WOOF Petco Health and Wellness Company Inc

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 10-Q

 

(Mark One)

☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended May 4, 2024

OR

 

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-39878

 

Petco Health and Wellness Company, Inc.

(Exact Name of Registrant as Specified in its Charter)

 

 

Delaware	81-1005932
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
10850 Via Frontera San Diego, California	92127
(Address of principal executive offices)	(Zip Code)

 

Registrant’s telephone number, including area code: (858) 453-7845

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class		Trading Symbol(s)		Name of each exchange on which registered
Class A Common Stock, par value $0.001 per share		WOOF		The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		☒		Accelerated filer		☐
Non-accelerated filer		☐		Smaller reporting company		☐
Emerging growth company		☐

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares of the registrant’s Class A Common Stock outstanding as of June 3, 2024 was 235,201,143.

The number of shares of the registrant’s Class B-1 Common Stock outstanding as of June 3, 2024 was 37,790,781.

The number of shares of the registrant’s Class B-2 Common Stock outstanding as of June 3, 2024 was 37,790,781.

 

 

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Table of Contents

 

		Page
PART I.	FINANCIAL INFORMATION	2
Item 1.	Financial Statements (Unaudited)	2
	Consolidated Balance Sheets	2
	Consolidated Statements of Operations	3
	Consolidated Statements of Comprehensive Income (Loss)	4
	Consolidated Statements of Stockholders' / Members' Equity	5
	Consolidated Statements of Cash Flows	6
	Notes to Unaudited Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	23
Item 4.	Controls and Procedures	24
PART II.	OTHER INFORMATION	25
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	26
Signatures

 

 

 

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Forward-Looking Statements

 

This Quarterly Report on Form 10-Q (this “Form 10-Q”) contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 as contained in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, concerning expectations, beliefs, plans, objectives, goals, strategies, future events or performance, and underlying assumptions and other statements that are not statements of historical fact, including, but not limited to, statements regarding: our expectations with respect to our revenue, expenses, profitability, and other operating results; our growth plans; our ability to compete effectively in the markets in which we participate; the execution on our transformation initiatives; and the impact of certain macroeconomic factors, including inflationary and interest rate pressures, consumer spending patterns, global supply chain constraints, and global economic and geopolitical developments, on our business. Forward-looking and other statements in this Form 10-Q may also address our progress, plans, and goals with respect to sustainability initiatives, and the inclusion of such statements is not an indication that these contents are necessarily material to investors or required to be disclosed in our filings with the U.S. Securities and Exchange Commission (the “SEC”). Such plans and goals may change, and statements regarding such plans and goals are not guarantees or promises that they will be met. In addition, historical, current, and forward-looking sustainability-related statements may be based on standards for measuring progress that are still developing, internal controls and processes that continue to evolve, and assumptions that are subject to change in the future.

Such forward-looking statements can generally be identified by the use of forward-looking terms such as “believes,” “expects,” “may,” “intends,” “will,” “shall,” “should,” “anticipates,” “opportunity,” “illustrative”, or the negative thereof or other variations thereon or comparable terminology. Although we believe that the expectations and assumptions reflected in these statements are reasonable, there can be no assurance that these expectations will prove to be correct or that any forward-looking results will occur or be realized. Nothing contained in this Form 10-Q is, or should be relied upon as, a promise or representation or warranty as to any future matter, including any matter in respect of our operations or business or financial condition. All forward-looking statements are based on current expectations and assumptions about future events that may or may not be correct or necessarily take place and that are by their nature subject to significant uncertainties and contingencies, many of which are outside of our control.

Forward-looking statements are subject to many risks, uncertainties and other factors that could cause actual results or events to differ materially from the potential results or events discussed in such forward-looking statements, including, without limitation, those identified in this Form 10-Q as well as the following: (i) increased competition (including from multi-channel retailers, mass and grocery retailers, and e-Commerce providers); (ii) reduced consumer demand for our products and/or services; (iii) our reliance on key vendors; (iv) our ability to attract and retain qualified employees; (v) risks arising from statutory, regulatory, and/or legal developments; (vi) macroeconomic pressures in the markets in which we operate, including inflation and prevailing interest rates; (vii) failure to effectively manage our costs; (viii) our reliance on our information technology systems; (ix) our ability to prevent or effectively respond to a data privacy or security breach; (x) our ability to effectively manage or integrate strategic ventures, alliances, or acquisitions and realize the anticipated benefits of such transactions; (xi) economic or regulatory developments that might affect our ability to provide attractive promotional financing; (xii) business interruptions and other supply chain issues; (xiii) catastrophic events, political tensions, conflicts and wars (such as the ongoing conflicts in Ukraine and the Middle East), health crises, and pandemics; (xiv) our ability to maintain positive brand perception and recognition; (xv) product safety and quality concerns; (xvi) changes to labor or employment laws or regulations; (xvii) our ability to effectively manage our real estate portfolio; (xviii) constraints in the capital markets or our vendor credit terms; (xix) changes in our credit ratings; (xx) impairments of the carrying value of our goodwill and other intangible assets; (xxi) our ability to successfully implement our operational adjustments, achieve the expected benefits of our cost action plans, and drive improved profitability; and (xxii) the other risks, uncertainties and other factors referred to under “Risk Factors” and identified elsewhere in this Form 10-Q and our other filings with the SEC. The occurrence of any such factors could significantly alter the results set forth in these statements.

We caution that the foregoing list of risks, uncertainties and other factors is not complete, and forward-looking statements speak only as of the date they are made. We undertake no duty to update publicly any such forward-looking statement, whether as a result of new information, future events or otherwise, except as may be required by applicable law, regulation or other competent legal authority.

In addition, statements such as “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.

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PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

 

		May 4, 2024				February 3, 2024
		(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents		$	89,717			$	125,428
Receivables, less allowance for credit losses ($1,821 and $1,806, respectively)			42,081				44,369
Merchandise inventories, net			681,020				684,502
Prepaid expenses			64,983				58,615
Other current assets			26,254				38,830
Total current assets			904,055				951,744
Fixed assets			2,177,472				2,173,015
Less accumulated depreciation			(1,398,944	)			(1,356,648	)
Fixed assets, net			778,528				816,367
Operating lease right-of-use assets			1,357,576				1,384,050
Goodwill			980,064				980,297
Trade name			1,025,000				1,025,000
Other long-term assets			213,819				205,694
Total assets		$	5,259,042			$	5,363,152
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and book overdrafts		$	464,524			$	485,131
Accrued salaries and employee benefits			95,027				101,265
Accrued expenses and other liabilities			198,219				200,278
Current portion of operating lease liabilities			307,989				310,507
Current portion of long-term debt and other lease liabilities			3,680				15,962
Total current liabilities			1,069,439				1,113,143
Senior secured credit facilities, net, excluding current portion			1,574,486				1,576,223
Operating lease liabilities, excluding current portion			1,093,136				1,116,615
Deferred taxes, net			240,653				251,629
Other long-term liabilities			119,019				121,113
Total liabilities			4,096,733				4,178,723
Commitments and contingencies (Notes 4 and 8)
Stockholders' equity:
Class A common stock, $0.001 par value: Authorized - 1.0 billion shares;     Issued and outstanding - 233.0 million and 231.2 million shares, respectively			233				231
Class B-1 common stock, $0.001 par value: Authorized - 75.0 million shares;     Issued and outstanding - 37.8 million shares			38				38
Class B-2 common stock, $0.000001 par value: Authorized - 75.0 million shares;     Issued and outstanding - 37.8 million shares			—				—
Preferred stock, $0.001 par value: Authorized - 25.0 million shares;     Issued and outstanding - none			—				—
Additional paid-in-capital			2,246,756				2,229,582
Accumulated deficit			(1,093,726	)			(1,047,243	)
Accumulated other comprehensive income			9,008				1,821
Total stockholders’ equity			1,162,309				1,184,429
Total liabilities and stockholders’ equity		$	5,259,042			$	5,363,152

 

See accompanying notes to consolidated financial statements.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts) (Unaudited)

 

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Net sales:
Products		$	1,279,731			$	1,316,596
Services and other			249,409				239,312
Total net sales			1,529,140				1,555,908
Cost of sales:
Products			792,722				805,759
Services and other			157,758				145,667
Total cost of sales			950,480				951,426
Gross profit			578,660				604,482
Selling, general and administrative expenses			595,442				576,865
Operating (loss) income			(16,782	)			27,617
Interest income			(418	)			(1,177	)
Interest expense			36,817				37,202
Loss on partial extinguishment of debt			—				441
Other non-operating loss (income)			2,665				(2,819	)
Loss before income taxes and income    from equity method investees			(55,846	)			(6,030	)
Income tax benefit			(4,477	)			(1,008	)
Income from equity method investees			(4,886	)			(3,130	)
Net loss attributable to Class A and B-1    common stockholders		$	(46,483	)		$	(1,892	)
Net loss per Class A and B-1 common share:
Basic		$	(0.17	)		$	(0.01	)
Diluted		$	(0.17	)		$	(0.01	)
Weighted average shares used in computing net     loss per Class A and B-1 common share:
Basic			269,768				266,485
Diluted			269,768				266,485

 

 

See accompanying notes to consolidated financial statements.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands) (Unaudited)

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Net loss attributable to Class A and B-1    common stockholders		$	(46,483	)		$	(1,892	)
Other comprehensive income, net of tax:
Foreign currency translation adjustment			1,665				1,057
Unrealized gain (loss) on derivatives			6,372				(984	)
(Gains) losses on derivatives reclassified to income			(850	)			433
Total other comprehensive income, net of tax			7,187				506
Comprehensive loss attributable to Class A and    B-1 common stockholders		$	(39,296	)		$	(1,386	)

 

See accompanying notes to consolidated financial statements.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(In thousands) (Unaudited)

 

		Common stock
		Class A (shares)				Class B-1 (shares)				Class B-2 (shares)				Amount				Additional paid-in capital				Accumulated deficit				Accumulated other comprehensive income				Total stockholders’ equity
Balance at February 3, 2024			231,156				37,791				37,791			$	269			$	2,229,582			$	(1,047,243	)		$	1,821			$	1,184,429
Equity-based compensation expense    (Note 7)			—				—				—				—				17,451				—				—				17,451
Net loss			—				—				—				—				—				(46,483	)			—				(46,483	)
Foreign currency translation    adjustment, net of tax			—				—				—				—				—				—				1,665				1,665
Unrealized gain on derivatives (Note 5),    net of tax			—				—				—				—				—				—				6,372				6,372
Gains on derivatives reclassified to    income (Note 5), net of tax			—				—				—				—				—				—				(850	)			(850	)
Issuance of common stock,    net of tax withholdings			1,793				—				—				2				(277	)			—				—				(275	)
Balance at May 4, 2024			232,949				37,791				37,791			$	271			$	2,246,756			$	(1,093,726	)		$	9,008			$	1,162,309

 

		Common stock
		Class A (shares)				Class B-1 (shares)				Class B-2 (shares)				Amount				Additional paid-in capital				Retained earnings				Accumulated other comprehensive loss				Total stockholders’ equity
Balance at January 28, 2023			228,338				37,791				37,791			$	266			$	2,152,342			$	232,967			$	(4,098	)		$	2,381,477
Equity-based compensation expense    (Note 7)			—				—				—				—				22,282				—				—				22,282
Net loss			—				—				—				—				—				(1,892	)			—				(1,892	)
Foreign currency translation    adjustment, net of tax			—				—				—				—				—				—				1,057				1,057
Unrealized loss on derivatives (Note 5),    net of tax			—				—				—				—				—				—				(984	)			(984	)
Losses on derivatives reclassified to    income (Note 5), net of tax			—				—				—				—				—				—				433				433
Issuance of common stock,    net of tax withholdings			727				—				—				1				(1,254	)			—				—				(1,253	)
Balance at April 29, 2023			229,065				37,791				37,791			$	267			$	2,173,370			$	231,075			$	(3,592	)		$	2,401,120

 

 

See accompanying notes to consolidated financial statements.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands) (Unaudited)

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Cash flows from operating activities:
Net loss		$	(46,483	)		$	(1,892	)
Adjustments to reconcile net loss to net cash (used in) provided by operating    activities:
Depreciation and amortization			49,587				49,255
Amortization of debt discounts and issuance costs			1,218				1,238
Provision for deferred taxes			(13,365	)			(5,530	)
Equity-based compensation			17,434				22,129
Impairments, write-offs and losses on sale of fixed and other assets			3,508				4
Loss on partial extinguishment of debt			—				441
Income from equity method investees			(4,886	)			(3,130	)
Amounts reclassified out of accumulated other comprehensive income (Note 5)			(1,129	)			575
Non-cash operating lease costs			103,637				106,316
Other non-operating loss (income)			2,665				(2,819	)
Changes in assets and liabilities:
Receivables			2,987				4,165
Merchandise inventories			3,076				(15,508	)
Prepaid expenses and other assets			(4,511	)			(12,115	)
Accounts payable and book overdrafts			(19,538	)			12,582
Accrued salaries and employee benefits			(5,474	)			18,982
Accrued expenses and other liabilities			5,902				(8,736	)
Operating lease liabilities			(104,181	)			(130,297	)
Other long-term liabilities			1,139				1,991
Net cash (used in) provided by operating activities			(8,414	)			37,651
Cash flows from investing activities:
Cash paid for fixed assets			(32,641	)			(62,050	)
Cash paid for acquisitions, net of cash acquired			(100	)			(725	)
Proceeds from investments			998				—
Net cash used in investing activities			(31,743	)			(62,775	)
Cash flows from financing activities:
Borrowings under long-term debt agreements			173,000				—
Repayments of long-term debt			(173,000	)			(35,000	)
Debt refinancing costs			(2,955	)			—
Payments for finance lease liabilities			(1,444	)			(1,250	)
Proceeds from employee stock purchase plan and stock option exercises			830				1,378
Tax withholdings on stock-based awards			(2,059	)			(2,210	)
Net cash used in financing activities			(5,628	)			(37,082	)
Net decrease in cash, cash equivalents and restricted cash			(45,785	)			(62,206	)
Cash, cash equivalents and restricted cash at beginning of period			136,649				213,727
Cash, cash equivalents and restricted cash at end of period		$	90,864			$	151,521
Supplemental cash flow disclosures:
Interest paid, net		$	34,357			$	37,121
Income taxes paid		$	1,282			$	8,934
Supplemental non-cash investing and financing activities disclosure:
Accounts payable and accrued expenses for capital expenditures		$	14,541			$	24,767

 

See accompanying notes to consolidated financial statements.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

 

 

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the accompanying notes included elsewhere in this Quarterly Report on Form 10-Q (this “Form 10-Q”), as well as the corresponding Management’s Discussion and Analysis of Financial Condition and Results of Operations contained in our Annual Report on Form 10-K for the fiscal year ended February 3, 2024 (the “2023 Form 10-K”). The discussion and analysis below contains certain forward-looking statements about our business and operations that are subject to the risks, uncertainties, and other factors referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q. These risks, uncertainties, and other factors could cause our actual results to differ materially from those expressed in, or implied by, the forward-looking statements. The risks described in this Form 10-Q and in other documents we file from time to time with the U.S. Securities and Exchange Commission (the “SEC”), including the section entitled “Forward-Looking Statements” in this Form 10-Q, should be carefully reviewed. All amounts herein are unaudited.

