Petco's loss shrank from $1.2 billion to $16.7 million as Anderson's turnaround took hold
New CEO Joel Anderson refocused Petco on fast-turning SKUs, staffing standards and efficiency — Q3 net loss narrowed from $1.2 billion to $16.7 million.
What was changed
Petco entered late 2024 deep in the red: a year earlier its third quarter had produced a $1.2 billion net loss and a $1.23 billion operating loss. In late July 2024 the retailer hired Joel Anderson away from discount retailer Five Below as CEO. On his first earnings call he named merchandising as the greatest near-term opportunity to strengthen profitability and set three focus areas: merchandising, customer service, and driving efficiency across the business.
The moves followed directly: more shelf space for faster-turning SKUs while reducing SKUs in other categories to simplify decisions for customers, and new labor and staffing standards so store associates and leaders spend more time with customers and less on backroom tasks. Anderson also rebuilt part of the C-suite, creating a chief revenue officer role for Joe Venezia to develop customer experience and revenue across pet care centers, services and real estate, and hiring Dan Calista as chief strategy and transformation officer.
By the Q3 FY2024 report in December 2024 the numbers had swung: net revenue grew 1.2 percent to $1.51 billion (consumables +2.7 percent, services and other +5 percent), comparable sales rose 1.8 percent to beat analyst expectations, gross profit rose 4.7 percent to $575.8 million with gross margin of 38.1 percent, up nearly 130 basis points, and the net loss narrowed to $16.7 million while operating income reached $3.97 million. Wedbush analysts led by Seth Basham wrote that fundamentals were improving and the turnaround appeared on track.
Why it worked
Merchandising was the biggest near-term profit lever: shelf space moved to fast-turning SKUs while duplicative categories were cut.
New labor standards shifted associates from backroom tasks to time with customers, aimed at service and conversion.
New leadership roles — chief revenue officer and chief strategy and transformation officer — were created to hold the turnaround in place.
Growth in consumables (+2.7%) and services (+5%) cushioned a 2.8% decline in supplies and companion animal sales while costs were fixed.
What can be applied
A retail turnaround starts on the shelf: give space to what turns, cut what duplicates, and point freed labor hours at the customer before anything else.
Aftermath
CFO Brian LaRose told investors the company was encouraged by structural improvement and that changes made in the first nine months of 2024 set up 'a solid finish to 2024 as we build momentum heading into 2025'. The turnaround was still early: Petco posted an $88 million net loss for the 39 weeks ended November 2, 2024, and guided fourth-quarter revenue of about $1.55 billion with adjusted EBITDA of $90-95 million, inclusive of at least $10 million in turnaround-related consulting fees.