Pet Valu Q4 Earnings Call Highlights

Key Points

• Pet Valu reported Q4 system-wide sales of CAD 424M (2% ex-extra week) and revenue of CAD 326M, with adjusted EBITDA of CAD 75M (23% of revenue) and full-year free cash flow of > CAD 104M.
• The company is expanding its footprint and omnichannel reach—ending 2025 with 863 stores, opening 40 net stores in 2025 (targeting ~40 in 2026), onboarding DoorDash/Uber Eats, and growing proprietary brands and loyalty (88% penetration, >3M members) to drive higher-value customers.
• For 2026 Pet Valu guides 2–4% revenue growth and flat-to-improving adjusted EBITDA margin, plans ~CAD 35M reinvestment, will prioritize free cash flow conversion (~40%) and shareholder returns including an 8% dividend increase and ongoing buybacks.

Pet Valu TSE: PET executives said the Canadian pet retail market remained pressured by muted consumer confidence in 2025, with shoppers increasingly focused on value even as demand for premium offerings persisted. On the company’s fourth-quarter fiscal 2025 earnings call, management emphasized share gains, continued investment in stores and omnichannel capabilities, and cost discipline that supported results within original full-year guidance ranges.

Fourth-quarter results: growth driven by new stores and wholesale penetration

Chief Financial Officer Linda Drysdale reported that fourth-quarter system-wide sales rose 9% to CAD 424 million. Excluding the extra week in fiscal 2025, system-wide sales grew 2%, which management attributed primarily to network expansion after opening 40 new stores over the prior 12 months. The company ended the year with 863 sites across Canada.

On a same-store basis, sales increased 0.3%, which Drysdale said was driven by growth in average basket, particularly units per transaction (UPT), reflecting targeted promotions and in-store execution. She noted that while consumables continued to grow, dollar growth eased in the quarter due to intentional value actions across 2025 and higher promotional intensity versus the prior year. Hardlines performance was described as consistent with recent trends.

Revenue in the quarter grew 11% to CAD 326 million. Excluding the extra week, revenue increased 3%. Drysdale said revenue once again slightly outpaced system-wide sales due to continued increases in wholesale penetration, and management reiterated it expects the gap between revenue and system-wide sales growth seen in the latter half of 2025 to be more indicative going forward.

Margins, profitability, and cash flow

Drysdale said fourth-quarter gross margin (excluding non-recurring supply chain transformation costs) declined 90 basis points year-over-year. While the company achieved leverage in distribution costs following completion of its supply chain transformation, that benefit was more than offset by investments made to provide value to customers and support franchisees.

SG&A discipline was a key offset. Excluding share-based compensation and other items not indicative of performance, SG&A was CAD 54 million, or 16.5% of revenue, similar to last year. Drysdale cited leverage in recurring people costs and lower professional fees, which helped offset inflation in technology SaaS fees.

Adjusted EBITDA for the quarter was CAD 75 million, representing 23% of revenue, which management said was a sequential improvement from the third quarter and roughly similar to the prior-year quarter. Net income was CAD 29 million, also similar to last year. Adjusted net income was CAD 34 million or CAD 0.49 per diluted share, compared with CAD 32 million or CAD 0.45 per diluted share a year earlier.

For full-year 2025, management said the company grew revenue by more than 5% on a 52-week comparable basis and maintained adjusted EBITDA margins of 22%. Pet Valu also generated over CAD 104 million in free cash flow for the year, with fourth-quarter free cash flow of CAD 37 million. Drysdale said trailing four-quarter free cash flow conversion was 40%, consistent with the company’s framework.

Store growth, franchising, and omnichannel investments

Chief Executive Officer Greg Ramier said Pet Valu and its franchisees opened 14 new stores in the fourth quarter, reaching its target of 40 new stores in 2025. The company also resold eight corporate stores to franchisees in the quarter, which management said reflected continued interest and capacity from both new and existing franchise partners. Ramier noted the company received more than 2,200 franchise inquiries last year.