Overview

Petco Health and Wellness Company, Inc. (“Petco”, the “Company”, “we”, “our” and “us”) is a pet health and wellness company focused on improving the lives of pets, pet parents, and our own partners. Through our omnichannel ecosystem, we provide our customers with a comprehensive offering of products and services to fulfill their pets’ health and wellness needs through our more than 1,500 pet care centers in the U.S., Mexico, and Puerto Rico, including a network of in-store veterinary hospitals, our digital channel, and our flexible fulfillment options.

Our multicategory strategy integrates our digital assets with our nationwide physical footprint to meet the needs of pet parents who are looking for a single source for all their pets' needs. Our e-commerce site and mobile app serve as hubs for pet parents to manage their pets’ health, wellness, and merchandise needs, while enabling them to shop wherever, whenever, and however they want. The full value of our ecosystem can be realized through our Vital Care membership program, which has a two-tiered offering—Vital Care Core, our free membership tier, and Vital Care Premier, our paid membership tier. Sitting at the intersection of value and loyalty, Vital Care Premier makes it easier and more affordable for pet parents to care for their pet’s whole health and links pet parents with our merchandising and services offerings, while Vital Care Core provides pet parents with a suite of loyalty offerings.

We strive to be a company that is improving millions of pet lives as well as the lives of pet parents and the partners who work for us. In tandem with Petco Love, a life-changing independent nonprofit organization, we work with and support thousands of local animal welfare groups across the country and, through in-store adoption events, we have helped find homes for nearly 7 million animals.

Macroeconomic factors, including rising interest rates, inflationary pressures, supply chain constraints, and global economic and geopolitical developments have had varying impacts on our results of operations, such as decreases in sales of discretionary items like supplies, that are difficult to isolate and quantify. We cannot predict the duration or ultimate severity of these macroeconomic factors or the ultimate impact on our operations and liquidity. Please refer to the risk factors referred to in Part II, Item 1A, “Risk Factors” of this Form 10-Q.

 

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How We Assess the Performance of Our Business

In assessing our performance, we consider a variety of performance and financial measures, including the following:

 

Comparable Sales

Comparable sales is an important measure throughout the retail industry and includes both retail and digital sales of products and services. A new location or digital site is included in comparable sales beginning on the first day of the fiscal month following 12 full fiscal months of operation and is subsequently compared to like time periods from the previous year. Relocated pet care centers become comparable pet care centers on the first day of operation if the original pet care center was open longer than 12 full fiscal months. If, during the period presented, a pet care center was closed, sales from that pet care center are included up to the first day of the month of closing. There may be variations in the way in which some of our competitors and other retailers calculate comparable sales. As a result, data in this filing regarding our comparable sales may not be comparable to similar data made available by other retailers.

Comparable sales allow us to evaluate how our overall ecosystem is performing by measuring the change in period-over-period net sales from locations and digital sites that have been open for the applicable period. We intend to improve comparable sales by continuing initiatives aimed to increase customer retention, frequency of visits, and basket size. General macroeconomic and retail business trends are also a key driver of changes in comparable sales.

Non-GAAP Financial Measures

Management and our board of directors review, in addition to GAAP (as defined herein) measures, certain non-GAAP financial measures, including Adjusted EBITDA and Free Cash Flow, to evaluate our operating performance, generate future operating plans, and make strategic decisions regarding the allocation of capital. Further explanations of these non-GAAP measures, along with reconciliations to their most comparable GAAP measures, are presented below under “Reconciliation of Non-GAAP Financial Measures to GAAP Measures.”

Executive Summary

Comparing the thirteen weeks ended May 4, 2024 with the thirteen weeks ended April 29, 2023 (unless otherwise noted), our results included the following:

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Results of Operations

The following tables summarize our results of operations and the percent of net sales of line items included in our consolidated statements of operations (dollars in thousands):

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Net sales:
Products		$	1,279,731			$	1,316,596
Services and other			249,409				239,312
Total net sales			1,529,140				1,555,908
Cost of sales:
Products			792,722				805,759
Services and other			157,758				145,667
Total cost of sales			950,480				951,426
Gross profit			578,660				604,482
Selling, general and administrative expenses			595,442				576,865
Operating (loss) income			(16,782	)			27,617
Interest income			(418	)			(1,177	)
Interest expense			36,817				37,202
Loss on partial extinguishment of debt			—				441
Other non-operating loss (income)			2,665				(2,819	)
Loss before income taxes and income    from equity method investees			(55,846	)			(6,030	)
Income tax benefit			(4,477	)			(1,008	)
Income from equity method investees			(4,886	)			(3,130	)
Net loss attributable to Class A and B-1    common stockholders		$	(46,483	)		$	(1,892	)

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Net sales:
Products			83.7	%			84.6	%
Services and other			16.3				15.4
Total net sales			100.0				100.0
Cost of sales:
Products			51.9				51.7
Services and other			10.3				9.4
Total cost of sales			62.2				61.1
Gross profit			37.8				38.9
Selling, general and administrative expenses			38.9				37.1
Operating (loss) income			(1.1	)			1.8
Interest income			(0.0	)			(0.1	)
Interest expense			2.4				2.4
Loss on partial extinguishment of debt			—				0.0
Other non-operating loss (income)			0.2				(0.1	)
Loss before income taxes and income    from equity method investees			(3.7	)			(0.4	)
Income tax benefit			(0.4	)			(0.1	)
Income from equity method investees			(0.3	)			(0.2	)
Net loss attributable to Class A and B-1    common stockholders			(3.0	)%			(0.1	)%

 

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		Thirteen weeks ended
		May 4, 2024				April 29, 2023
Operational Data:
Comparable sales change			-1.2	%			5.1	%
Total pet care centers at end of period			1,423				1,428
Adjusted EBITDA (in thousands)		$	75,644			$	111,026

 

Thirteen Weeks Ended May 4, 2024 Compared with Thirteen Weeks Ended April 29, 2023

Net Sales and Comparable Sales

 

	Thirteen weeks ended
(dollars in thousands)	May 4, 2024				April 29, 2023				$ Change				% Change
Consumables	$	763,974			$	763,051			$	923				0.1	%
Supplies and companion animals		515,757				553,545				(37,788	)			(6.8	%)
Services and other		249,409				239,312				10,097				4.2	%
Net sales	$	1,529,140			$	1,555,908			$	(26,768	)			(1.7	%)

 

Net sales decreased $26.8 million, or 1.7%, to $1.53 billion in the thirteen weeks ended May 4, 2024 compared to net sales of $1.56 billion in the thirteen weeks ended April 29, 2023. We continue to experience momentum in consumables and services, although we have also experienced a decrease in supplies and companion animals sales driven by softening in discretionary spend associated with the current inflationary macroeconomic environment.

The comparison of consumables sales between the periods reflects the impact of prior year inflation, coupled with pricing actions taken in the third quarter of fiscal 2023.The decrease in supplies and companion animals sales is due to a decrease in spending on certain non-essential items. The increase in services and other was driven by ongoing strength in our veterinary hospitals, mobile clinics, and grooming businesses.

The increase in services and other sales was primarily driven by a 10.5% increase in service-related sales during the thirteen weeks ended May 4, 2024, reflecting expansion and maturity of our veterinary hospital footprint and growth in our veterinary and grooming business.

We are unable to quantify certain factors impacting sales described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.

Gross Profit

Gross profit decreased $25.8 million, or 4.3%, to $578.7 million in the thirteen weeks ended May 4, 2024 compared to gross profit of $604.5 million for the thirteen weeks ended April 29, 2023. As a percentage of sales, our gross profit rate was 37.8% for the thirteen weeks ended May 4, 2024 compared with 38.9% for the thirteen weeks ended April 29, 2023. The decrease in gross profit rate between the periods was primarily due to the mix impact of higher consumables and services sales and softer supplies sales during the thirteen weeks ended May 4, 2024. Sales channel impacts driven by strength in our services business also contributed to the decrease in gross profit rate during the thirteen weeks ended May 4, 2024 as compared to the prior year period. We are unable to quantify the factors impacting gross profit rate described above due to the fact that such factors are based on input measures or qualitative information that do not lend themselves to quantification.

Selling, General and Administrative (“SG&A”) Expenses

SG&A expenses increased $18.6 million, or 3.2%, to $595.4 million for the thirteen weeks ended May 4, 2024 compared to $576.9 million for the thirteen weeks ended April 29, 2023. As a percentage of net sales, SG&A expenses were 38.9% for the thirteen weeks ended May 4, 2024 compared with 37.1% for the thirteen weeks ended April 29, 2023. The increase in SG&A expenses period-over-period included higher payroll and fringe benefits, severance-related charges, store occupancy costs, and depreciation expense.

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Interest Expense

Interest expense decreased $0.4 million, or 1.0%, to $36.8 million in the thirteen weeks ended May 4, 2024 compared with $37.2 million in the thirteen weeks ended April 29, 2023. The decrease was primarily driven by pre-tax gains recognized in interest expense related to the Company's cash flow hedges during the thirteen weeks ended May 4, 2024. For more information on derivative instruments, refer to Note 5, “Derivative Instruments,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Loss on Partial Extinguishment of Debt

There was no loss on debt extinguishment and modification for the thirteen weeks ended May 4, 2024. During the thirteen weeks ended April 29, 2023, the Company recognized $0.4 million of losses on partial extinguishment of debt. For more information regarding these activities, refer to Note 4, “Senior Secured Credit Facilities,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Other Non-Operating Loss (Income)

Other non-operating loss was $2.7 million and other non-operating income was $2.8 million for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively. For more information regarding this activity, refer to Note 6, “Fair Value Measurements,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Income Tax Benefit

Our effective tax rate was 9.1% resulting in income tax benefit of $4.5 million for the thirteen weeks ended May 4, 2024, compared to an effective tax rate of 34.8% resulting in income tax benefit of $1.0 million for the thirteen weeks ended April 29, 2023. The decrease in effective tax rate for the thirteen weeks ended May 4, 2024 is primarily driven by a shortfall in tax deductions resulting from the exercise and vesting of equity-based compensation along with a change in pre-tax earnings.

Reconciliation of Non-GAAP Financial Measures to GAAP Measures

The following information provides definitions and reconciliations of certain non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP. Such non-GAAP financial measures are not calculated in accordance with GAAP and should not be considered superior to, as a substitute for or alternative to, and should be considered in conjunction with, the most comparable GAAP measures. The non-GAAP financial measures presented may differ from similarly-titled measures used by other companies.

Adjusted EBITDA

We present Adjusted EBITDA, a non-GAAP financial measure, because we believe it enhances an investor’s understanding of our financial and operational performance by excluding certain material non-cash items, unusual or non-recurring items that we do not expect to continue in the future, and certain other adjustments we believe are or are not reflective of our ongoing operations and performance. Adjusted EBITDA enables operating performance to be reviewed across reporting periods on a consistent basis. We use Adjusted EBITDA as one of the principal measures to evaluate and monitor our operating financial performance and to compare our performance to others in our industry. We also use Adjusted EBITDA in connection with establishing discretionary annual incentive compensation targets, to make budgeting decisions, to make strategic decisions regarding the allocation of capital, and to report our quarterly results as defined in our debt agreements, although under such agreements the measure is calculated differently and is used for different purposes.

Adjusted EBITDA is not a substitute for net loss, the most comparable GAAP measure, and is subject to a number of limitations as a financial measure, so it should be used in conjunction with GAAP financial measures and not in isolation. There can be no assurances that we will not modify the presentation of Adjusted EBITDA in the future. In addition, other companies in our industry may define Adjusted EBITDA differently, limiting its usefulness as a comparative measure. Refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition

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and Results of Operations—Reconciliation of Non-GAAP Financial Measures to GAAP Measures” included in the 2023 Form 10-K for more information regarding how we define Adjusted EBITDA.

