Petco Health and Wellness Company, Inc. (WOOF): Business Model Canvas [Dec-2025 Updated]

You're digging into how the company is actually making money now, shifting from just selling bags of kibble to building a full pet health ecosystem-a critical operational reset. As an analyst who's seen this pivot play out before, the numbers for fiscal year 2025 tell the story: they are targeting net sales between $5.93 billion and $5.95 billion while aggressively cutting costs, aiming for $150 million in annualized SG&A savings. The real engine, though, is the push into high-margin services, like vet care, which command gross margins of 60% to 80%, a massive change from traditional retail. Dive into the full Business Model Canvas below to see exactly how they are structuring their key partnerships and resources to make this transition stick.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Key Partnerships

You're looking at how Petco Health and Wellness Company, Inc. (WOOF) builds value through its external relationships, which is critical given its Total Net Sales for the fiscal year ending March 31, 2025, were $6,116.5 million.

Veterinary Service Providers like Thrive Pet Healthcare (50% stake)

The foundation for Petco Health and Wellness Company, Inc.'s integrated veterinary strategy was built on the joint venture with Thrive Pet Healthcare, formed in May 2017. Petco Health and Wellness Company, Inc. later agreed to purchase the remaining 50% stake in this venture, which at the time operated nearly 100 full-service veterinary hospitals across 14 U.S. states under the THRIVE brand. These locations are now transitioning to the Petco Health and Wellness Company, Inc. Vetco Total Care hospital branding. This move was intended to offer pet parents a one-stop solution for convenient, high-quality pet care.

The transition involved offering over 800 veterinary care professionals the opportunity to join Petco Health and Wellness Company, Inc.'s network of more than 27,000 partners (employees) as of the agreement date.

Strategic Vendors for High-Margin, Premium Pet Food (e.g., Just Food For Dogs)

The partnership with Just Food For Dogs is central to capturing the premium fresh frozen category, which was predicted to grow from $1 billion to approximately $4 billion by 2025. The expansion plan included growing the offering from approximately 700 Petco locations nationwide to more than 1,000 Petco pet care centers by the end of 2022. Petco Health and Wellness Company, Inc. maintains exclusivity as the only national brick-and-mortar retailer offering Just Food For Dogs products in retail stores and online through same-day delivery and BOPIS (buy online, pick up in store) options, with the arrangement potentially extending until 2026.

This relationship also involves co-developing a new human-grade fresh and frozen owned brand pet food for Petco Health and Wellness Company, Inc.'s WholeHearted line.

Retail Partners for Store-within-a-Store Concepts (e.g., Lowe's)

The collaboration with Lowe's Companies Inc. aims to serve the 70 percent of U.S. households, or 90.5 million families, that own a pet. The store-in-store pilot program expanded from an initial 15 Lowe's locations to nearly 300 by the end of 2023, focusing on rural communities. This footprint brings Petco Health and Wellness Company, Inc.'s expertise and merchandise into home improvement centers.

The partnership structure includes:

• Expansion to nearly 300 Lowe's locations by year-end 2023.
• Monthly availability of Petco Health and Wellness Company, Inc.'s Vetco Clinics at 75 Lowe's stores.
• Inclusion of Petco Health and Wellness Company, Inc. private brands like WholeHearted alongside national brands.

Suppliers for Achieving 50% Sustainable Products by End of 2025

Petco Health and Wellness Company, Inc. set a commitment to increase its assortment of sustainable pet products to 50% by the end of 2025. This goal builds on prior progress, such as in 2020, when the company estimated eliminating 3.6 million pounds of cardboard waste and 30,000 pounds of plastic waste through in-store fulfillment. Furthermore, they reported upcycling 1.5 million plastic bottles into pet accessories through the "Started as a Bottle" program.

