Pet Valu's comps rise 1.5% and its 2026 margin outlook moves up

Pet Valu's same-store sales rose 1.5% in the third quarter, a turn from the 0.2% decline in the second, and the Canadian pet retailer raised its 2026 adjusted EBITDA margin outlook to about 21.5% from about 21%. Revenue reached $299.5M, up 3.5%, while the company trimmed its new-store plan to about 37 openings from about 40.

Network-wide sales, which count franchised stores as well as company-operated ones, were $388.6M, up 3.9%. Adjusted EBITDA came to $66.6M, up 4.8%, or 22.2% of revenue. Adjusted net income per diluted share was $0.44, up 10% from $0.40.

Greg Ramier, Pet Valu's president and chief executive officer, said, "We delivered strong third quarter performance, highlighted by positive same-store sales growth," and described "compelling earnings growth in a constrained consumer environment."

Comps return to growth on higher spend per visit

The 1.5% comp came almost entirely from the basket. Average transaction spend rose 1.4% and comparable transactions rose 0.1%. The second quarter ran the other way, with transactions down 1.4% and spend up 1.2%, as our second-quarter coverage laid out.

Comps were 2.6% in the second quarter of 2025, 2.3% in the third quarter of 2025, 0.0% in the first quarter of 2026 and negative 0.2% in the second quarter of 2026. The 0.0% figure comes from the first-quarter results on Pet Valu's investor site, which also gave the full-year comp outlook at the time as flat to 2%. On the earnings call, management said year-to-date comps stand at 0.4%, according to an Investing.com transcript of the call.

Gross profit was $97.2M, a margin of 32.5% against 33.0% a year earlier. Selling, general and administrative expense fell to 18.0% of revenue from 18.5%, and operating income rose 3.4% to $43.4M. Net income was $26.3M, up 5.8%, and free cash flow was $25.2M.

Pet Valu is a franchise-heavy business, and the split shows in the revenue lines. Retail sales, which come from company-operated stores, rose 3.8% to $108.6M. Franchise and other revenue rose 3.2% to $190.9M, which by our math is about 64% of total revenue. Management said on the call that franchisees operate 71% of the 882 stores.

Those 882 stores compare with 877 at the end of the second quarter, a net gain of five on seven openings. Pet Valu said it bought back $14.6M of its shares in the quarter and declared a dividend of $0.13 per share, payable December 15th to holders of record on November 30th.

The 2026 outlook narrows revenue and lifts margin

Pet Valu changed several parts of its 2026 outlook, which it states on a 52-week basis because fiscal 2025 had 53 weeks. The extra week contributed about 2% of last year's revenue, adjusted EBITDA and adjusted net income.

Revenue growth is now 2.5% to 3.5%, inside the earlier 2% to 4%. Comparable store sales growth is now 0% to 1%, against flat to 2% in the outlook it gave with first-quarter results. Adjusted EBITDA margin moves to about 21.5%, and adjusted net income per diluted share is expected to grow in the low single digits, replacing a plan for results similar to fiscal 2025. New stores come in at about 37 against about 40, and the company expects to reinvest about $30M in the business, made up of about $18M in net capital spending and about $12M in transformation costs.

Pet Valu ties its revenue outlook partly to higher wholesale sales. On the call, management said 28 of the 37 planned openings were done and that real estate remains tight, a condition it expects to continue into 2027.

Holiday quarter and 2027 store targets come next

Fourth-quarter-to-date comps are running near the third-quarter average, management said on the call, with the biggest spending weeks still ahead. Chief financial officer Linda Drysdale confirmed, according to the transcript, an analyst's estimate that the outlook implies a fourth-quarter EBITDA margin about 90 basis points lower than a year earlier, which she tied to heavier promotions. Management also said it expects to renew its share buyback in early December and to give 2027 store targets in March.

Pet Valu is a 50-year-old retailer headquartered in Markham, Ontario, with distribution centres in Brampton, Surrey and Calgary. PetSmart, a specialty rival, lists 83 stores in Ontario, 29 in British Columbia and 27 in Alberta on its Canadian store locator. Those are the same three provinces where Pet Valu runs its distribution centres. Global Pet Foods, a pet food chain, invites prospective franchisees to apply on its website. Across the border, Tractor Supply reported that comps rose 0.4% in its latest quarter, as we covered in October.

The update matters most to franchisees and prospective franchisees weighing the 2027 store plan, and to the national and proprietary brands sold through its stores. Management cited the company's Item of the Month program and national brand refreshes as drivers of hardlines, which it said had their best results since early 2023. It also said AutoShip click-and-collect subscriptions have grown fourfold this year.

Comps are positive again, and the next numbers to check are the holiday quarter and the March store targets.

Source: Pet Valu Holdings via GlobeNewswire