The table below reflects the calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the periods presented:

 

		Thirteen weeks ended
(dollars in thousands)		May 4, 2024				April 29, 2023
Net loss attributable to Class A and B-1    common stockholders		$	(46,483	)		$	(1,892	)
Interest expense, net			36,399				36,025
Income tax benefit			(4,477	)			(1,008	)
Depreciation and amortization			49,587				49,255
Income from equity method investees			(4,886	)			(3,130	)
Loss on partial extinguishment of debt			—				441
Asset impairments and write offs			3,508				4
Equity-based compensation			17,434				22,129
Other non-operating loss (income)			2,665				(2,819	)
Mexico joint venture EBITDA (1)			10,496				8,734
Acquisition and divestiture-related costs (2)			3,719				—
Other costs (3)			7,682				3,287
Adjusted EBITDA		$	75,644			$	111,026
Net sales		$	1,529,140			$	1,555,908
Net margin (4)			(3.0	)%			(0.1	)%
Adjusted EBITDA Margin			4.9	%			7.1	%

————————————

 

		Thirteen weeks ended
(dollars in thousands)		May 4, 2024				April 29, 2023
Net income		$	9,555			$	6,259
Depreciation			6,948				5,708
Income tax expense			3,456				4,074
Foreign currency loss			479				127
Interest expense, net			553				1,300
EBITDA		$	20,991			$	17,468
50% of EBITDA		$	10,496			$	8,734

————————————

Free Cash Flow

Free Cash Flow is a non-GAAP financial measure that is calculated as net cash provided by operating activities less cash paid for fixed assets. Management believes that Free Cash Flow, which measures our ability to generate additional cash from our business operations, is an important financial measure for use in evaluating the Company’s financial performance.

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The table below reflects the calculation of Free Cash Flow for the periods presented:

 

		Thirteen weeks ended
		May 4, 2024				April 29, 2023
(dollars in thousands)
Net cash (used in) provided by operating activities		$	(8,414	)		$	37,651
Cash paid for fixed assets			(32,641	)			(62,050	)
Free Cash Flow		$	(41,055	)		$	(24,399	)

 

Liquidity and Capital Resources

Overview

Our primary sources of liquidity are funds generated by operating activities and available capacity for borrowings on our $581 million secured asset-based revolving credit facility (the “ABL Revolving Credit Facility”). Our ability to fund our operations, to make planned capital investments, to make scheduled debt payments and to repay or refinance indebtedness depends on our future operating performance and cash flows, which are subject to prevailing economic conditions and financial, business, and other factors, some of which are beyond our control. Our liquidity as of May 4, 2024 was $617.3 million, inclusive of cash and cash equivalents of $89.7 million and $527.6 million of availability on the ABL Revolving Credit Facility.

We are a party to contractual obligations involving commitments to make payments to third parties. These obligations impact our short-term and long-term liquidity and capital resource needs. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under the ABL Revolving Credit Facility will be sufficient to finance our operations, meet our current cash requirements, and fund anticipated capital investments for at least the next 12 months. We may, however, seek additional financing to fund future growth or refinance our existing indebtedness through the debt capital markets, but we cannot be assured that such financing will be available on favorable terms, or at all.

Cash Flows

The following table summarizes our consolidated cash flows:

 

		Thirteen weeks ended
(dollars in thousands)		May 4, 2024				April 29, 2023
Total cash (used in) provided by:
Operating activities		$	(8,414	)		$	37,651
Investing activities			(31,743	)			(62,775	)
Financing activities			(5,628	)			(37,082	)
Net decrease in cash, cash equivalents   and restricted cash		$	(45,785	)		$	(62,206	)

 

Operating Activities

Our primary source of operating cash is sales of products and services to customers, which are substantially all on a cash basis, and therefore provide us with a significant source of liquidity. Our primary uses of cash in operating activities include: purchases of inventory; freight and warehousing costs; employee-related expenditures; occupancy-related costs for our pet care centers, distribution centers and corporate support centers; credit card fees; interest under our debt agreements; and marketing expenses. Net cash (used in) provided by operating activities is impacted by our net loss adjusted for certain non-cash items, including: depreciation, amortization, impairments and write-offs; amortization of debt discounts and issuance costs; deferred income taxes; equity-based compensation; impairments of goodwill and intangible assets; other non-operating loss (income); and the effect of changes in operating assets and liabilities.

Net cash used in operating activities was $8.4 million in the thirteen weeks ended May 4, 2024 compared with net cash provided by operating activities of $37.7 million in the thirteen weeks ended April 29, 2023. The decrease in operating cash flow was driven by lower sales, an increase in cash paid for inventory and higher payroll and

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fringe benefits. This was partially offset by a decrease in cash paid for operating leases, effective management of accounts payable, and fewer payouts of prior year accrued incentive bonuses.

 

Investing Activities

Cash used in investing activities consists of capital expenditures, which in the thirteen weeks ended May 4, 2024 and the thirteen weeks ended April 29, 2023 supported the continued build-out of our veterinary hospitals. Net cash used in investing activities was $31.7 million and $62.8 million for the thirteen weeks ended May 4, 2024 and April 29, 2023, respectively.

 

Financing Activities

Net cash used in financing activities was $5.6 million for the thirteen weeks ended May 4, 2024, compared with $37.1 million used in financing activities in the thirteen weeks ended April 29, 2023.

Financing cash flows in the thirteen weeks ended May 4, 2024 primarily consisted of borrowings and repayments on the ABL Revolving Credit Facility.

Financing cash flows in the thirteen weeks ended April 29, 2023 primarily consisted of the $35.0 million principal repayment on the term loan.

Sources of Liquidity

Senior Secured Credit Facilities

On March 4, 2021, the Company completed a refinancing transaction by entering into a $1,700 million secured term loan facility maturing on March 4, 2028 (the “First Lien Term Loan”) and the ABL Revolving Credit Facility, maturing on March 4, 2026 with availability of up to $500.0 million, subject to a borrowing base.

In March 2024, the Company amended the ABL Revolving Credit Facility, which now consists of two tranches, to increase its total availability from $500.0 million to $581.0 million and extend the maturity on a portion of this availability. The first tranche has availability of up to $35.0 million, subject to a borrowing base, maturing on March 4, 2026. The second tranche has availability of up to $546.0 million, subject to a borrowing base, maturing on March 29, 2029. Interest on the ABL Revolving Credit Facility is now based on, at the Company's option, either the base rate subject to a 1% floor, or Term SOFR subject to a floor of 0%, plus an applicable margin. All other key terms of the ABL Revolving Credit Facility remained unchanged.

Interest on the First Lien Term Loan is based on, at the Company’s option, either a base rate or Adjusted Term SOFR, subject to a 0.75% floor, payable upon maturity of the SOFR contract, in either case plus the applicable rate. The base rate is the greater of the bank prime rate, federal funds effective rate plus 0.5% or Adjusted Term SOFR plus 1.0%. The applicable rate is 2.25% per annum for a base rate loan or 3.25% per annum for an Adjusted Term SOFR loan. Principal and interest payments commenced on June 30, 2021. Principal payments are typically $4.25 million quarterly. During the thirteen weeks ended April 29, 2023, the Company repaid $35.0 million in principal of the First Lien Term Loan using existing cash on hand. The repayments were applied to remaining principal payments in order of scheduled payment date.

For more information regarding this indebtedness, refer to Note 4, “Senior Secured Credit Facilities,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Derivative Instruments

In November 2022, the Company entered into a series of interest rate cap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate caps became effective December 30, 2022 and expire on December 31, 2024.

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In March 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective March 31, 2023 and expires on March 31, 2026.

In June 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective September 30, 2023 and expires on December 31, 2026.

In December 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar becomes effective December 31, 2024 and expires on December 31, 2026.

In March 2024, the Company entered into two interest rate collar agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collars become effective on December 31, 2024 and expire on December 31, 2026.

For more information regarding derivative instruments, refer to Note 5, “Derivative Instruments,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements in conformity with accounting principles generally accepted in the United States (“GAAP”) requires us to make assumptions and estimates about future results and apply judgments that affect the reported amounts of assets, liabilities, net sales, expenses and related disclosures. We base our estimates and judgments on historical experience, current trends and other factors that we believe to be relevant at the time our consolidated financial statements are prepared. On an ongoing basis, we review the accounting policies, assumptions, estimates and judgments to ensure that our financial statements are presented fairly and in accordance with GAAP. However, because future events and their effects cannot be determined with certainty, actual results could differ from our assumptions and estimates, and such differences could be material.

Goodwill and Trade Name Intangible Assets

Goodwill

We evaluate goodwill annually in our fourth quarter or whenever events or changes in circumstances indicate that the carrying value may not be recoverable. We have identified one reporting unit and selected our fourth fiscal quarter to perform our annual goodwill impairment testing. Goodwill impairment guidance provides entities the option to perform a qualitative assessment to determine whether further impairment testing is necessary. The qualitative assessment requires significant judgments about economic conditions, including the entity’s operating environment, its industry and other market conditions, entity-specific events related to financial performance or loss of key personnel, and other events that could impact the reporting unit. If management concludes, based on assessment of relevant events, facts, and circumstances, that it is more likely than not that a reporting unit’s fair value is greater than its carrying value, no further impairment testing is required.

If management’s assessment of qualitative factors indicates that it is more likely than not that the fair value of a reporting unit is less than its carrying value, then a quantitative assessment is performed. We also have the option to bypass the qualitative assessment described above and proceed directly to the quantitative assessment, where we compare the fair value of the reporting unit to its carrying value. If the fair value of the reporting unit exceeds the carrying value of our net assets assigned to that unit, goodwill is not considered impaired, and we are not required to perform further testing. If the carrying value of net assets assigned to the reporting unit exceeds the fair value of the reporting unit, then we would record an impairment loss equal to the difference. If a quantitative assessment is performed, the evaluation includes management estimates of cash flow projections based on internal future projections and/or use of a market approach by reviewing transactional and financial data of publicly traded companies. The assumptions used in the impairment analysis are inherently subject to uncertainty and small changes in these assumptions could have a significant impact on the concluded value. The Company's market capitalization is also considered as part of the analysis, in order to further validate the reasonableness of the fair values concluded

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for the reporting unit. Factors that may trigger an interim impairment test may include, but are not limited to, current economic and market conditions or a significant decline in the Company's share price and market capitalization compared to net book value.

Indefinite-lived trade name

We consider the Petco trade name to be an indefinite-lived intangible asset, as we currently anticipate that this trade name will contribute cash flows to us indefinitely. We perform our annual impairment test during the fourth quarter of each year or whenever events or changes in circumstances indicate the carrying value may not be recoverable. Management has the option to first perform a qualitative assessment of its trade name asset to determine whether it is necessary to perform a quantitative impairment test. We also have the option to bypass the qualitative assessment described above and proceed directly to quantitative assessment.

Factors that may trigger an interim impairment test may include, but are not limited to, a significant decline in the Company's share price and market capitalization compared to net book value, or changes in the pattern of utilization of the intangible asset. Significant assumptions used in the determination of fair value of the trade name generally include prospective financial information, growth rates, discount rates and comparable multiples from publicly traded companies in similar industries. An impairment charge is recorded for the amount by which the carrying amount of the trade name exceeds its fair value.

There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in the 2023 Form 10-K.

Recent Accounting Pronouncements

Refer to Note 1, “Summary of Significant Accounting Policies,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for information regarding recently issued accounting pronouncements.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

We are subject to market risks arising from transactions in the normal course of our business. These risks are primarily associated with interest rate fluctuations, as well as changes in our credit standing, based on the capital and credit markets, which are not predictable. We do not currently hold any instruments for trading purposes.

Interest Rate Risk

We are subject to interest rate risk in connection with the First Lien Term Loan and the ABL Revolving Credit Facility. As of May 4, 2024, we had $1,595.3 million outstanding under the First Lien Term Loan and no amounts outstanding under the ABL Revolving Credit Facility. The First Lien Term Loan and the ABL Revolving Credit Facility each bear interest at variable rates. An increase of 100 basis points in the variable rates on the First Lien Term Loan and the ABL Revolving Credit Facility as of May 4, 2024 would have increased gross annual cash interest in the aggregate by approximately $16.2 million. Additionally, we entered into cash flow hedges to limit the maximum interest rate on a portion of our variable-rate debt and limit our exposure to interest rate variability, refer to Note 5, “Derivative Instruments,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q.

We cannot predict market fluctuations in interest rates and their impact on our debt, nor can there be any assurance that long-term fixed-rate debt will be available at favorable rates, if at all. Consequently, future results may differ materially from estimated results due to adverse changes in interest rates or debt availability.

Credit Risk

As of May 4, 2024, our cash and cash equivalents were maintained at major financial institutions in the United States, and our current deposits are likely in excess of insured limits. We believe these institutions have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us.

Foreign Currency Risk

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Substantially all of our business is currently conducted in U.S. dollars. We do not believe that an immediate 10% increase or decrease in the relative value of the U.S. dollar as compared to other currencies would have a material effect on our operating results.

Item 4. Controls and Procedures.

Management’s Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this Form 10-Q, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rules 13a-15(e) and 15d-15(e). Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of May 4, 2024.

Changes in Internal Control over Financial Reporting

There was no change in our internal control over financial reporting that occurred during the quarter ended May 4, 2024, which has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

Limitations on the Effectiveness of Controls

 

Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based on certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.

 

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

See Note 8, “Commitments and Contingencies,” to the Notes to Consolidated Financial Statements included in Part I, Item 1 of this Form 10-Q for a description of legal proceedings, which is incorporated herein by reference.

Item 1A. Risk Factors.

Reference is made to Part I, Item 1A, “Risk Factors” included in the 2023 Form 10-K for information concerning risk factors. Except as set forth below, there have been no material changes with respect to the risk factors disclosed in the 2023 Form 10-K. The risk factor set forth below updates, and should be read together with, the risk factors in our 2023 Form 10-K. You should carefully consider such factors, which could materially and adversely affect our business, financial condition, and/or results of operations. The risks described in this Form 10-Q and the 2023 Form 10-K are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially and adversely affect our business, financial condition, and/or results of operations.