Key supplier alignment focuses on products meeting at least one of five sustainability pillars:

Sustainability Pillar	Metric/Example from Prior Progress
Responsible Manufacturing	Brands keeping environmental impact in mind during production.
Sustainably Sourced Materials	Items made with materials like organic cotton or recycled nylon.
Sustainably Sourced Ingredients	Edible products with fewer greenhouse gas emissions.
Responsible Packaging	Packaging designed for refill or multiple uses.
Animal Welfare	Items meeting Petco Health and Wellness Company, Inc.'s cruelty-free standard.

As of May 2023, Petco Health and Wellness Company, Inc. had eliminated more than 6 million single-use plastic polybags from its owned-brand supply chain.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Key Activities

Executing the multi-phased operational reset and cost discipline.

The second phase of the transformation, focused on improving the bottom line through execution, cost reduction, and gross margin improvement, showed tangible results through the third quarter of 2025. The company tightened its full year 2025 earnings guidance, increasing the midpoint of its expected Adjusted EBITDA range by $6 million. The plan is anchored on restoring the health of the economic model, setting the foundation for a return to growth during fiscal 2026.

Metric	Q1 FY2025 (Ended May 3)	Q2 FY2025	Q3 FY2025	FY2025 Guidance (Tightened)
Net Sales	$1.5 billion (down 2.3% YoY)	$1.5 billion (decreased 2.3% YoY)	$1.5 billion (decreased 3.1% YoY)	Down low single digits
Gross Profit Margin	38.2%	39.3% (up more than 120 bps)	38.9% (up approximately 75 bps)	N/A
Adjusted EBITDA	$89.4 million	$113.9 million (up 36.4% YoY)	$98.6 million (up $17.3 million)	Midpoint of $385 million to $395 million
Operating Income	$16.4 million	$43 million	$29.2 million (improved $25.2 million)	N/A
GAAP Net Income	$11.7 million (loss improved $34.8 million)	$14 million	$9.3 million (improved $26.0 million)	N/A

The company is set to begin Phase 3 in late 2025, which will target revenue growth.

Managing a store fleet optimization plan with approximately 20 net closures in FY2025.

The optimization plan involves exiting underperforming locations to streamline operations. The company previously closed a net of 25 stores in FY2024. For fiscal year 2025, the outlook included 20 to 30 net store closures. By the end of the second quarter of 2025, Petco had closed a total of 35 net stores since 2024.

• Total U.S. store count at the end of Q2 2025: 1,388 locations.
• Number of stores already shut by early October 2025: 13 locations.
• Total stores operated across U.S., Mexico, and Puerto Rico: Over 1,500, or 1,400 locations.

Operating and expanding high-margin pet services (grooming, vet care, training).

Services are highlighted as the fastest-growing area of the pet category and a key component of the moat. In the first quarter of fiscal year 2025, net sales from services grew by 1% to reach $252 million.

Service Segment	Q1 FY2025 Net Sales	Growth YoY
Services	$252 million	1% increase
Veterinary Fleet Size	300 locations	Optimization focus

Digital platform development and omnichannel integration.

The company is actively investing in digital transformation and omnichannel integration to improve speed and convenience, including features like online appointments and loyalty point management. Capital expenditures for 2025 are slated to be between $125 million and $130 million. The e-commerce segment remains a focus area for improvement, as e-commerce sales accounted for just 7.1% of total revenue in Q2 2025.

• E-commerce sales as a percentage of revenue (Q2 2025): 7.1%.
• Planned scaling of the membership program: 2026.
• Initiatives include reducing the number of split shipments and the cost per order in eCommerce operations.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Key Resources

The Key Resources underpinning Petco Health and Wellness Company, Inc. (WOOF) business are a mix of physical assets, proprietary brands, integrated service infrastructure, and valuable customer data assets.

The physical store footprint remains a core asset, though actively being optimized. As of the end of the reporting period for the second quarter of 2025, the total number of pet care centers in the U.S. and Puerto Rico stood at 1,388. This is part of a broader network that, as of early 2025, included over 1,500 pet care centers across the U.S., Mexico, and Puerto Rico. The company projected a strategic adjustment, planning for an additional 20 to 30 net closures in 2025.

