt payments and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business, and other factors, some of which are beyond our control. Our liquidity as of May 2, 2026 was $654.4 million, inclusive of cash and cash equivalents of $166.8 million and $487.6 million of availability on the ABL Revolving Credit Facility.

We are a party to contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under the ABL Revolving Credit Facility will be sufficient to finance our operations, meet our current cash requirements, and fund anticipated capital investments for at least the next 12 months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.

Cash Flows

The following table summarizes our consolidated cash flows:


	Thirteen weeks ended
(dollars in thousands)	May 2, 2026			May 3, 2025
Total cash used in:
Operating activities	$	(30,969	)	$	(15,454	)
Investing activities		(37,849	)		(27,133	)
Financing activities		(32,638	)		(334	)
Net decrease in cash, cash equivalents and restricted cash	$	(101,456	)	$	(42,921	)

Operating Activities

Our primary source of operating cash is sales of products and services to customers, which are substantially all on a cash basis, and therefore provide us with a significant source of liquidity. Our primary uses of cash in operating activities include: purchases of inventory; freight and warehousing costs; employee-related expenditures; occupancy-related costs for our pet care centers, distribution centers and corporate support centers; credit card fees; interest under our debt agreements; and marketing expenses. Net cash used in operating activities is impacted by our net loss adjusted for certain non-cash items, including: depreciation and amortization; amortization of debt discounts and issuance costs; deferred income taxes; equity-based compensation; impairments of goodwill and intangible assets; other non-operating income; and the effect of changes in operating assets and liabilities.

Net cash used in operating activities was $31.0 million in the thirteen weeks ended May 2, 2026 compared with net cash used in operating activities of $15.5 million in the thirteen weeks ended May 3, 2025. The decrease in operating cash flows were primarily driven by a increase in inventory purchases as well as timing of invoice payments. This was partially offset by a decrease in cash paid for interest and lower payouts of prior year accrued incentive bonuses.

Investing Activities

Net cash used in investing activities was $37.8 million and $27.1 million for the thirteen weeks ended May 2, 2026 and May 3, 2025, respectively, and consisted primarily of capital expenditures to support our business.

Financing Activities

Net cash used in financing activities was $32.6 million for the thirteen weeks ended May 2, 2026, compared with $0.3 million used in financing activities for the thirteen weeks ended May 3, 2025. Financing cash flows in the thirteen weeks ended May 2, 2026 primarily consisted of payments of debt issuance costs and borrowings and repayments of debt in connection with the February 2, 2026 refinancing transaction discussed under "Sources of Liquidity" below. Financing cash flows in the thirteen weeks ended May 3, 2025 were not material.

Sources of Liquidity

Senior Secured Credit Facilities and Senior Secured Notes

The Company had a secured term loan facility originally maturing on March 4, 2028 (the “First Lien Term Loan”), with an outstanding principal balance of $1,500.0 million as of January 31, 2026. On February 2, 2026, the Company entered into a refinancing amendment to the credit agreement governing the First Lien Term Loan (“Amended First Lien Term Loan”) and issued $600.0 million in aggregate principal amount of senior secured notes (the “Senior Secured Notes”). Following the amendment, $900.0 million of principal remained on the Amended First Lien Term Loan.

For more information regarding this indebtedness, refer to Note 3, “Senior Secured Credit Facilities,” and Note 4, "Senior Secured Notes," to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Derivative Instruments

The Company has entered into interest rate collar and swap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. For more information regarding derivative instruments, refer to Note 5, “Derivative Instruments,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make assumptions and estimates about future results and apply judgments that affect the reported amounts of assets, liabilities, net sales, expenses and related disclosures. We base our estimates and judgments on historical experience, current trends and other factors that we believe to be relevant at the time our consolidated financial statements are prepared. On an ongoing basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2025 Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to market risks arising from transactions in the normal course of our business. These risks are primarily associated with interest rate fluctuations, as well as changes in our credit standing, based on the capital and credit markets, which are not predictable. We do not currently hold any instruments for trading purposes.

Interest Rate Risk

We are subject to interest rate risk in connection with the Amended First Lien Term Loan and the ABL Revolving Credit Facility. As of May 2, 2026, we had $900.0 million outstanding under the Amended First Lien Term Loan and no amounts outstanding under the ABL Revolving Credit Facility. The Amended First Lien Term Loan and the ABL Revolving Credit Facility each bear interest at variable rates. An increase of 100 basis points in the variable rates on the Amended First Lien Term Loan and the ABL Revolving Credit Facility as of May 2, 2026 would have increased annual cash interest in the aggregate by approximately $9.1 million. Additionally, we entered into cash flow hedges to limit the maximum interest rate on a portion of our variable-rate debt and limit our exposure to interest rate variability, refer to Note 5, “Derivative Instruments,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

We cannot predict market fluctuations in interest rates and their impact on our debt, nor can there be any assurance that long-term fixed-rate debt will be available at favorable rates, if at all. Consequently, future results may differ materially from estimated results due to adverse changes in interest rates or debt availability.