 

Risks Related to Legal and Regulatory Matters

 

We are subject to risks related to online payment methods and our Petco Pay promotional financing program.

 

We currently accept payments using a variety of methods, including, but not limited to, credit cards, debit cards, PayPal, Apple Pay, Google Pay, Samsung Pay, Klarna, and gift cards. As we offer new payment options to consumers, we may be subject to additional regulations, compliance requirements, fraud, and other risks. For certain payment methods, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. As a merchant that accepts debit and credit cards for payment, we are subject to PCI DSS, which contains compliance guidelines and standards with regard to our security surrounding the physical administrative and technical storage, processing, and transmission of individual cardholder data. By accepting debit cards for payment, we are also subject to compliance with American National Standards Institute data encryption standards and payment network security operating guidelines.

 

Failure to be PCI compliant or to meet other payment card standards may result in the imposition of financial penalties or the allocation by the card brands of the costs of fraudulent charges to us. Additionally, the Fair and Accurate Credit Transactions Act requires systems that print payment card receipts to employ personal account number truncation so that the customer’s full account number is not viewable on the slip.

 

As our business changes, we may be subject to different rules under existing standards, which may require new assessments that involve costs above what we currently pay for compliance. In the future, as we offer new payment options to consumers, including by way of integrating emerging mobile and other payment methods, we may be subject to additional regulations, compliance requirements, licenses, and fraud. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines, legal proceedings, or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments from consumers or facilitate other types of online payments. If any of these events were to occur, our business, financial condition, and results of operations could be materially and adversely affected.

 

We also occasionally receive orders placed with fraudulent data. Although we have measures in place to detect, reduce, and mitigate the occurrence of such fraudulent activity, those measures are not always effective, and we have incurred, and could in the future incur, financial losses, losses of customers, and reputational harm for such fraudulent transactions, which could harm our business, financial condition, and results of operations.

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Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

None.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

None of our directors or Section 16 officers adopted or terminated a Rule 10b5-1 trading arrangement (as defined in Item 408(a) of Regulation S-K) or a non-Rule 10b5-1 trading arrangement (as defined in Item 408(c) of Regulation S-K) during the quarterly period covered by this Form 10-Q.

 

Item 6. Exhibits.

 

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q:

 

Exhibit Number		Description
10.1†		Form of Retention Bonus Agreement (2024 Officer Form)
10.2†		Form of Performance Stock Unit Award Grant Notice and Standard terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (2024 Executive Form)
10.3†		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (Interim CEO Form)
10.4†		Form of Nonqualified Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (Interim CEO Form)
10.5†		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (Executive Form)
10.6†		Form of Restricted Stock Unit Award Grant Notice and Standard Terms and Conditions under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (CHRO Special RSU Form)
10.7†		Separation Agreement and General Release of Claims by and between Petco Health and Wellness Company, Inc., Scooby LP, and Darren McDonald dated April 12, 2024
10.8†		Employment Letter, dated March 12, 2024, between Petco Health and Wellness Company, Inc. and R. Michael Mohan, effective as of March 13, 2024 (incorporated by reference to Exhibit 10.1 of the Company's Current Report on Form 8-K, filed on March 13, 2024)
10.9†		Separation and Consulting Agreement and General Release of Claims by and between Petco Animal Supplies Stores, Inc., Petco Health and Wellness Company, Inc., Scooby LP and Ronald V. Coughlin Jr., dated March 12, 2024 (incorporated by reference to Exhibit 10.2 of the Company's Current Report on Form 8-K, filed on March 13, 2024)
31.1		Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

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31.2		Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1*		Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2*		Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS		Inline XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH		Inline XBRL Taxonomy Extension Schema With Embedded Linkbase Documents
104		Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)

 

* Furnished herewith and not deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

† Management contract or compensatory plan or arrangement.

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

		Petco Health and Wellness Company, Inc.
Date: June 5, 2024	By:		/s/ Brian LaRose
			Brian LaRose
			Chief Financial Officer (Principal Financial and Accounting Officer)

 

 

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RETENTION BONUS AGREEMENT

This Retention Bonus Agreement (Agreement) is effective on , by and between (hereinafter “Employee”) and Petco Animal Supplies Stores, Inc. (hereinafter “Company”). In consideration of the mutual promises made herein, the Company and Employee agree as follows.

 

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IT IS SO AGREED.

DATED: ____________ ____________________________

 

Petco Animal Supplies Stores, Inc.

DATED: ____________ ____________________________

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PETCO HEALTH AND WELLNESS COMPANY, INC.

2021 EQUITY INCENTIVE PLAN
 

GRANT NOTICE FOR

PERFORMANCE STOCK UNIT AWARD

FOR GOOD AND VALUABLE CONSIDERATION, Petco Health and Wellness Company, Inc. (the “Company”), hereby grants to the Participant named below the target number of performance stock units (the “PSUs”) specified below (the “Award”) as performance-based Restricted Stock Units under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (as amended from time to time, the “Plan”). Each Earned PSU represents the right to receive one share of Common Stock, upon the terms and subject to the conditions set forth in this Grant Notice (including Exhibit C), the Plan and the Standard Terms and Conditions (the “Standard Terms and Conditions”) promulgated under such Plan and attached hereto as Exhibit A, and the Confidentiality and Inventions Agreement attached hereto as Exhibit B. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

Name of Participant:
Grant Date:
Target Number of PSUs:	[●] (the “Target PSUs”)
Award Type:	The Award represents the right to receive shares of Common Stock in an amount from [●] to [●] of the Target PSUs. The Award shall vest and become earned and nonforfeitable upon (i) the Participant’s satisfaction of the Service Requirement (as defined below) and (ii) the Committee’s certification of the final level of achievement of the Performance Goal (as defined below). PSUs that become earned upon satisfaction of the Service Requirement and the Performance Goal are referred to herein as “Earned PSUs.”
Performance Period:
Service Requirement:	The “Service Requirement” is set forth on Exhibit C attached hereto.
Performance Goal:	The “Performance Goal” is set forth on Exhibit C attached hereto.

 

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IN ORDER TO RECEIVE THE BENEFITS OF THIS AGREEMENT, PARTICIPANT MUST EXECUTE AND RETURN THIS GRANT NOTICE (THE “ACCEPTANCE REQUIREMENTS”). IF PARTICIPANT FAILS TO SATISFY THE ACCEPTANCE REQUIREMENTS WITHIN 60 DAYS AFTER THE GRANT DATE, THEN (1) THIS GRANT NOTICE WILL BE OF NO FORCE OR EFFECT AND THIS AWARD WILL BE AUTOMATICALLY FORFEITED TO THE COMPANY WITHOUT CONSIDERATION, AND (2) NEITHER PARTICIPANT NOR THE COMPANY WILL HAVE ANY FUTURE RIGHTS OR OBLIGATIONS UNDER THIS GRANT NOTICE OR THE STANDARD TERMS AND CONDITIONS.

By accepting this Grant Notice, Participant acknowledges that Participant has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice (including Exhibit C), the Plan, and the Standard Terms and Conditions and the Confidentiality and Inventions Agreement.

 

 

PETCO HEALTH AND WELLNESS COMPANY, INC.

 

 

 

By:

Name:

Title:

 

PARTICIPANT

 

 

 

[Name]

 

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EXHIBIT A

 

PETCO HEALTH AND WELLNESS COMPANY, INC.
2021 EQUITY INCENTIVE PLAN

 

STANDARD TERMS AND CONDITIONS FOR
PERFORMANCE STOCK UNITS

These Standard Terms and Conditions apply to the Award of performance stock units granted pursuant to the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (the “Plan”), which are evidenced by a Grant Notice or an action of the Committee that specifically refers to these Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the performance stock units shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Petco Health and Wellness Company, Inc. (the “Company”) has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of performance stock units (the “Award” or “PSUs”) specified in the Grant Notice, with each Earned PSU representing the right to receive one share of Common Stock. The Award is subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions and the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

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The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Earned PSUs, including (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the PSUs. The Company shall not be required to issue

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shares or to recognize the disposition of such shares until such obligations are satisfied.

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Committee, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution. Notwithstanding the foregoing, (a) the Participant shall be permitted to transfer the Award as a gift to an Assignee Entity in accordance with and subject to the limits of Section 17 of the Plan and (b) if not previously so transferred, any shares of Common Stock that become issuable hereunder but which otherwise remain unissued at the time of the Participant’s death shall be transferred to the Participant’s designated beneficiary or, if none, to the Participant’s estate.

The Grant Notice, these Standard Terms and Conditions, the Confidentiality and Inventions Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded; provided, however, that the terms of the Confidentiality and Inventions Agreement are in addition to and complement (and do not replace or supersede) all other agreements and obligations between the Company and any of its affiliates and the Participant with respect to confidentiality and intellectual property.

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

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The PSUs and any shares of Common Stock issued pursuant to the Earned PSUs will be subject to recoupment in accordance with any clawback policy adopted by the Company. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company. By accepting the Award, the Participant is agreeing to be bound by any such clawback policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.

By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the PSUs via Company web site or other electronic delivery.

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EXHIBIT B

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

As a condition to the receipt of the Award granted pursuant to the Grant Notice to which this Confidentiality and Inventions Agreement is attached and in consideration of the Participant’s continued employment with the Company, the Participant hereby confirms the Participant’s agreement as follows:

The Participant’s employment by the Company is in a capacity in which he or she may have access to, or contribute to the production of, Confidential Information and the Company Work Product (both as defined below). The Participant’s employment creates a relationship of confidence and trust between the Company and the Participant with respect to the Confidential Information and the Company Work Product as set forth herein. This Confidentiality and Inventions Agreement are subject to the terms of the Standard Terms and Conditions attached as Exhibit A to the Grant Notice to which this Confidentiality and Inventions Agreement is attached; provided however, that in the event of any conflict between the Standard Terms and Conditions and this Confidentiality and Inventions Agreement, this Confidentiality and Inventions Agreement shall control.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, as amended from time to time. For purposes of this Confidentiality and Inventions Agreement:

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All apparatus, computers, computer files and media, notes, data, documents, reference materials, sketches, memoranda, records, drawings, engineering log books, equipment, lab/inventor notebooks, programs, prototypes, samples, equipment, tangible embodiments of information, and other physical property, whether or not pertaining to Confidential Information, furnished to the Participant or produced by the Participant or others in connection with the Participant’s employment, shall be and remain the sole property of the Company and any such property actually in the Participant’s possession or control shall be returned promptly to the Company as and when requested in writing by the Company. Should the Company not so request, the Participant shall return and deliver all such property to the Company upon termination of the Participant’s employment. The Participant may not retain any such property or any reproduction of such property upon such termination. The Participant further agrees that any property situated on the Company’s premises and owned, leased, maintained or otherwise contracted for by the Company, including, but not limited to, computers, computer files, e-mail, voicemail, disks and other electronic storage media, filing cabinets, desks or other work areas, are subject to inspection by the Company’s representatives at any time with or without notice.

Subject to Section 6 and 7 below, the Participant agrees that any Work Product, in whole or in part, conceived, developed, made or reduced to practice by the Participant (either solely or in conjunction with others) during the term of his or her employment with the Company (collectively, the “Company Work Product”) shall be owned exclusively by the Company (or, to the extent applicable, a Purchaser pursuant to an Acquisition). Without limiting the foregoing, the Participant agrees that any of the Company Work Product shall be deemed to be “works made for hire” as defined in U.S. Copyright Act §101, and all right, title, and interest therein shall vest solely in the Company from conception. The Participant hereby irrevocably assigns and transfers, and agrees

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to assign and transfer in the future on the Company’s request, to the Company all right, title and interest in and to any Company Work Product, including, but not limited to, patents, copyrights and other intellectual property rights therein. The Participant shall treat any such Company Work Product as Confidential Information. The Participant will execute all applications, assignments, instruments and other documents and perform all acts consistent herewith as the Company or its counsel may deem necessary or desirable to obtain, perfect or enforce any patents, copyright registrations or other protections on such Company Work Product and to otherwise protect the interests of the Company therein. The Participant’s obligation to reasonably assist the Company in obtaining and enforcing the intellectual property and other rights in the Company Work Product in any and all jurisdictions shall continue beyond the termination of the Participant’s employment. The Participant acknowledges that the Company may need to secure the Participant’s signature for lawful and necessary documents required to apply for, maintain or enforce intellectual property and other rights with respect to the Company Work Product (including, but not limited to, renewals, extensions, continuations, divisions or continuations in part of patent applications). The Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Participant’s agents and attorneys-in-fact, to act for and on the Participant’s behalf and instead of the Participant, to execute and file any such document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyright registrations and other protections on the Company Work Product with the same legal force and effect as if executed by the Participant. The Participant further hereby waives and relinquishes any and all moral rights that the Participant may have in the Company Work Product.

Pursuant to Section 2870 of the California Labor Code, the requirements set forth in Section 5 of this Agreement shall not apply to an invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (i) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (ii) result from any work performed by the Participant for the Company.

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The Participant agrees that he or he or she will keep and maintain adequate and current written records (in the form of notes, sketches, drawings or such other form(s) as may be specified by the Company) of all the Company Work Product made by the Participant during the term of his or his or her employment with the Company, which records shall be available at all times to the Company and shall remain the sole property of the Company.

If any application for any United States or foreign patent related to or useful in the business of the Company or any customer of the Company shall be filed by or for the Participant during the period of one year after the Participant’s employment is terminated, the subject matter covered by such application shall be presumed to have been conceived during the Participant’s employment with the Company.

The Participant acknowledges that the Company from time to time may have agreements with other persons or entities, or with the U.S. Government or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. The Participant agrees to be bound by all such obligations and restrictions of which the Participant has been made aware of by the Company and to take all action necessary to discharge the obligations of the Company thereunder.