The company's owned brands represent a resource for margin enhancement and customer stickiness. Owned product assortment, including brands like WholeHearted and Reddy, was a meaningful contributor to enterprise sales in fiscal 2024. For context on supply chain scale, inventory purchases from China, Canada, and Mexico for Petco-branded goods represented about 5% of the company's total merchandise cost in early 2025.

The integrated services infrastructure, particularly veterinary care, is a key differentiator. As of February 1, 2025, Petco Health and Wellness Company, Inc. operated approximately 300 full-service veterinary hospitals within its network. This was complemented by an operational network of over 1,500 Vetco clinics on a weekly basis. The Services and other segments showed growth, delivering a 1.1% increase in net sales for the thirteen weeks ended August 2, 2025.

Customer data, leveraged through loyalty programs, quantifies the value of the customer relationship. As of 2022, the paid Vital Care Premier program had over half a million members, while the Vital Care Core tier had 24 million members. Data from early 2024 indicated that members in the Vital Care program saw a 50% increase in visits and a 40% higher spend compared to non-members. Furthermore, Vital Care Premier members historically demonstrated a 3.6x higher lifetime value than non-members.

Key Resource Metrics Snapshot (As of Latest Reported Data Points):

Resource Component	Metric/Value	Date/Period Reference
U.S. & Puerto Rico Pet Care Centers	1,388 locations	End of Q2 2025 Reporting Period
Total Full-Service Veterinary Hospitals	Approximately 300	As of February 1, 2025
Weekly Operated Vetco Clinics	Over 1,500	As of February 1, 2025
Owned Brand Merchandise Cost Share	Approximately 5% of total merchandise cost	Early 2025
Vital Care Premier Members (Historical)	Over 500,000 members	As of 2022
Vital Care Core Members (Historical)	24 million members	As of 2022

The company's digital assets, including Petco.com and the Petco app, serve as hubs integrating these physical and service resources. These platforms enable capabilities like repeat delivery, buy online and pick up in store (BOPUS), curbside pick-up, and same day delivery.

• Owned brands include WholeHearted, Reddy, and Well & Good.
• Services segment net sales growth for Q2 2025: 1.1% year over year.
• Loyalty members' spend lift versus non-members (2024 data): 40% higher spend.
• Projected net store closures for 2025: 20 to 30.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Value Propositions

You're looking at the core reasons why a pet parent chooses Petco Health and Wellness Company, Inc. over competitors right now. It's not just about selling bags of kibble anymore; it's about the entire health journey.

Integrated pet health and wellness ecosystem (products plus services).

The value proposition centers on combining physical goods with essential care. This integration is what fortifies the competitive moat against online-only players. For the first quarter of fiscal 2025, the Services segment, which includes veterinary care and grooming, was a bright spot, delivering positive net sales of 1% year over year. This segment is noted as Petco Health and Wellness Company, Inc.'s fastest-growing business.

Higher-margin services (vet, grooming) with 60% to 80% gross margins.

The strategic importance of services is clear when you look at the margin differential. While the overall company gross profit margin was reported at 39.3% in Q2 2025 and 38.9% in Q3 2025, the services component is where the real margin potential lies. The services segment, like veterinary care, is cited as commanding gross margins in the range of 60% to 80%, significantly outpacing the 25% to 35% margins typical for traditional product sales.

Curated, premium product assortment, including fresh and frozen food.

Petco Health and Wellness Company, Inc. offers a mix of national brands and owned brands like WholeHearted, Reddy, and Well & Good. The company is actively managing its assortment based on consumer shifts. For the thirteen weeks ended August 2, 2025, consumables revenue was down 2.0% year-over-year. The focus on premium nutrition, specifically fresh and frozen food, is a key differentiator, tapping into a market segment that was projected to reach approximately $4 billion by 2025 as of early 2022.