Credit Risk

As of May 2, 2026, substantially all of our cash and cash equivalents were maintained at major financial institutions in the United States, and our current deposits are likely in excess of insured limits. We believe these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us.

Foreign Currency Risk

Substantially all of our business is currently conducted in U.S. dollars, with a small amount denominated in foreign currencies. Our expenses are generally denominated in the currencies of the jurisdictions in which we conduct our operations. Our results of current and future operations and cash flows are subject to fluctuations due to changes in foreign currency exchange rates. We do not enter into forward currency contracts to hedge our foreign currency exposure. A hypothetical 10% change in foreign currency exchange rates applicable to our business would not have a material effect on our operating results.

Item 4. Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this Form 10-Q, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of May 2, 2026.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended May 2, 2026, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based on certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 8, “Commitments and Contingencies,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a description of legal proceedings, which is incorporated herein by reference.

Item 1A. Risk Factors.

Reference is made to Part I, Item 1A, “Risk Factors” included in the 2025 Form 10-K for information concerning risk factors. There have been no material changes with respect to the risk factors disclosed in the 2025 Form 10-K. You should carefully consider such factors, which could materially and adversely affect our business, financial condition and/or results of operations. The risks described in the 2025 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition and/or results of operations.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None of our directors or Section 16 officers adopted or terminated a Rule 10b5-1 trading arrangement (as defined in Item 408(a) of Regulation S-K) or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this Form 10-Q.

Item 6. Exhibits.

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q:


Exhibit Number		Description

4.4		Indenture, dated February 2, 2026, among the Company, the guarantors party thereto, and U.S. Bank Trust Company, National Association (incorporated by reference to Exhibit 4.1 of the Company's Current Report on Form 8-K, filed on February 2, 2026)

10.1		First Lien Credit Agreement, dated March 4, 2021, by and among the Company, the Lenders party thereto, and Citibank, N.A., as Administrative Agent and Collateral Agent, as amended by the First Amendment to Credit Agreement, dated December 12, 2022, by and between the Company, and Citibank, N.A., as administrative agent, and as further amended by the Second Amendment to Credit Agreement, dated as of February 2, 2026, among the Company, the guarantors party thereto, certain lenders party thereto and Citibank, N.A., as administrative agent (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on February 2, 2026)

10.2†		Form of Performance Stock Unit Award Grant Notice and Standard terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (2026 CEO Form) (incorporated by reference to Exhibit 10.30 of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026)

10.3†		Form of Performance Stock Unit Award Grant Notice and Standard terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (2026 Executive Form) (incorporated by reference to Exhibit 10.43 of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026)

10.4†		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (2026 Executive Form) (incorporated by reference to Exhibit 10.41 of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026)

10.5†		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (2026 CEO Form) (incorporated by reference to Exhibit 10.42 of the Company's Annual Report on Form 10-K for the fiscal year ended January 31, 2026)

10.6†		Offer Letter, dated February 17, 2025, between Michael Romanko and Petco Animal Supplies Stores, Inc.

10.7†		Separation Agreement and General Release of Claims, dated December 16, 2025, between Jack Stout and Petco Animal Supplies Stores, Inc.

31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

101.SCH		Inline XBRL Taxonomy Extension With Embedded Linkbase Documents


104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


†	Management contract or compensatory plan or arrangement.

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		Petco Health and Wellness Company, Inc.

Date: June 5, 2026	By:		/s/ Sabrina Simmons
			Sabrina Simmons
			Chief Financial Officer (Principal Financial and Accounting Officer)

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Date	Price Target	Rating	Analyst
4/13/2026	$3.83	Buy → Neutral	Goldman
3/12/2026	$5.00	Hold → Buy	Jefferies
7/19/2024	$3.00 → $4.00	Neutral	Citigroup
4/2/2024	$5.00 → $1.50	Buy → Underperform	BofA Securities
12/19/2023	$3.11	Hold	Jefferies
11/30/2023	$8.00 → $3.00	Outperform → Neutral	Robert W. Baird
11/29/2023		Overweight → Equal Weight	Wells Fargo
9/29/2023		Peer Perform	Wolfe Research

SEC Form 10-Q filed by Petco Health and Wellness Company Inc.

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