Because of the unique nature of the Confidential Information and the Company Work Product, the Participant understands and agrees that the Company may suffer immediate and irreparable harm if the Participant fails to comply with any of his or her obligations under this Confidentiality and Inventions Agreement and that monetary damages may be inadequate to compensate the Company for such breach. Accordingly, the Participant agrees that in the event of a breach or threatened breach of this Confidentiality and Inventions Agreement, in addition to any other remedies available to it at law or in equity, the Company will be entitled, without posting bond or other security, to seek injunctive relief to enforce the terms of this Confidentiality and Inventions Agreement, including, but not limited to, restraining the Participant from violating this Confidentiality and Inventions Agreement or compelling the Participant to cease and desist all unauthorized use and disclosure of the Confidential Information and the Company Work Product. The Participant will indemnify the Company against any costs, including, but not limited to, reasonable outside legal fees and costs, incurred in obtaining relief against the Participant’s breach of this Confidentiality and Inventions Agreement. Nothing in this Section 11 shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, but not limited to, recovery of damages.

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The Participant is hereby permitted and the Participant authorizes the Company to provide a copy of this Confidentiality and Inventions Agreement and any exhibits hereto to any of the Participant’s future employers, and to notify any such future employers of the Participant’s obligations and the Company’s rights hereunder, provided that neither party is under any obligation to do so.

This Confidentiality and Inventions Agreement will be governed by the laws of the State of California without regard to any conflicts-of-law rules. To the extent that any lawsuit is permitted under this Confidentiality and Inventions Agreement, the Participant hereby expressly consents to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Diego, California for any lawsuit filed against the Participant by the Company. Nothing herein shall limit the right of the Company to seek and obtain injunctive relief in any jurisdiction for violation of the portions of this Confidentiality and Inventions Agreement dealing with protection of Confidential Information or the Company Work Product.

Neither this Confidentiality and Inventions Agreement nor any duties or obligations under this Confidentiality and Inventions Agreement may be assigned by the Participant without the prior written consent of the Company. The Participant understands and agrees that the Company may freely assign this Confidentiality and Inventions Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the permitted assigns, successors in interest (including any Purchaser upon consummation of an Acquisition), personal representatives, estates, heirs, and legatees of each of the parties hereto. Any assignment in violation of this Section 14 shall be null and void.

The rights and obligations of the parties to this Confidentiality and Inventions Agreement will survive termination of my employment with the Company.

In the event that any provision hereof or any obligation or grant of rights by the Participant hereunder is found invalid or unenforceable pursuant to judicial decree or decision, any such provision, obligation or grant of rights shall be deemed and construed to extend only to the maximum permitted by law, the invalid or unenforceable portions shall be severed, and the remainder of this Confidentiality and Inventions Agreement shall remain valid and enforceable according to its terms. This Confidentiality and Inventions Agreement may not be amended, waived or modified, except by an instrument in writing executed by the Participant and a duly authorized representative of the Company.

EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE GRANT NOTICE TO WHICH

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THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT IS ATTACHED, EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND EMPLOYEE HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT. THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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EXHIBIT C

PERFORMANCE GOALS AND SERVICE REQUIREMENT

 

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PETCO HEALTH AND WELLNESS COMPANY, INC.

2021 EQUITY INCENTIVE PLAN
 

GRANT NOTICE FOR

RESTRICTED STOCK UNIT AWARD

FOR GOOD AND VALUABLE CONSIDERATION, Petco Health and Wellness Company, Inc. (the “Company”), hereby grants to the Participant named below the number of Restricted Stock Units (the “RSUs”) specified below (the “Award”) under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (as amended from time to time, the “Plan”). Each RSU represents the right to receive one share of Common Stock, upon the terms and subject to the conditions set forth in this Grant Notice, the Plan and the Standard Terms and Conditions (the “Standard Terms and Conditions”) promulgated under such Plan and attached hereto as Exhibit A, and the Confidentiality and Inventions Agreement attached hereto as Exhibit B. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

Name of Participant:
Grant Date:
Number of RSUs:
Vesting Commencement Date:
Vesting Schedule:	Subject to the Plan and the Standard Terms and Conditions, the RSUs shall vest , so long as Participant remains continuously employed by the Company or its Subsidiaries from the Grant Date through such vesting date.

 

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IN ORDER TO RECEIVE THE BENEFITS OF THIS AGREEMENT, PARTICIPANT MUST EXECUTE AND RETURN THIS GRANT NOTICE (THE “ACCEPTANCE REQUIREMENTS”). IF PARTICIPANT FAILS TO SATISFY THE ACCEPTANCE REQUIREMENTS WITHIN 60 DAYS AFTER THE GRANT DATE, THEN (1) THIS GRANT NOTICE WILL BE OF NO FORCE OR EFFECT AND THIS AWARD WILL BE AUTOMATICALLY FORFEITED TO THE COMPANY WITHOUT CONSIDERATION, AND (2) NEITHER PARTICIPANT NOR THE COMPANY WILL HAVE ANY FUTURE RIGHTS OR OBLIGATIONS UNDER THIS GRANT NOTICE OR THE STANDARD TERMS AND CONDITIONS.

By accepting this Grant Notice, Participant acknowledges that Participant has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice, the Plan, and the Standard Terms and Conditions and the Confidentiality and Inventions Agreement.

 

 

PETCO HEALTH AND WELLNESS COMPANY, INC.

 

 

 

By:

Name:

Title:

 

PARTICIPANT

 

 

 

[Name]

 

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EXHIBIT A

 

PETCO HEALTH AND WELLNESS COMPANY, INC.
2021 EQUITY INCENTIVE PLAN

 

STANDARD TERMS AND CONDITIONS FOR
RESTRICTED STOCK UNITS

These Standard Terms and Conditions apply to the Award of Restricted Stock Units granted pursuant to the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (the “Plan”), which are evidenced by a Grant Notice or an action of the Committee that specifically refers to these Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the Restricted Stock Units shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Petco Health and Wellness Company, Inc. (the “Company”) has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of Restricted Stock Units (the “Award” or “RSUs”) specified in the Grant Notice, with each Restricted Stock Unit representing the right to receive one share of Common Stock. The Award is subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions and the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

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The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to

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issue shares or to recognize the disposition of such shares until such obligations are satisfied.

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Committee, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution. Notwithstanding the foregoing, (a) the Participant shall be permitted to transfer the Award as a gift to an Assignee Entity in accordance with and subject to the limits of Section 17 of the Plan and (b) if not previously so transferred, any shares of Common Stock that become issuable hereunder but which otherwise remain unissued at the time of the Participant’s death shall be transferred to the Participant’s designated beneficiary or, if none, to the Participant’s estate.

The Grant Notice, these Standard Terms and Conditions, the Confidentiality and Inventions Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded; provided, however, that the terms of the Confidentiality and Inventions Agreement are in addition to and complement (and do not replace or supersede) all other agreements and obligations between the Company and any of its affiliates and the Participant with respect to confidentiality and intellectual property.

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

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The RSUs and any shares of Common Stock received upon settlement of the RSUs will be subject to recoupment in accordance with any clawback policy adopted by the Company. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company. By accepting the RSUs, the Participant is agreeing to be bound by any such clawback policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.

By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Restricted Stock Units via Company web site or other electronic delivery.

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EXHIBIT B

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

As a condition to the receipt of the Award granted pursuant to the Grant Notice to which this Confidentiality and Inventions Agreement is attached and in consideration of the Participant’s continued employment with the Company, the Participant hereby confirms the Participant’s agreement as follows:

The Participant’s employment by the Company is in a capacity in which he or she may have access to, or contribute to the production of, Confidential Information and the Company Work Product (both as defined below). The Participant’s employment creates a relationship of confidence and trust between the Company and the Participant with respect to the Confidential Information and the Company Work Product as set forth herein. This Confidentiality and Inventions Agreement are subject to the terms of the Standard Terms and Conditions attached as Exhibit A to the Grant Notice to which this Confidentiality and Inventions Agreement is attached; provided however, that in the event of any conflict between the Standard Terms and Conditions and this Confidentiality and Inventions Agreement, this Confidentiality and Inventions Agreement shall control.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, as amended from time to time. For purposes of this Confidentiality and Inventions Agreement:

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All apparatus, computers, computer files and media, notes, data, documents, reference materials, sketches, memoranda, records, drawings, engineering log books, equipment, lab/inventor notebooks, programs, prototypes, samples, equipment, tangible embodiments of information, and other physical property, whether or not pertaining to Confidential Information, furnished to the Participant or produced by the Participant or others in connection with the Participant’s employment, shall be and remain the sole property of the Company and any such property actually in the Participant’s possession or control shall be returned promptly to the Company as and when requested in writing by the Company. Should the Company not so request, the Participant shall return and deliver all such property to the Company upon termination of the Participant’s employment. The Participant may not retain any such property or any reproduction of such property upon such termination. The Participant further agrees that any property situated on the Company’s premises and owned, leased, maintained or otherwise contracted for by the Company, including, but not limited to, computers, computer files, e-mail, voicemail, disks and other electronic storage media, filing cabinets, desks or other work areas, are subject to inspection by the Company’s representatives at any time with or without notice.

Subject to Section 6 and 7 below, the Participant agrees that any Work Product, in whole or in part, conceived, developed, made or reduced to practice by the Participant (either solely or in conjunction with others) during the term of his or her employment with the Company (collectively, the “Company Work Product”) shall be owned exclusively by the Company (or, to the extent

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applicable, a Purchaser pursuant to an Acquisition). Without limiting the foregoing, the Participant agrees that any of the Company Work Product shall be deemed to be “works made for hire” as defined in U.S. Copyright Act §101, and all right, title, and interest therein shall vest solely in the Company from conception. The Participant hereby irrevocably assigns and transfers, and agrees to assign and transfer in the future on the Company’s request, to the Company all right, title and interest in and to any Company Work Product, including, but not limited to, patents, copyrights and other intellectual property rights therein. The Participant shall treat any such Company Work Product as Confidential Information. The Participant will execute all applications, assignments, instruments and other documents and perform all acts consistent herewith as the Company or its counsel may deem necessary or desirable to obtain, perfect or enforce any patents, copyright registrations or other protections on such Company Work Product and to otherwise protect the interests of the Company therein. The Participant’s obligation to reasonably assist the Company in obtaining and enforcing the intellectual property and other rights in the Company Work Product in any and all jurisdictions shall continue beyond the termination of the Participant’s employment. The Participant acknowledges that the Company may need to secure the Participant’s signature for lawful and necessary documents required to apply for, maintain or enforce intellectual property and other rights with respect to the Company Work Product (including, but not limited to, renewals, extensions, continuations, divisions or continuations in part of patent applications). The Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Participant’s agents and attorneys-in-fact, to act for and on the Participant’s behalf and instead of the Participant, to execute and file any such document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyright registrations and other protections on the Company Work Product with the same legal force and effect as if executed by the Participant. The Participant further hereby waives and relinquishes any and all moral rights that the Participant may have in the Company Work Product.

Pursuant to Section 2870 of the California Labor Code, the requirements set forth in Section 5 of this Agreement shall not apply to an invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (i) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (ii) result from any work performed by the Participant for the Company.

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The Participant agrees that he or he or she will keep and maintain adequate and current written records (in the form of notes, sketches, drawings or such other form(s) as may be specified by the Company) of all the Company Work Product made by the Participant during the term of his or his or her employment with the Company, which records shall be available at all times to the Company and shall remain the sole property of the Company.

If any application for any United States or foreign patent related to or useful in the business of the Company or any customer of the Company shall be filed by or for the Participant during the period of one year after the Participant’s employment is terminated, the subject matter covered by such application shall be presumed to have been conceived during the Participant’s employment with the Company.

The Participant acknowledges that the Company from time to time may have agreements with other persons or entities, or with the U.S. Government or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. The Participant agrees to be bound by all such obligations and restrictions of which the Participant has been made aware of by the Company and to take all action necessary to discharge the obligations of the Company thereunder.

Because of the unique nature of the Confidential Information and the Company Work Product, the Participant understands and agrees that the Company may suffer immediate and irreparable harm if the Participant fails to comply with any of his or her obligations under this Confidentiality and Inventions Agreement and that monetary damages may be inadequate to compensate the Company for such breach. Accordingly, the Participant agrees that in the event of a breach or threatened breach of this Confidentiality and Inventions Agreement, in addition to any other remedies available to it at law or in equity, the Company will be entitled, without posting bond or other security, to seek injunctive relief to enforce the terms of this Confidentiality and Inventions Agreement, including, but not limited to, restraining the Participant from violating this Confidentiality and Inventions Agreement or compelling the Participant to cease and desist all unauthorized use and disclosure of the Confidential Information and the Company Work Product. The Participant will indemnify the Company against any costs, including, but not limited to, reasonable outside legal fees and costs, incurred in obtaining relief against the Participant’s breach

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of this Confidentiality and Inventions Agreement. Nothing in this Section 11 shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, but not limited to, recovery of damages.

The Participant is hereby permitted and the Participant authorizes the Company to provide a copy of this Confidentiality and Inventions Agreement and any exhibits hereto to any of the Participant’s future employers, and to notify any such future employers of the Participant’s obligations and the Company’s rights hereunder, provided that neither party is under any obligation to do so.

This Confidentiality and Inventions Agreement will be governed by the laws of the State of California without regard to any conflicts-of-law rules. To the extent that any lawsuit is permitted under this Confidentiality and Inventions Agreement, the Participant hereby expressly consents to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Diego, California for any lawsuit filed against the Participant by the Company. Nothing herein shall limit the right of the Company to seek and obtain injunctive relief in any jurisdiction for violation of the portions of this Confidentiality and Inventions Agreement dealing with protection of Confidential Information or the Company Work Product.