Here's a quick look at the revenue breakdown context from the fiscal year ending February 1, 2025:

Revenue Category (FY End Feb 1, 2025)	Approximate Annual Revenue
Total Net Sales	$6.12 billion
Consumables (Q2 2025, 13 weeks)	Down 2.0% Y/Y

Omnichannel convenience: buy online, pick up in-store (BOPIS) and delivery.

Convenience is baked into the model through digital integration. The e-commerce platform and mobile app are central, supporting options like buy online, pick up in-store and same-day delivery. The physical footprint supports this integration, with Petco Health and Wellness Company, Inc. operating approximately 1,398 pet care centers in the U.S. and Puerto Rico as of the last 10-K filing. The company planned for net store closures of approximately ~20 for the full fiscal year 2025.

Customer engagement is further driven by the loyalty structure:

• Participation in the paid Vital Care Premier tier grew from 40% to 66.7% in 2024.
• The company plans a relaunch of the Vital Care members program in 2026.

The goal is to reinforce Petco Health and Wellness Company, Inc. as a reliable destination for all pet care needs.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Customer Relationships

You're looking at how Petco Health and Wellness Company, Inc. (WOOF) keeps its customers engaged, which is key since services are their fastest-growing segment. As of the third quarter of 2025, Petco operated 1,389 stores in the US, part of a network spanning over 1,500 centers across the US, Mexico, and Puerto Rico.

Vital Care loyalty program for recurring revenue and subscription services

The Vital Care program is central to locking in high-value shoppers and building recurring revenue, though the current structure was being deemphasized ahead of a planned relaunch in 2026. The goal of the 2026 relaunch is to create a more personalized long-term loyalty experience. Even with the deemphasis, the program's structure gives you an idea of the commitment. The paid tier, Vital Care Premier, for dogs and cats costs $24.99 per month, while companion animal plans are $9.99 per month.

Here's what the Premier tier offered as of late 2025:

Benefit Category	Dog/Cat Premier Benefit	Small Pet Premier Benefit
Routine Vet Exams	Unlimited at Vetco Total Care or $20 Reward	$20 Vital Care Rewards (up to twice yearly)
Monthly Rewards	$15 Vital Care Rewards	$5 Vital Care Rewards
Nutrition Discount	10% off	15% off
Grooming/Litter Discount	20% off grooming OR 20% off litter	15% off supplies

The company previously reported that Vital Care members had a 3.5 times higher lifetime value than regular shoppers. Services overall, which include grooming and veterinary care, delivered positive net sales growth of 1% year-over-year in Q1 2025. Petco optimizes its existing fleet of 300 veterinary hospital locations.

Personalized engagement driven by customer data

Petco Health and Wellness Company, Inc. uses sophisticated data analytics to drive engagement. Their e-commerce platform tracks customer preferences and pet profiles. This allows for hyper-personalization, such as delivering tailored content about joint supplements or seasonal allergies based on a pet's breed and age. The company is actively using qualitative and quantitative customer analytics as part of its "North Star" initiative to inform the loyalty program scaling planned for 2026. This data-driven approach aims to enhance the customer experience and drive repeat purchases.

High-touch, in-store service from Petco partners (employees)

The physical store experience remains a core relationship touchpoint, especially for services. Petco is focusing on improving customer satisfaction by optimizing its customer support infrastructure, which includes its physical locations. The company views its service offering as what fortifies its competitive moat. Associates are positioned as knowledgeable partners in pet health and wellness. The company is working on enhancing the store experience as part of its transformation strategy.

Self-service digital tools via the Petco app and websites

Digital tools are integrated to support the omnichannel experience, particularly for services. Petco upgraded the software used to book grooming appointments to offer customers more flexibility and time slots.

• Almost 50% of customers schedule a grooming appointment online.
• The Vital Care membership dashboard is accessible on petco.com and the Petco app for tracking care plans.
• Digital experience enhancements are a key focus to stimulate growth, including revisiting and scaling the membership program in 2026.
• The company is working to increase visibility into order tracking for omnichannel customers.