Looking ahead, Pet Valu plans to open approximately 40 new stores in 2026. In response to a question on the mix of corporate versus franchise openings, Ramier said the company follows a “best site first” strategy and expects to lean somewhat more toward corporate openings based on targeted real estate opportunities, while maintaining franchise penetration around the 70% level with a continued store resale program.

On digital, Ramier highlighted customer response to limited-time AutoShip promotions in the fall and a 20% off click-and-collect promotion in December that the company said drove strong response and new customer acquisition. Pet Valu also onboarded DoorDash and Uber Eats in the quarter, adding to its delivery options. Ramier said third-party market share tracking shows the company’s online growth continues to outpace the overall channel, and he emphasized that omnichannel customers are more engaged and higher value than online-only shoppers.

Proprietary brands, loyalty, and culinary rollout

Management repeatedly pointed to proprietary brands as a key lever for value and differentiation. Ramier said targeted pricing investments were made during 2025, including earlier actions in the Performatrin Prime portfolio and additional targeted investments in the fourth quarter across select SKUs in Performatrin Ultra and Naturals to create more accessible entry points.

Ramier said proprietary brands increased roughly 200 basis points in unit penetration in 2025. In the Q&A, he added that proprietary brands represent about 25% of sales and carry an average margin benefit of approximately 1,200 basis points, describing the dynamic as “lower price for the consumer, better cost for us,” with margin benefits shared with franchisees.

The company also reported loyalty momentum, with loyalty sales penetration reaching an all-time high of 88% in 2025, supported by more than 3 million active members. Ramier said the company is using data from the program to test more personalized offers, including breed-specific and cross-sell opportunities.

Pet Valu completed an initial rollout of its enhanced culinary experience in the quarter, reaching 120 corporate stores and an initial group of 13 franchise stores in 2025. Ramier said culinary is among the company’s fastest-growing segments and that these stores are outperforming the company average in both culinary-specific and total sales. The company plans roughly 40 culinary projects within its franchise network in 2026.

2026 outlook, capital allocation, and dividend increase

Drysdale said the company’s base case for 2026 assumes industry growth remains constrained without a meaningful improvement in the macroeconomic backdrop, an environment she said persisted through the fourth quarter and into early 2026. Pet Valu will return to a 52-week fiscal calendar in 2026 (after 53 weeks in 2025), and guidance was provided on a 52-week comparable basis.

• Revenue growth: 2% to 4%, supported by approximately 40 new store openings, flat to 2% same-store sales growth, and slightly increased wholesale penetration
• Adjusted EBITDA margin: flat to slight expansion, supported by SG&A and supply chain leverage while maintaining competitiveness
• Adjusted diluted EPS: mid- to high-single-digit growth, as the company moves past prior headwinds from a step-up in fixed distribution center costs

For reinvestment in 2026, Drysdale outlined approximately CAD 35 million consisting of about CAD 20 million in net capital expenditures and CAD 15 million of transformation costs expensed through the income statement, primarily related to implementation of a new finance system expected to be completed in 2027. Management said the reduced reinvestment level versus recent years should support free cash flow conversion at or above 40% and enable returning the bulk of free cash flow to shareholders through dividends and buybacks.

The company also announced its board approved an 8% increase to its quarterly dividend to $0.13 per share, marking five consecutive years of dividend growth. Drysdale said the company has already begun repurchasing shares under its renewed normal course issuer bid (NCIB) and plans to continue buybacks in a balanced way throughout the year.

Ramier also referenced restructuring charges taken at the end of 2025, saying the changes were intended to reposition resources and talent to better compete and support profitable long-term growth.

About Pet Valu TSE: PET

Pet Valu Holdings Ltd is engaged in providing pet-related products through its stores. Its products include Dry Food, Wet Food, Frozen raw food, Jerky Treats, and Training treats among others. The services offered by the company include Dog Wash, Adoption, Grooming, and Frozen Raw.

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