Neither this Confidentiality and Inventions Agreement nor any duties or obligations under this Confidentiality and Inventions Agreement may be assigned by the Participant without the prior written consent of the Company. The Participant understands and agrees that the Company may freely assign this Confidentiality and Inventions Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the permitted assigns, successors in interest (including any Purchaser upon consummation of an Acquisition), personal representatives, estates, heirs, and legatees of each of the parties hereto. Any assignment in violation of this Section 14 shall be null and void.

The rights and obligations of the parties to this Confidentiality and Inventions Agreement will survive termination of my employment with the Company.

In the event that any provision hereof or any obligation or grant of rights by the Participant hereunder is found invalid or unenforceable pursuant to judicial decree or decision, any such provision, obligation or grant of rights shall be deemed and construed to extend only to the maximum permitted by law, the invalid or unenforceable portions shall be severed, and the remainder of this Confidentiality and Inventions Agreement shall remain valid and enforceable according to its terms. This Confidentiality and Inventions Agreement may not be amended, waived or modified, except by an instrument in writing executed by the Participant and a duly authorized representative of the Company.

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EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE GRANT NOTICE TO WHICH THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT IS ATTACHED, EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND EMPLOYEE HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT. THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

2021 EQUITY INCENTIVE PLAN
 

GRANT NOTICE FOR
NONQUALIFIED STOCK OPTIONS

FOR GOOD AND VALUABLE CONSIDERATION, Petco Health and Wellness Company, Inc. (the “Company”), hereby grants to Participant named below the Nonqualified Stock Option (the “Option”) to purchase any part or all of the number of shares of Common Stock that are covered by this Option at the Exercise Price per share, each specified below, and upon the terms and subject to the conditions set forth in this Grant Notice, the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (as amended from time to time, the “Plan”), the Standard Terms and Conditions (the “Standard Terms and Conditions”) promulgated under such Plan and attached hereto as Exhibit A, and the Confidentiality and Inventions Agreement attached hereto as Exhibit B. This Option is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. This Option is not intended to qualify as an incentive stock option under Section 422 of the Code. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

Name of Participant:
Grant Date:
Number of Shares of Common Stock covered by Option:
Exercise Price Per Share:
Expiration Date:
Vesting Commencement Date:
Vesting Schedule:	Subject to the Plan and the Standard Terms and Conditions, the Option shall vest , so long as Participant remains continuously employed by the Company or its Subsidiaries from the Grant Date through such vesting date; provided, however, if the Participant’s employment with the Company and its Subsidiaries is terminated as a result of an Early Termination, subject to the Participant’s execution and nonrevocation of a general release of claims in a form provided by the Company, the portion of the Option that would have vested on or prior to shall become vested as of the date of such termination and any remaining unvested portion of the Option shall be forfeited. As used herein, “Early Termination” has the meaning set forth in that certain employment letter between the Company and Participant effective as of March 13, 2024.

 

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IN ORDER TO RECEIVE THE BENEFITS OF THIS AGREEMENT, PARTICIPANT MUST EXECUTE AND RETURN THIS GRANT NOTICE (THE “ACCEPTANCE REQUIREMENTS”). IF PARTICIPANT FAILS TO SATISFY THE ACCEPTANCE REQUIREMENTS WITHIN 60 DAYS AFTER THE GRANT DATE, THEN (1) THIS GRANT NOTICE WILL BE OF NO FORCE OR EFFECT AND THE OPTION GRANTED HEREIN WILL BE AUTOMATICALLY FORFEITED TO THE COMPANY WITHOUT CONSIDERATION, AND (2) NEITHER PARTICIPANT NOR THE COMPANY WILL HAVE ANY FUTURE RIGHTS OR OBLIGATIONS UNDER THIS GRANT NOTICE OR THE STANDARD TERMS AND CONDITIONS.

By accepting this Grant Notice, Participant acknowledges that he or she has received and read, and agrees that this Option shall be subject to, the terms of this Grant Notice, the Plan, and the Standard Terms and Conditions and the Confidentiality and Inventions Agreement.

 

PETCO HEALTH AND WELLNESS COMPANY, INC.

 

 

By:

Name:

Title:

 

PARTICIPANT

 

 

[Name]

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EXHIBIT A

 

PETCO HEALTH AND WELLNESS COMPANY, INC.
2021 EQUITY INCENTIVE PLAN

 

STANDARD TERMS AND CONDITIONS FOR
NONQUALIFIED STOCK OPTIONS

These Standard Terms and Conditions apply to the Options granted pursuant to the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (the “Plan”), which are identified as nonqualified stock options and are evidenced by a Grant Notice or an action of the Committee that specifically refers to these Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the Option shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Petco Health and Wellness Company, Inc. (the “Company”) has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) a Nonqualified Stock Option (the “Option”) to purchase up to the number of shares of Common Stock at an exercise price per share, each as set forth in the Grant Notice. The Option is subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions, and the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

The Option is not intended to be an incentive stock option under Section 422 of the Code and will be interpreted accordingly.

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The Option shall expire and cease to be exercisable as of the earlier of (i) the Expiration Date set forth in the Grant Notice or (ii) the date specified below in connection with the Participant’s Termination of Employment:

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The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued as a result of the exercise of the Option, including (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other option holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

The Company shall not deliver shares of Common Stock in respect of the exercise of any Option unless and until the Participant has made arrangements satisfactory to the Company to satisfy applicable withholding tax obligations. Unless the Participant pays the withholding tax obligations to the Company by cash or check in connection with the exercise of the Option (including an irrevocable commitment by a broker to pay over such amount from a sale of the Common Stock issuable under the Option), withholding may be effected, at the Company’s election, withholding Common Stock issuable in connection with the exercise of the Option (provided that shares of Common Stock may be withheld only to the extent that such withholding will not result in adverse accounting treatment for the Company). The Participant acknowledges that the Company shall have the right to deduct any taxes required to be withheld by law in connection with the exercise of the Option from any amounts payable by it to the Participant (including future cash wages).

Except as permitted by the Committee or as permitted under the Plan, the Participant may not assign or transfer the Option to anyone other than by will or the laws of descent and distribution and the Option shall be exercisable only by the Participant during his or her lifetime. The Company may cancel the Participant’s Option if the Participant attempts to assign or transfer it in a manner inconsistent with this Section 7. Notwithstanding the foregoing, (a) the Participant shall be permitted to transfer the Option as a gift to an Assignee Entity in accordance with and subject to the limits of Section 17 of the Plan and (b) if not previously so transferred, upon the Participant’s death, the Option shall be transferred to the Participant’s designated beneficiary or, if none, to the Participant’s estate.

The Grant Notice, these Standard Terms and Conditions, the Confidentiality and Inventions Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding the Option. Any prior agreements, commitments or negotiations concerning the Option are superseded; provided, however, that the terms of the Confidentiality and Inventions Agreement are in addition to and complement (and do not replace or supersede) all other

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agreements and obligations between the Company and any of its affiliates and the Participant with respect to confidentiality and intellectual property.

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person upon exercise of the Option or any part of it. Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

The Company and any affiliate which is in existence or hereafter comes into existence shall not be liable to the Participant or any other person as to: (a) the non­issuance or sale of shares of Common Stock as to which the Company has been unable to obtain from any regulatory body having jurisdiction the authority deemed by the Company’s counsel to be necessary to the lawful issuance and sale of any shares hereunder; and (b) any tax consequence expected, but not realized, by the Participant or other person due to the receipt, exercise or settlement of any Option granted hereunder.

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The Option and any shares of Common Stock received upon exercise of the Option will be subject to recoupment in accordance with any clawback policy adopted by the Company. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company. By accepting the Option, the Participant is agreeing to be bound by any such clawback policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.

By executing the Grant Notice, the Participant hereby consents to the delivery of information (including information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, the Option and the Common Stock via Company web site or other electronic delivery.

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EXHIBIT B

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

As a condition to the receipt of the Option grants pursuant to the Grant Notice to which this Confidentiality and Inventions Agreement is attached and in consideration of the Participant’s continued employment with the Company, the Participant hereby confirms the Participant’s agreement as follows:

The Participant’s employment by the Company is in a capacity in which he or she may have access to, or contribute to the production of, Confidential Information and the Company Work Product (both as defined below). The Participant’s employment creates a relationship of confidence and trust between the Company and the Participant with respect to the Confidential Information and the Company Work Product as set forth herein. This Confidentiality and Inventions Agreement are subject to the terms of the Standard Terms and Conditions attached as Exhibit A to the Grant Notice to which this Confidentiality and Inventions Agreement is attached; provided however, that in the event of any conflict between the Standard Terms and Conditions and this Confidentiality and Inventions Agreement, this Confidentiality and Inventions Agreement shall control.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, as amended from time to time. For purposes of this Confidentiality and Inventions Agreement:

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All apparatus, computers, computer files and media, notes, data, documents, reference materials, sketches, memoranda, records, drawings, engineering log books, equipment, lab/inventor notebooks, programs, prototypes, samples, equipment, tangible embodiments of information, and other physical property, whether or not pertaining to Confidential Information, furnished to the Participant or produced by the Participant or others in connection with the Participant’s employment, shall be and remain the sole property of the Company and any such property actually in the Participant’s possession or control shall be returned promptly to the Company as and when requested in writing by the Company. Should the Company not so request, the Participant shall return and deliver all such property to the Company upon termination of the Participant’s employment. The Participant may not retain any such property or any reproduction of such property upon such termination. The Participant further agrees that any property situated on the Company’s premises and owned, leased, maintained or otherwise contracted for by the Company, including, but not limited to, computers, computer files, e-mail, voicemail, disks and other electronic storage media, filing cabinets, desks or other work areas, are subject to inspection by the Company’s representatives at any time with or without notice.

Subject to Section 6 and 7 below, the Participant agrees that any Work Product, in whole or in part, conceived, developed, made or reduced to practice by the Participant (either solely or in conjunction with others) during the term of his or her employment with the Company (collectively, the “Company Work Product”) shall be owned exclusively by the Company (or, to the extent applicable, a Purchaser pursuant to an Acquisition). Without limiting the foregoing, the Participant agrees that any of the Company Work Product shall be deemed to be “works made for hire” as defined in U.S. Copyright Act §101, and all right, title, and interest therein shall vest solely in the

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Company from conception. The Participant hereby irrevocably assigns and transfers, and agrees to assign and transfer in the future on the Company’s request, to the Company all right, title and interest in and to any Company Work Product, including, but not limited to, patents, copyrights and other intellectual property rights therein. The Participant shall treat any such Company Work Product as Confidential Information. The Participant will execute all applications, assignments, instruments and other documents and perform all acts consistent herewith as the Company or its counsel may deem necessary or desirable to obtain, perfect or enforce any patents, copyright registrations or other protections on such Company Work Product and to otherwise protect the interests of the Company therein. The Participant’s obligation to reasonably assist the Company in obtaining and enforcing the intellectual property and other rights in the Company Work Product in any and all jurisdictions shall continue beyond the termination of the Participant’s employment. The Participant acknowledges that the Company may need to secure the Participant’s signature for lawful and necessary documents required to apply for, maintain or enforce intellectual property and other rights with respect to the Company Work Product (including, but not limited to, renewals, extensions, continuations, divisions or continuations in part of patent applications). The Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Participant’s agents and attorneys-in-fact, to act for and on the Participant’s behalf and instead of the Participant, to execute and file any such document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyright registrations and other protections on the Company Work Product with the same legal force and effect as if executed by the Participant. The Participant further hereby waives and relinquishes any and all moral rights that the Participant may have in the Company Work Product.

Pursuant to Section 2870 of the California Labor Code, the requirements set forth in Section 5 of this Agreement shall not apply to an invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (i) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (ii) result from any work performed by the Participant for the Company.

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The Participant agrees that he or he or she will keep and maintain adequate and current written records (in the form of notes, sketches, drawings or such other form(s) as may be specified by the Company) of all the Company Work Product made by the Participant during the term of his or his or her employment with the Company, which records shall be available at all times to the Company and shall remain the sole property of the Company.

If any application for any United States or foreign patent related to or useful in the business of the Company or any customer of the Company shall be filed by or for the Participant during the period of one year after the Participant’s employment is terminated, the subject matter covered by such application shall be presumed to have been conceived during the Participant’s employment with the Company.

The Participant acknowledges that the Company from time to time may have agreements with other persons or entities, or with the U.S. Government or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. The Participant agrees to be bound by all such obligations and restrictions of which the Participant has been made aware of by the Company and to take all action necessary to discharge the obligations of the Company thereunder.

Because of the unique nature of the Confidential Information and the Company Work Product, the Participant understands and agrees that the Company may suffer immediate and irreparable harm if the Participant fails to comply with any of his or her obligations under this Confidentiality and Inventions Agreement and that monetary damages may be inadequate to compensate the Company for such breach. Accordingly, the Participant agrees that in the event of a breach or threatened breach of this Confidentiality and Inventions Agreement, in addition to any other remedies available to it at law or in equity, the Company will be entitled, without posting bond or other security, to seek injunctive relief to enforce the terms of this Confidentiality and Inventions Agreement, including, but not limited to, restraining the Participant from violating this Confidentiality and Inventions Agreement or compelling the Participant to cease and desist all unauthorized use and disclosure of the Confidential Information and the Company Work Product. The Participant will indemnify the Company against any costs, including, but not limited to, reasonable outside legal fees and costs, incurred in obtaining relief against the Participant’s breach of this Confidentiality and Inventions Agreement. Nothing in this Section 11 shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, but not limited to, recovery of damages.