Finance: draft 13-week cash view by Friday.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Channels

You're looking at how Petco Health and Wellness Company, Inc. gets its value proposition-the integrated pet health and wellness offering-into the hands of pet parents. The channel strategy is clearly multi-pronged, balancing the traditional brick-and-mortar strength with necessary digital expansion.

Physical retail stores (the primary point of service delivery).

The physical footprint remains central to the Petco Health and Wellness Company, Inc. model, serving as the hub for product sales and high-touch services. As of the end of the third quarter of fiscal 2025, the company operated 1,389 Petco stores across the U.S.. This count reflects a continued refinement of the fleet, with a total of 25 net store closures in fiscal 2024 and 9 additional net closures year-to-date in 2025 as of Q3. The physical locations are designed as one-stop shops, integrating product sales with essential services. For instance, the in-store experience often includes grooming salons, dog training areas, and Vetco clinics. Geographically, California leads the U.S. presence with 190 locations, representing about 14% of the total U.S. stores, followed by Texas with 130 stores (10%) and Florida with 75 stores (6%).

The performance of the physical channel is a key driver. In the third quarter of 2025, in-store performance was noted as stronger than the total comparable sales figure, which was dragged down by e-commerce softness.

The breakdown of Q3 2025 net sales by category shows the relative contribution of in-store driven segments:

Category	Q3 2025 Net Sales (Millions USD)	Q3 2024 Net Sales (Millions USD)
Consumables	$731	$753
Supplies	$478	$510
Services and Other	$255	$248

E-commerce platforms (petco.com, petcoach.co, pupbox.com).

The digital channels, including petco.com and pupbox.com, are crucial for reaching customers beyond the immediate vicinity of a physical store and for handling recurring needs. The company also offers services through petcoach.co. While the overall strategy emphasizes an integrated omni-channel experience, the digital sales component faced headwinds in the near term. For the third quarter of 2025, comparable sales declined 2% year-over-year, with the company specifically noting softness in e-commerce that offset stronger in-store results. Overall net sales for Q3 2025 were $1.46 billion. The full-year 2025 outlook projected overall net sales to be down low single digits versus the prior year.

The company is focused on enhancing digital capabilities as part of its transformation, which includes a revamped membership offering and repeat delivery options.

Mobile app for shopping, appointments, and loyalty management.

The Petco mobile application serves as a direct-to-consumer engagement tool, facilitating shopping, service bookings, and loyalty program interaction. The app has garnered 379K Ratings on the App Store with an average score of 4.7. The platform allows users to buy items in the app for pickup at over 1,000 U.S. locations, leveraging Curbside Pickup. Despite its functionality for basics like pet profiles and tracking history, external feedback suggests technical challenges, with estimated daily downloads around 1,666 in late 2025, ranking the app in the 33rd percentile against industry peers for downloads. The app helps manage and track a pet's complete health and needs, offering features like Care Reminders for things like flea/tick treatments and vaccinations.

Key app-related statistics as of late 2025:

• Estimated daily downloads: 1,666
• App Store Rating: 4.7 stars
• Number of App Store Ratings: 379K
• Pickup locations available: Over 1,000
• Peer ranking for downloads: 33rd percentile

Shop-in-shop concepts (e.g., inside Lowe's stores).

While the outline specifies shop-in-shop concepts, specific, verifiable data regarding the number of these external partnerships or their financial contribution for late 2025 was not present in the latest public reports. The primary physical channel focus remains on the company's own fleet of 1,389 stores. The strategy emphasizes integrating services like Vetco clinics and grooming directly within the Petco store footprint to differentiate the physical experience.

Finance: review Q3 2025 digital sales conversion rate against Q2 2025 by Friday.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Customer Segments

You're looking at the core groups Petco Health and Wellness Company, Inc. (WOOF) is trying to serve as they push their wellness transformation. It's a mix of the traditional retailer and the high-touch service provider, and the numbers from late 2025 show that mix clearly.

