$WOOF

Moody's upgraded Petco Health and Wellness Company's (WOOF) rating to B2 from B3, citing operational improvements and debt reduction. The company has scaled back promotions, overhauled products, and expanded higher-margin services. Moody's expects adjusted leverage to stay around 3.5x debt-to-EBITDA and interest coverage at 1.5x over the next 12-18 months. Petco's annual revenue is approximately $6.0 billion.

Chewy (CHWY) and Petco (WOOF) reported stronger sales in cat products and weaker dog-related sales. General Mills (GIS) saw similar trends, with cat food sales up and dog food down. Cat ownership grew faster than dog ownership, with cats costing less overall. Chewy's Q2 sales rose 7.3% YoY, and it raised full-year guidance, but its stock is down 43.72% YTD.

Cat food and product sales are rising, boosting retailers like General Mills (GIS), Chewy (CHWY), and Petco (WOOF). According to the companies, cat ownership increased 5% in 2025, driving demand. General Mills reported double-digit growth in cat food sales, while dog food sales declined. Chewy and Petco also noted strong cat product sales in their recent earnings calls.

Chewy (CHWY) and Petco (WOOF) presented at a Goldman Sachs event, highlighting growth strategies. Chewy emphasized its platform expansion, including health services, while Petco focused on its turnaround progress. Both companies aim to move beyond transactional sales. Chewy's stock has faced recent downgrades, while Petco's turnaround is in its early stages. Investors should monitor Chewy's diversification and Petco's sales trends.

Goldman Sachs updated on Chewy (CHWY) and Petco (WOOF) post-retail conference. Chewy expects market share growth, expanding into pet care ecosystem. Petco in Phase 3 of turnaround, focusing on revenue growth, reported 2 quarters of positive comparable sales.

Petco (WOOF) reported Q2 2026 net sales of $1.49B, up 0.05% YoY, with comparable sales growth of 0.6%. Adjusted EBITDA was $122.2M, including $6.8M in tariff refunds. The company prepaid $75M in debt, reducing total debt to $1.48B. Full-year sales guidance remains flat to up 1.5%, with adjusted EBITDA guidance of $415M-$430M. Management noted softness in the dog category and supply chain headwinds.

Chewy (CHWY) fell 11% after reporting a 15% drop in free cash flow to $89.5M, despite beating revenue estimates and raising its full-year outlook. Petco (WOOF) also declined 6%, while Freshpet (FRPT) rose 2% on strong revenue growth and an improved sales forecast. Chewy's Autoship sales accounted for 84.6% of revenue, with 21.7 million active customers.

Petco Health and Wellness (WOOF) reported Q2 2026 net sales of $1.49B, up 0.05%, with adjusted EBITDA of $122.2M, including a $6.8M tariff refund. Excluding the refund, EBITDA grew 1.3%. Gross margin increased 37 bps to 39.7%. The company reaffirmed full-year guidance and reduced debt to $1.48B.

Petco reported improved free cash flow of $60.8M (up from $9.9M YoY) and reduced debt to $1.48B. The company prepaid $75M in debt, aiming for a 2x net debt to EBITDA target. Full-year guidance remains unchanged: net sales flat to +1.5%, adjusted EBITDA $415M-$430M. Q3 sales growth expected at 0.4%-1.0%, adjusted EBITDA $100M-$103M. CEO and CFO highlighted progress in consumables and debt reduction. Analysts' consensus price target is $3.42, a 32% upside, but ratings are mixed.

Petco Health and Wellness (WOOF) stock rose 7.14% after Q2 earnings beat expectations, with EPS at $0.13 vs. estimates of $0.05-$0.07. Revenue was flat YoY at ~$1.5B but slightly ahead of estimates. The company improved profitability and prepaid ~$170M of debt, addressing balance sheet concerns. Analysts see potential upside to $3.50 if margin expansion continues.