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The Participant is hereby permitted and the Participant authorizes the Company to provide a copy of this Confidentiality and Inventions Agreement and any exhibits hereto to any of the Participant’s future employers, and to notify any such future employers of the Participant’s obligations and the Company’s rights hereunder, provided that neither party is under any obligation to do so.

This Confidentiality and Inventions Agreement will be governed by the laws of the State of California without regard to any conflicts-of-law rules. To the extent that any lawsuit is permitted under this Confidentiality and Inventions Agreement, the Participant hereby expressly consents to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Diego, California for any lawsuit filed against the Participant by the Company. Nothing herein shall limit the right of the Company to seek and obtain injunctive relief in any jurisdiction for violation of the portions of this Confidentiality and Inventions Agreement dealing with protection of Confidential Information or the Company Work Product.

Neither this Confidentiality and Inventions Agreement nor any duties or obligations under this Confidentiality and Inventions Agreement may be assigned by the Participant without the prior written consent of the Company. The Participant understands and agrees that the Company may freely assign this Confidentiality and Inventions Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the permitted assigns, successors in interest (including any Purchaser upon consummation of an Acquisition), personal representatives, estates, heirs, and legatees of each of the parties hereto. Any assignment in violation of this Section 14 shall be null and void.

The rights and obligations of the parties to this Confidentiality and Inventions Agreement will survive termination of my employment with the Company.

In the event that any provision hereof or any obligation or grant of rights by the Participant hereunder is found invalid or unenforceable pursuant to judicial decree or decision, any such provision, obligation or grant of rights shall be deemed and construed to extend only to the maximum permitted by law, the invalid or unenforceable portions shall be severed, and the remainder of this Confidentiality and Inventions Agreement shall remain valid and enforceable according to its terms. This Confidentiality and Inventions Agreement may not be amended, waived or modified, except by an instrument in writing executed by the Participant and a duly authorized representative of the Company.

EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE GRANT NOTICE TO WHICH

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THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT IS ATTACHED, EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND EMPLOYEE HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT. THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

2021 EQUITY INCENTIVE PLAN
 

GRANT NOTICE FOR

RESTRICTED STOCK UNIT AWARD

FOR GOOD AND VALUABLE CONSIDERATION, Petco Health and Wellness Company, Inc. (the “Company”), hereby grants to the Participant named below the number of Restricted Stock Units (the “RSUs”) specified below (the “Award”) under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (as amended from time to time, the “Plan”). Each RSU represents the right to receive one share of Common Stock, upon the terms and subject to the conditions set forth in this Grant Notice, the Plan and the Standard Terms and Conditions (the “Standard Terms and Conditions”) promulgated under such Plan and attached hereto as Exhibit A, and the Confidentiality and Inventions Agreement attached hereto as Exhibit B. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

Name of Participant:

Grant Date:

Number of RSUs:

Vesting Schedule: Subject to the Plan and the Standard Terms and Conditions, the RSUs shall vest in accordance with the following schedule, so long as Participant remains continuously employed by the Company or its Subsidiaries from the Grant Date through such vesting date:

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IN ORDER TO RECEIVE THE BENEFITS OF THIS AGREEMENT, PARTICIPANT MUST EXECUTE AND RETURN THIS GRANT NOTICE (THE “ACCEPTANCE REQUIREMENTS”). IF PARTICIPANT FAILS TO SATISFY THE ACCEPTANCE REQUIREMENTS WITHIN 60 DAYS AFTER THE GRANT DATE, THEN (1) THIS GRANT NOTICE WILL BE OF NO FORCE OR EFFECT AND THIS AWARD WILL BE AUTOMATICALLY FORFEITED TO THE COMPANY WITHOUT CONSIDERATION, AND (2) NEITHER PARTICIPANT NOR THE COMPANY WILL HAVE ANY FUTURE RIGHTS OR OBLIGATIONS UNDER THIS GRANT NOTICE OR THE STANDARD TERMS AND CONDITIONS.

By accepting this Grant Notice, Participant acknowledges that Participant has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice, the Plan, and the Standard Terms and Conditions and the Confidentiality and Inventions Agreement.

 

 

PETCO HEALTH AND WELLNESS COMPANY, INC.

 

 

 

By:

Name:

Title:

 

PARTICIPANT

 

 

 

[Name]

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EXHIBIT A

 

PETCO HEALTH AND WELLNESS COMPANY, INC.
2021 EQUITY INCENTIVE PLAN

 

STANDARD TERMS AND CONDITIONS FOR
RESTRICTED STOCK UNITS

These Standard Terms and Conditions apply to the Award of Restricted Stock Units granted pursuant to the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (the “Plan”), which are evidenced by a Grant Notice or an action of the Committee that specifically refers to these Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the Restricted Stock Units shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Petco Health and Wellness Company, Inc. (the “Company”) has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of Restricted Stock Units (the “Award” or “RSUs”) specified in the Grant Notice, with each Restricted Stock Unit representing the right to receive one share of Common Stock. The Award is subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions and the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

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The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied.

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Committee, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution. Notwithstanding the foregoing, (a) the Participant shall be permitted to transfer the Award as a gift to an Assignee Entity in accordance with and subject to the limits of Section 17 of the Plan and (b) if not previously so transferred, any shares of Common Stock that become issuable hereunder but which otherwise remain unissued at the time of the Participant’s death shall be transferred to the Participant’s designated beneficiary or, if none, to the

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Participant’s estate.

The Grant Notice, these Standard Terms and Conditions, the Confidentiality and Inventions Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded; provided, however, that the terms of the Confidentiality and Inventions Agreement are in addition to and complement (and do not replace or supersede) all other agreements and obligations between the Company and any of its affiliates and the Participant with respect to confidentiality and intellectual property.

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

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The RSUs and any shares of Common Stock received upon settlement of the RSUs will be subject to recoupment in accordance with any clawback policy adopted by the Company. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company. By accepting the RSUs, the Participant is agreeing to be bound by any such clawback policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.

By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Restricted Stock Units via Company web site or other electronic delivery.

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EXHIBIT B

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

As a condition to the receipt of the Award granted pursuant to the Grant Notice to which this Confidentiality and Inventions Agreement is attached and in consideration of the Participant’s continued employment with the Company, the Participant hereby confirms the Participant’s agreement as follows:

The Participant’s employment by the Company is in a capacity in which he or she may have access to, or contribute to the production of, Confidential Information and the Company Work Product (both as defined below). The Participant’s employment creates a relationship of confidence and trust between the Company and the Participant with respect to the Confidential Information and the Company Work Product as set forth herein. This Confidentiality and Inventions Agreement are subject to the terms of the Standard Terms and Conditions attached as Exhibit A to the Grant Notice to which this Confidentiality and Inventions Agreement is attached; provided however, that in the event of any conflict between the Standard Terms and Conditions and this Confidentiality and Inventions Agreement, this Confidentiality and Inventions Agreement shall control.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, as amended from time to time. For purposes of this Confidentiality and Inventions Agreement:

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All apparatus, computers, computer files and media, notes, data, documents, reference materials, sketches, memoranda, records, drawings, engineering log books, equipment, lab/inventor notebooks, programs, prototypes, samples, equipment, tangible embodiments of information, and other physical property, whether or not pertaining to Confidential Information, furnished to the Participant or produced by the Participant or others in connection with the Participant’s employment, shall be and remain the sole property of the Company and any such property actually in the Participant’s possession or control shall be returned promptly to the Company as and when requested in writing by the Company. Should the Company not so request, the Participant shall return and deliver all such property to the Company upon termination of the Participant’s employment. The Participant may not retain any such property or any reproduction of such property upon such termination. The Participant further agrees that any property situated on the Company’s premises and owned, leased, maintained or otherwise contracted for by the Company, including, but not limited to, computers, computer files, e-mail, voicemail, disks and other electronic storage media, filing cabinets, desks or other work areas, are subject to inspection by the Company’s representatives at any time with or without notice.

Subject to Section 6 and 7 below, the Participant agrees that any Work Product, in whole or in part, conceived, developed, made or reduced to practice by the Participant (either solely or in conjunction with others) during the term of his or her employment with the Company (collectively, the “Company Work Product”) shall be owned exclusively by the Company (or, to the extent

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applicable, a Purchaser pursuant to an Acquisition). Without limiting the foregoing, the Participant agrees that any of the Company Work Product shall be deemed to be “works made for hire” as defined in U.S. Copyright Act §101, and all right, title, and interest therein shall vest solely in the Company from conception. The Participant hereby irrevocably assigns and transfers, and agrees to assign and transfer in the future on the Company’s request, to the Company all right, title and interest in and to any Company Work Product, including, but not limited to, patents, copyrights and other intellectual property rights therein. The Participant shall treat any such Company Work Product as Confidential Information. The Participant will execute all applications, assignments, instruments and other documents and perform all acts consistent herewith as the Company or its counsel may deem necessary or desirable to obtain, perfect or enforce any patents, copyright registrations or other protections on such Company Work Product and to otherwise protect the interests of the Company therein. The Participant’s obligation to reasonably assist the Company in obtaining and enforcing the intellectual property and other rights in the Company Work Product in any and all jurisdictions shall continue beyond the termination of the Participant’s employment. The Participant acknowledges that the Company may need to secure the Participant’s signature for lawful and necessary documents required to apply for, maintain or enforce intellectual property and other rights with respect to the Company Work Product (including, but not limited to, renewals, extensions, continuations, divisions or continuations in part of patent applications). The Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Participant’s agents and attorneys-in-fact, to act for and on the Participant’s behalf and instead of the Participant, to execute and file any such document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyright registrations and other protections on the Company Work Product with the same legal force and effect as if executed by the Participant. The Participant further hereby waives and relinquishes any and all moral rights that the Participant may have in the Company Work Product.

Pursuant to Section 2870 of the California Labor Code, the requirements set forth in Section 5 of this Agreement shall not apply to an invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (i) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (ii) result from any work performed by the Participant for the Company.

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The Participant agrees that he or he or she will keep and maintain adequate and current written records (in the form of notes, sketches, drawings or such other form(s) as may be specified by the Company) of all the Company Work Product made by the Participant during the term of his or his or her employment with the Company, which records shall be available at all times to the Company and shall remain the sole property of the Company.

If any application for any United States or foreign patent related to or useful in the business of the Company or any customer of the Company shall be filed by or for the Participant during the period of one year after the Participant’s employment is terminated, the subject matter covered by such application shall be presumed to have been conceived during the Participant’s employment with the Company.

The Participant acknowledges that the Company from time to time may have agreements with other persons or entities, or with the U.S. Government or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. The Participant agrees to be bound by all such obligations and restrictions of which the Participant has been made aware of by the Company and to take all action necessary to discharge the obligations of the Company thereunder.

Because of the unique nature of the Confidential Information and the Company Work Product, the Participant understands and agrees that the Company may suffer immediate and irreparable harm if the Participant fails to comply with any of his or her obligations under this Confidentiality and Inventions Agreement and that monetary damages may be inadequate to compensate the Company for such breach. Accordingly, the Participant agrees that in the event of a breach or threatened breach of this Confidentiality and Inventions Agreement, in addition to any other remedies available to it at law or in equity, the Company will be entitled, without posting bond or other security, to seek injunctive relief to enforce the terms of this Confidentiality and Inventions Agreement, including, but not limited to, restraining the Participant from violating this Confidentiality and Inventions Agreement or compelling the Participant to cease and desist all unauthorized use and disclosure of the Confidential Information and the Company Work Product. The Participant will indemnify the Company against any costs, including, but not limited to, reasonable outside legal fees and costs, incurred in obtaining relief against the Participant’s breach

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of this Confidentiality and Inventions Agreement. Nothing in this Section 11 shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, but not limited to, recovery of damages.

The Participant is hereby permitted and the Participant authorizes the Company to provide a copy of this Confidentiality and Inventions Agreement and any exhibits hereto to any of the Participant’s future employers, and to notify any such future employers of the Participant’s obligations and the Company’s rights hereunder, provided that neither party is under any obligation to do so.

This Confidentiality and Inventions Agreement will be governed by the laws of the State of California without regard to any conflicts-of-law rules. To the extent that any lawsuit is permitted under this Confidentiality and Inventions Agreement, the Participant hereby expressly consents to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Diego, California for any lawsuit filed against the Participant by the Company. Nothing herein shall limit the right of the Company to seek and obtain injunctive relief in any jurisdiction for violation of the portions of this Confidentiality and Inventions Agreement dealing with protection of Confidential Information or the Company Work Product.

Neither this Confidentiality and Inventions Agreement nor any duties or obligations under this Confidentiality and Inventions Agreement may be assigned by the Participant without the prior written consent of the Company. The Participant understands and agrees that the Company may freely assign this Confidentiality and Inventions Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the permitted assigns, successors in interest (including any Purchaser upon consummation of an Acquisition), personal representatives, estates, heirs, and legatees of each of the parties hereto. Any assignment in violation of this Section 14 shall be null and void.

The rights and obligations of the parties to this Confidentiality and Inventions Agreement will survive termination of my employment with the Company.

In the event that any provision hereof or any obligation or grant of rights by the Participant hereunder is found invalid or unenforceable pursuant to judicial decree or decision, any such provision, obligation or grant of rights shall be deemed and construed to extend only to the maximum permitted by law, the invalid or unenforceable portions shall be severed, and the remainder of this Confidentiality and Inventions Agreement shall remain valid and enforceable according to its terms. This Confidentiality and Inventions Agreement may not be amended, waived or modified, except by an instrument in writing executed by the Participant and a duly authorized representative of the Company.

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EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE GRANT NOTICE TO WHICH THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT IS ATTACHED, EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND EMPLOYEE HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT. THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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PETCO HEALTH AND WELLNESS COMPANY, INC.