Affluent pet parents focused on premium health and wellness.

This segment is the target for the higher-margin offerings, even if the overall revenue base is still dominated by staples. The company's strategy hinges on capturing the spend from pet parents prioritizing integrated care, which is why the Services segment is called the critical growth engine for margins. While we don't have a direct dollar figure for this specific group's spend as of late 2025, their behavior is reflected in the performance of the services side of the business, which is the company's competitive moat.

• Services and Vet care revenue jumped 10% in the first quarter of 2025.
• Services, which include grooming and veterinary care, delivered positive net sales of 1% year-over-year in Q1 2025.
• Services areas can command gross margins of 60% to 80%, significantly higher than product sales.

Customers enrolled in the Vital Care loyalty and subscription programs.

The loyalty base is substantial, though the program itself is slated for a refresh. You need to know the scale they are working with as they prepare for the relaunch. The company unified over 24 million subscribers under the Vital Care umbrella as of early 2023, which is the latest public figure for the combined base.

Vital Care Tier	Cost Structure (Dog/Cat)	Key Feature Example
Vital Care Core	Free to enroll	Automatic transition from old Pals Rewards members.
Vital Care Premier (Monthly)	$24.99 per month (plus tax)	Unlimited routine vet exams at Vetco Total Care locations.
Vital Care Premier (Yearly)	$239.88 per year (plus tax)	Offers 20% savings compared to the monthly rate.

The management team is actively planning to relaunch the Vital Care members program in 2026 to create a more personalized long-term loyalty experience.

Pet owners seeking integrated, one-stop-shop pet services (vet, grooming).

This group is the direct beneficiary of the company's push to be an ecosystem, not just a store. They are the ones driving the higher-margin revenue that is improving profitability, even when overall sales are soft. The focus on in-person services is what management believes fortifies their competitive moat against online-only rivals.

• The company is improving the omnichannel experience for services like grooming and veterinary care following the Q1 2025 earnings call.
• Management is leaning into these services to drive in-store traffic, retention, and loyalty.

Value-conscious customers for core consumables and supplies.

This is the bedrock of the business, the segment that keeps the lights on, but it's also the most sensitive to macroeconomic pressures. You can see the weight of this segment in the revenue breakdown, even as the company works to shift focus.

The core retail side still dwarfs the services side in terms of sheer volume. For the full fiscal year 2025, the company projected net sales to be down in the low single-digit percentage range, with a full-year revenue of approximately $6.12 billion.

• Consumables (food and treats) and Supplies together account for over 83% of total revenue.
• In Q3 2025, net sales were $1.5 billion, representing a 3.1% decrease year-over-year.
• Comparable sales in Q3 2025 decreased by 2.2% year-over-year, suggesting customers are visiting less or buying less per trip.

Finance: draft 13-week cash view by Friday.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Cost Structure

You're looking at the core expenses driving Petco Health and Wellness Company, Inc.'s operations as they push through their transformation strategy. The cost structure is heavily influenced by maintaining a large physical footprint while aggressively managing inventory and debt.

Cost of Goods Sold (COGS) for product inventory remains a primary cost, though the company is actively trimming inventory levels. For the first quarter of fiscal 2025, the Cost of sales for Products was reported at $766,285 thousand. This focus on inventory discipline is intended to reduce carrying costs and obsolescence, which directly impacts this line item.

The high debt load is a significant fixed cost. For the full fiscal year 2025 outlook, Petco Health and Wellness Company, Inc. projects the net interest expense to be approximately $125 million. This expense is a direct consequence of their capital structure, which leans heavily on debt financing.

Store operating expenses are substantial due to the physical network. Primary uses of cash in operating activities related to the stores include:

• Occupancy-related costs for pet care centers and distribution centers.
• Employee-related expenditures, covering labor for the store fleet.
• Freight and warehousing costs associated with moving product inventory.

