Petco, the country’s second-biggest pet store chain, is struggling. Its latest earnings report showed a $35 million revenue drop from last year, bringing sales down to $1.5 billion for the quarter.
Same-store sales fell 1.4% as well, prompting Petco to plan to close 25 stores that haven’t performed well.
With nearly 1,400 stores across the U.S., Mexico, and Puerto Rico, the company is now trying to adjust its business as investors assess whether its turnaround plan will work.
Tariffs Make Pet Products Costlier
Petco is struggling with new trade tariffs that quickly raise the cost of importing pet products from countries like China and Canada.
The company’s Chief Financial Officer says tariffs are becoming more expensive every quarter, affecting about 7% of its inventory costs.
Because Petco relies heavily on items from other countries, rising tariffs could force the company to change how it sets prices, making things more expensive for customers.
The Online Shopping Challenge
People’s online shopping habits make it hard for traditional pet stores like Petco to keep up.
Big online sellers like Amazon and Chewy often offer better prices and convenient home delivery, putting pressure on physical store chains that have higher costs.
Even though the pet industry keeps growing, experts say more and more money is moving to online orders, so older companies have to rethink how many stores they need.
Tougher Times for Pet Owners
Because of high inflation and debt, American families are cutting back on spending, even for their pets, which they usually try to protect from budget cuts.
Surveys show people are now shopping for cheaper pet food and making trips to different stores to get better deals.
Experts warn that if stores raise prices too much, customers might leave for more affordable options, and loyal pet owners may rethink their shopping habits.
Closing Stores to Survive
Petco says shutting the 25 weakest stores is part of a long-term plan to make the company healthier.
These closures will happen across eleven states and Washington, D.C. By closing shops that lose money or don’t attract enough business, Petco hopes to focus on stores and markets that are doing better.
Leaders say this is just part of a new strategy to save money and stabilize the company, not a sign that Petco is giving up.
How Store Closures Hurt Communities
When a local Petco closes, some pet owners are upset because they’ll lose access to unique food, grooming, or veterinary services they can’t get elsewhere, like at PetSmart.
Many towns depend on Petco for live animals and in-store vet clinics.
With fewer options, prices could rise where there’s no competition, and even people who don’t shop at Petco notice the effects.
Jobs Disappear, Workers Worry
Hundreds of workers will lose their jobs as Petco shuts down stores, adding to broader worries about job losses in retail across America.
While some team members might find work at other locations, many don’t know if they’ll be kept on.
Workers with special skills may be especially hard to replace, which could leave a gap in customer service that online retailers can’t fill.
Mixed Results in Petco’s Finances
The company’s finances are a mix of good and bad news. Petco’s operating income improved, rising to $43 million, thanks to better cost management.
They also kept more money in the bank, cutting their inventory by almost 10%. However, sales declined, and the company closed more locations than it had opened.
Leaders raised profit expectations for the year, but say there’s still work to do to boost sales and keep up with the competition.
Fighting to Stay Competitive
Petco’s most significant battles are with other large pet stores, like PetSmart, and fast-growing online sellers like Amazon and Chewy.
Some new companies now sell specialty pet food and products directly to customers, cutting out the need for big stores and putting more pressure on traditional chains.
When smaller stores close, the entire industry becomes even more cutthroat, leaving only the strongest or most adaptable retailers standing.
Services Are Petco’s Secret Weapon
To combat online competition, Petco is focusing more on services you can’t buy over the internet, like grooming, training, and vet care.
Their in-store clinics and salons not only make higher profits but also bring in loyal customers.
However, closing stores and cutting staff could make it harder for Petco to keep these services running smoothly, so company leaders must work hard to avoid losing what sets them apart.
Leadership Pushes for Change
CEO Joel Anderson says Petco needs to shift from playing defense to playing offense if it wants to survive.
The leadership team is focused on boosting profits and streamlining operations instead of just trying to grow for the sake of growth.
They hope this focus on “winning” with efficiency and better service will remake company culture and give Petco a fighting chance, though there may be bumps in the road before things get better.
Prices Go Up as Costs Rise
Because of higher import costs and tariffs, Petco is raising prices on some of its goods. The company says it’s doing it with the customer in mind, but higher prices could drive some people to other stores.
Managers watch closely to see if customers push back or switch to other retailers.
As tariffs become even more important in late 2025, Petco expects pricing changes to continue to be a big part of its strategy.
Less Waste, More Cash
Petco is working hard to lower the number of unsold products in stores and warehouses, cutting inventory by almost 10% this year.
The company frees up money and keeps stores less cluttered by ordering fewer slow-selling or duplicate items.
This switch to lean retail helps keep Petco healthier and more able to adjust if trends or costs change.
Online Shopping Not Quite There Yet
Petco’s stores are improving faster than its website and online shopping systems. Leaders admit their digital sales are not as strong as possible, with the e-commerce team still figuring out how to catch up.
They’ve reduced online deals and discounts to save money, but most sales still happen in the stores.
Even so, Petco knows it must keep improving its website and delivery options to survive the shift to digital shopping.
Thinking About the Future
Petco hopes things will turn around by 2027 if it learns from its current cutbacks and starts a new growth phase.
Managers say closing stores now is just a pause and not a sign the company will keep shrinking forever.
Petco’s future goals have four keys: improving store experiences, selling unique products, expanding hands-on services, and preparing to grow when ready.
Navigating a Complicated Rules Game
U.S. trade policies are changing rapidly, so Petco and other stores are working together to understand new tariffs and stay legal.
Industry groups are holding classes and meetings for companies to keep up with all the changes.
Congress is also holding hearings about how higher import taxes might make pet care more expensive, and businesses are waiting to see if courts will reverse any rules.
Until then, Petco must plan for more uncertainty.
Store Closures Are a National Trend
Retail shrinkage isn’t just a Petco problem: All kinds of stores have closed thousands of locations since 2024, and more closures are likely by 2030.
This means more empty storefronts in neighborhoods, fewer customer choices, and lower property values in some towns.
Petco’s struggle is just one example of how U.S. shopping patterns are changing for good.
Social Media Sounds Off
On forums like Reddit, pet owners and Petco employees vent about store closures, job losses, and the company’s future.
Some fear their favorite treats or vet clinics will disappear, while workers worry about a sinking ship.
False rumors about the whole chain closing have forced Petco to set the record straight: only some stores will shut, not all.
Lessons From the Past
Petco has demonstrated remarkable resilience throughout its nearly 60-year history. By streamlining operations and enhancing operational efficiency, it successfully navigated major economic downturns, including the devastating 2008 financial crisis.
Industry analysts point to numerous examples of pet retailers that have executed successful turnarounds after strategically closing underperforming locations, suggesting viable pathways for recovery exist.
The key lies in Petco’s ability to leverage its extensive experience weathering market volatility while focusing on superior customer service and innovative operational strategies and applying hard-earned lessons from decades of challenging business cycles and competitive pressures.
Petco’s Make-or-Break Moment
Petco’s decision to close stores is meant to prepare the chain for a stronger future, not to signal defeat.
The goal is to focus on profitable services and slimmed-down, more efficient shops that can compete with online shopping.
The challenge now is getting through this period of change, so pet owners may notice fewer stores but better experiences where Petco stays.
Retailers must evolve to be around for the next generation of pet lovers.