Why Petco Stock Popped Today

By Joe Tenebruso – Mar 12, 2026 at 10:45PM ESTKey PointsPetco is closing underperforming stores as it prioritizes free cash flow production.Management expects sales to rebound in 2026.Shares of Petco (WOOF +34.38%) surged on Thursday after the pet food purveyor reported strong profit gains and issued an upbeat forecast for the year ahead. Image source: Getty Images. A renewed focus on profitability Petco's net sales declined by 2.4% year over year to $1.5 billion in its fiscal 2025 fourth quarter, which ended on Jan. 31. The pet supplies retailer closed seven underperforming stores during the quarter, placing its total at 1,382 locations at the end of January. Comparable sales, which measure revenue at stores open for at least one year, fell 1.6%, as Petco pared back some lower-margin products. ExpandNASDAQ: WOOFPetco Health and WellnessToday's Change(34.38%) $0.82Current Price$3.23Key Data PointsMarket Cap$675MDay's Range$2.92 - $3.3352wk Range$2.24 - $4.50Volume557KAvg Vol1.9MGross Margin35.26% Yet while Petco's efficiency initiatives contributed to a dip in sales, they also helped to drive its profit margins sharply higher. The pet care provider's operating income soared 83% to $32 million. Petco's cash generation also improved markedly over the course of 2025. The company's full-year free cash flow rocketed 276% higher to $187 million. That enabled Petco to bolster its cash reserves while also paying down debt. A return to growth Petco sees its net sales growing by up to 1.5% in 2026, even as it closes an additional 15 to 20 stores. "We are confident that our focus on driving product newness and innovation, as well as leveraging our differentiated, high-touch store ecosystem, will help us to grow market share," CEO Joel Anderson said. Investors are clearly enthused by Petco's improved profitability, but long-term profit gains will require rising sales at existing stores. Fortunately, management expects just that. "Our outlook reflects our strategic initiatives and assumes a return to positive comps in 2026," Anderson said.Read NextNov 26, 2025 •By Joe TenebrusoWhy Petco Stock Popped TodayAug 29, 2025 •By Eric VolkmanWhy Petco Stock Was a Good, Good Boy on FridayMay 21, 2025 •By Parkev Tatevosian, CFAShould Investors Buy Petco Stock Right Now?Dec 6, 2024 •By Keith NoonanWhy Petco Stock Is Skyrocketing TodayOct 4, 2024 •By Anders BylundWhy Petco Health and Wellness Stock Soared 43% Higher Last MonthSep 11, 2024 •By Keith SpeightsWhy Petco Stock Is Skyrocketing TodayAbout the AuthorJoe Tenebruso is a contributing Motley Fool stock market analyst with more than 3,000 financial bylines to his name. Joe was an investment analyst for Stock Advisor, Income Investor, Crypto Society, and other top-rated investing services. He also managed Tier 1 Investments, a market-crushing real-money portfolio with 24.58% annualized returns. Joe graduated summa cum laude from Rutgers University with a Bachelor of Science in Finance.tmfguardianX@Tier1InvestorStocks MentionedPetco Health and WellnessNASDAQ: WOOF$3.23(+34.38%)+$0.83*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.