Investment in the future operational base is managed through Capital Expenditures (CapEx). For fiscal 2025, Petco Health and Wellness Company, Inc. has guided CapEx to be in the range of $125 million to $130 million. This spending is earmarked for critical areas like IT infrastructure upgrades and necessary store remodels to support the evolving service model.

Selling, General, and Administrative (SG&A) expenses are under active management for efficiency. In the second quarter of fiscal 2025, the company noted a 7% reduction in SG&A expenses year-over-year, contributing to margin improvement. While the company is focused on cost discipline, the specific projection of $150 million in annualized savings by year-end is not explicitly confirmed in the latest public guidance, though the trend shows clear expense leverage.

Here are the key financial figures related to the cost structure as of the latest guidance:

Cost Component	Reported/Projected Amount (FY2025)	Context/Period
Net Interest Expense	~$125 million	Full Year 2025 Outlook
Capital Expenditures (CapEx)	$125 million to $130 million	Full Year 2025 Outlook
Cost of Sales: Products	$766,285 thousand	Q1 2025
SG&A Reduction Trend	7% decrease year-over-year	Q2 2025 Performance
Total Cost of Sales (YTD)	$1,826,641 thousand	39 Weeks Ended November 1, 2025

Finance: draft 13-week cash view by Friday.

Petco Health and Wellness Company, Inc. (WOOF) - Canvas Business Model: Revenue Streams

You're looking at the core ways Petco Health and Wellness Company, Inc. brings in cash, which is definitely shifting from just selling stuff to providing ongoing care. Honestly, the biggest chunk still comes from physical goods, but the growth story is all about services right now.

Product Sales (consumables, supplies, food) - the largest, but slowing, stream.

Product sales are the foundation, but this stream is showing signs of slowing down. For context, the last reported full fiscal year revenue base was approximately $6.1 billion, and the Fiscal Year 2025 outlook projects net sales to be down by low single-digits, reflecting macroeconomic pressures and strategic store closures.

Here's the quick math on how the product side breaks down, based on the most recent detailed segment reporting:

Revenue Category	Approximate Amount	Percentage of Total Revenue
Consumables (Food, etc.)	$3.0 billion	49.8%
Supplies & Companion Animals	$2.1 billion	33.9%
Total Product Sales (Estimated)	$5.1 billion	83.7%

The gross margins for these product categories typically run between 25% to 35%, which is why the shift is so important.

Services Revenue (grooming, training, veterinary care) - the fastest-growing segment.

This is where the company is putting its strategic chips, as services command much higher margins, often in the 60% to 80% range. In the first quarter of Fiscal Year 2025, services revenue actually saw a 1% increase year-over-year, hitting $252 million, while product sales declined. This segment is the clear growth engine.

Key components driving this segment include:

• Grooming appointments and bookings.
• In-store training classes and consultations.
• Veterinary services through Vetco clinics and full-service hospitals.

Subscription and Membership Fees (Vital Care program).

The Vital Care program is designed to lock in recurring revenue and increase customer lifetime value by bundling services and products. While specific, up-to-date subscription fee revenue amounts aren't always broken out separately in the headline guidance, the program is central to driving repeat visits for the high-margin services mentioned above. It's about securing that ongoing relationship.

FY2025 Financial Outlook Numbers.

The company has been focused on profitability improvements, leading to guidance adjustments. For the full Fiscal Year 2025, the latest raised guidance for Adjusted EBITDA is between $385 million and $395 million, up from the prior range of $375 million to $390 million. The Net Sales expectation for FY2025 remains a decline in the low single-digit percentage range from the prior year's $6.1 billion total net revenue.

To be defintely clear on the forward-looking targets based on the latest reports:

Metric	FY2025 Guidance Range (Latest Reported)
Net Sales	Down low single digits (from ~$6.1 billion base)
Adjusted EBITDA	$385 million to $395 million

Finance: draft 13-week cash view by Friday.