2021 EQUITY INCENTIVE PLAN
 

GRANT NOTICE FOR

RESTRICTED STOCK UNIT AWARD

FOR GOOD AND VALUABLE CONSIDERATION, Petco Health and Wellness Company, Inc. (the “Company”), hereby grants to the Participant named below the number of Restricted Stock Units (the “RSUs”) specified below (the “Award”) under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (as amended from time to time, the “Plan”). Each RSU represents the right to receive one share of Common Stock, upon the terms and subject to the conditions set forth in this Grant Notice, the Plan and the Standard Terms and Conditions (the “Standard Terms and Conditions”) promulgated under such Plan and attached hereto as Exhibit A, and the Confidentiality and Inventions Agreement attached hereto as Exhibit B. This Award is granted pursuant to the Plan and is subject to and qualified in its entirety by the Standard Terms and Conditions. Capitalized terms not otherwise defined herein shall have the meanings set forth in the Plan.

Name of Participant:

Grant Date:

Number of RSUs:

Vesting Schedule: Subject to the Plan and the Standard Terms and Conditions, the RSUs shall vest in accordance with the following schedule, so long as Participant remains continuously employed by the Company or its Subsidiaries from the Grant Date through such vesting date:

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IN ORDER TO RECEIVE THE BENEFITS OF THIS AGREEMENT, PARTICIPANT MUST EXECUTE AND RETURN THIS GRANT NOTICE (THE “ACCEPTANCE REQUIREMENTS”). IF PARTICIPANT FAILS TO SATISFY THE ACCEPTANCE REQUIREMENTS WITHIN 60 DAYS AFTER THE GRANT DATE, THEN (1) THIS GRANT NOTICE WILL BE OF NO FORCE OR EFFECT AND THIS AWARD WILL BE AUTOMATICALLY FORFEITED TO THE COMPANY WITHOUT CONSIDERATION, AND (2) NEITHER PARTICIPANT NOR THE COMPANY WILL HAVE ANY FUTURE RIGHTS OR OBLIGATIONS UNDER THIS GRANT NOTICE OR THE STANDARD TERMS AND CONDITIONS.

By accepting this Grant Notice, Participant acknowledges that Participant has received and read, and agrees that this Award shall be subject to, the terms of this Grant Notice, the Plan, and the Standard Terms and Conditions and the Confidentiality and Inventions Agreement.

 

 

PETCO HEALTH AND WELLNESS COMPANY, INC.

 

 

 

Name:

Title:

 

PARTICIPANT

 

 

 

[Name]

 

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EXHIBIT A

 

PETCO HEALTH AND WELLNESS COMPANY, INC.
2021 EQUITY INCENTIVE PLAN

 

STANDARD TERMS AND CONDITIONS FOR
RESTRICTED STOCK UNITS

These Standard Terms and Conditions apply to the Award of Restricted Stock Units granted pursuant to the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan (the “Plan”), which are evidenced by a Grant Notice or an action of the Committee that specifically refers to these Standard Terms and Conditions. In addition to these Standard Terms and Conditions, the Restricted Stock Units shall be subject to the terms of the Plan, which are incorporated into these Standard Terms and Conditions by this reference. Capitalized terms not otherwise defined herein shall have the meaning set forth in the Plan.

Petco Health and Wellness Company, Inc. (the “Company”) has granted to the Participant named in the Grant Notice provided to said Participant herewith (the “Grant Notice”) an award of Restricted Stock Units (the “Award” or “RSUs”) specified in the Grant Notice, with each Restricted Stock Unit representing the right to receive one share of Common Stock. The Award is subject to the conditions set forth in the Grant Notice, these Standard Terms and Conditions and the Plan. For purposes of these Standard Terms and Conditions and the Grant Notice, any reference to the Company shall include a reference to any Subsidiary.

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The Company may impose such restrictions, conditions or limitations as it determines appropriate as to the timing and manner of any resales by the Participant or other subsequent transfers by the Participant of any shares of Common Stock issued pursuant to Vested RSUs, including (a) restrictions under an insider trading policy, (b) restrictions designed to delay and/or coordinate the timing and manner of sales by Participant and other holders and (c) restrictions as to the use of a specified brokerage firm for such resales or other transfers.

To the extent required by applicable federal, state, local or foreign law, the Participant shall make arrangements satisfactory to the Company for the satisfaction of any withholding tax obligations that arise by reason of the grant or vesting of the RSUs. The Company shall not be required to issue shares or to recognize the disposition of such shares until such obligations are satisfied.

The Participant understands, acknowledges and agrees that, except as otherwise provided in the Plan or as permitted by the Committee, the Award may not be sold, assigned, transferred, pledged or otherwise directly or indirectly encumbered or disposed of other than by will or the laws of descent and distribution. Notwithstanding the foregoing, (a) the Participant shall be permitted to transfer the Award as a gift to an Assignee Entity in accordance with and subject to the limits of Section 17 of the Plan and (b) if not previously so transferred, any shares of Common Stock that become issuable hereunder but which otherwise remain unissued at the time of the Participant’s death shall be transferred to the Participant’s designated beneficiary or, if none, to the

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Participant’s estate.

The Grant Notice, these Standard Terms and Conditions, the Confidentiality and Inventions Agreement and the Plan constitute the entire understanding between the Participant and the Company regarding the Award. Any prior agreements, commitments or negotiations concerning the Award are superseded; provided, however, that the terms of the Confidentiality and Inventions Agreement are in addition to and complement (and do not replace or supersede) all other agreements and obligations between the Company and any of its affiliates and the Participant with respect to confidentiality and intellectual property.

Neither the Participant (individually or as a member of a group) nor any beneficiary or other person claiming under or through the Participant shall have any right, title, interest, or privilege in or to any shares of Common Stock allocated or reserved for the purpose of the Plan or subject to the Grant Notice or these Standard Terms and Conditions except as to such shares of Common Stock, if any, as shall have been issued to such person in connection with the Award. Nothing in the Plan, in the Grant Notice, these Standard Terms and Conditions or any other instrument executed pursuant to the Plan shall confer upon the Participant any right to continue in the Company’s employ or service nor limit in any way the Company’s right to terminate the Participant’s employment at any time for any reason.

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The RSUs and any shares of Common Stock received upon settlement of the RSUs will be subject to recoupment in accordance with any clawback policy adopted by the Company. No recovery of compensation under such a clawback policy will be an event giving rise to a right to resign for “good reason” or “constructive termination” (or similar term) under any agreement with the Company. By accepting the RSUs, the Participant is agreeing to be bound by any such clawback policy, as in effect or as may be adopted and/or modified from time to time by the Company in its discretion.

By executing the Grant Notice, the Participant hereby consents to the delivery of information (including, without limitation, information required to be delivered to the Participant pursuant to applicable securities laws) regarding the Company and the Subsidiaries, the Plan, and the Restricted Stock Units via Company web site or other electronic delivery.

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EXHIBIT B

 

CONFIDENTIALITY AND INVENTIONS AGREEMENT

As a condition to the receipt of the Award granted pursuant to the Grant Notice to which this Confidentiality and Inventions Agreement is attached and in consideration of the Participant’s continued employment with the Company, the Participant hereby confirms the Participant’s agreement as follows:

The Participant’s employment by the Company is in a capacity in which he or she may have access to, or contribute to the production of, Confidential Information and the Company Work Product (both as defined below). The Participant’s employment creates a relationship of confidence and trust between the Company and the Participant with respect to the Confidential Information and the Company Work Product as set forth herein. This Confidentiality and Inventions Agreement are subject to the terms of the Standard Terms and Conditions attached as Exhibit A to the Grant Notice to which this Confidentiality and Inventions Agreement is attached; provided however, that in the event of any conflict between the Standard Terms and Conditions and this Confidentiality and Inventions Agreement, this Confidentiality and Inventions Agreement shall control.

Capitalized terms not otherwise defined herein shall have the meaning set forth in the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, as amended from time to time. For purposes of this Confidentiality and Inventions Agreement:

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All apparatus, computers, computer files and media, notes, data, documents, reference materials, sketches, memoranda, records, drawings, engineering log books, equipment, lab/inventor notebooks, programs, prototypes, samples, equipment, tangible embodiments of information, and other physical property, whether or not pertaining to Confidential Information, furnished to the Participant or produced by the Participant or others in connection with the Participant’s employment, shall be and remain the sole property of the Company and any such property actually in the Participant’s possession or control shall be returned promptly to the Company as and when requested in writing by the Company. Should the Company not so request, the Participant shall return and deliver all such property to the Company upon termination of the Participant’s employment. The Participant may not retain any such property or any reproduction of such property upon such termination. The Participant further agrees that any property situated on the Company’s premises and owned, leased, maintained or otherwise contracted for by the Company, including, but not limited to, computers, computer files, e-mail, voicemail, disks and other electronic storage media, filing cabinets, desks or other work areas, are subject to inspection by the Company’s representatives at any time with or without notice.

Subject to Section 6 and 7 below, the Participant agrees that any Work Product, in whole or in part, conceived, developed, made or reduced to practice by the Participant (either solely or in conjunction with others) during the term of his or her employment with the Company (collectively, the “Company Work Product”) shall be owned exclusively by the Company (or, to the extent

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applicable, a Purchaser pursuant to an Acquisition). Without limiting the foregoing, the Participant agrees that any of the Company Work Product shall be deemed to be “works made for hire” as defined in U.S. Copyright Act §101, and all right, title, and interest therein shall vest solely in the Company from conception. The Participant hereby irrevocably assigns and transfers, and agrees to assign and transfer in the future on the Company’s request, to the Company all right, title and interest in and to any Company Work Product, including, but not limited to, patents, copyrights and other intellectual property rights therein. The Participant shall treat any such Company Work Product as Confidential Information. The Participant will execute all applications, assignments, instruments and other documents and perform all acts consistent herewith as the Company or its counsel may deem necessary or desirable to obtain, perfect or enforce any patents, copyright registrations or other protections on such Company Work Product and to otherwise protect the interests of the Company therein. The Participant’s obligation to reasonably assist the Company in obtaining and enforcing the intellectual property and other rights in the Company Work Product in any and all jurisdictions shall continue beyond the termination of the Participant’s employment. The Participant acknowledges that the Company may need to secure the Participant’s signature for lawful and necessary documents required to apply for, maintain or enforce intellectual property and other rights with respect to the Company Work Product (including, but not limited to, renewals, extensions, continuations, divisions or continuations in part of patent applications). The Participant hereby irrevocably designates and appoints the Company and its duly authorized officers and agents, as the Participant’s agents and attorneys-in-fact, to act for and on the Participant’s behalf and instead of the Participant, to execute and file any such document(s) and to do all other lawfully permitted acts to further the prosecution, issuance and enforcement of patents, copyright registrations and other protections on the Company Work Product with the same legal force and effect as if executed by the Participant. The Participant further hereby waives and relinquishes any and all moral rights that the Participant may have in the Company Work Product.

Pursuant to Section 2870 of the California Labor Code, the requirements set forth in Section 5 of this Agreement shall not apply to an invention that the Participant develops entirely on his or her own time without using the Company’s equipment, supplies, facilities, or trade secret information except for those inventions that either: (i) relate at the time of conception or reduction to practice of the invention to the Company’s business, or actual or demonstrably anticipated research or development of the Company; or (ii) result from any work performed by the Participant for the Company.

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The Participant agrees that he or he or she will keep and maintain adequate and current written records (in the form of notes, sketches, drawings or such other form(s) as may be specified by the Company) of all the Company Work Product made by the Participant during the term of his or his or her employment with the Company, which records shall be available at all times to the Company and shall remain the sole property of the Company.

If any application for any United States or foreign patent related to or useful in the business of the Company or any customer of the Company shall be filed by or for the Participant during the period of one year after the Participant’s employment is terminated, the subject matter covered by such application shall be presumed to have been conceived during the Participant’s employment with the Company.

The Participant acknowledges that the Company from time to time may have agreements with other persons or entities, or with the U.S. Government or agencies thereof, which impose obligations or restrictions on the Company regarding inventions made during the course of work thereunder or regarding the confidential nature of such work. The Participant agrees to be bound by all such obligations and restrictions of which the Participant has been made aware of by the Company and to take all action necessary to discharge the obligations of the Company thereunder.

Because of the unique nature of the Confidential Information and the Company Work Product, the Participant understands and agrees that the Company may suffer immediate and irreparable harm if the Participant fails to comply with any of his or her obligations under this Confidentiality and Inventions Agreement and that monetary damages may be inadequate to compensate the Company for such breach. Accordingly, the Participant agrees that in the event of a breach or threatened breach of this Confidentiality and Inventions Agreement, in addition to any other remedies available to it at law or in equity, the Company will be entitled, without posting bond or other security, to seek injunctive relief to enforce the terms of this Confidentiality and Inventions Agreement, including, but not limited to, restraining the Participant from violating this Confidentiality and Inventions Agreement or compelling the Participant to cease and desist all unauthorized use and disclosure of the Confidential Information and the Company Work Product. The Participant will indemnify the Company against any costs, including, but not limited to, reasonable outside legal fees and costs, incurred in obtaining relief against the Participant’s breach

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of this Confidentiality and Inventions Agreement. Nothing in this Section 11 shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, but not limited to, recovery of damages.

The Participant is hereby permitted and the Participant authorizes the Company to provide a copy of this Confidentiality and Inventions Agreement and any exhibits hereto to any of the Participant’s future employers, and to notify any such future employers of the Participant’s obligations and the Company’s rights hereunder, provided that neither party is under any obligation to do so.

This Confidentiality and Inventions Agreement will be governed by the laws of the State of California without regard to any conflicts-of-law rules. To the extent that any lawsuit is permitted under this Confidentiality and Inventions Agreement, the Participant hereby expressly consents to the personal and exclusive jurisdiction and venue of the state and federal courts located in San Diego, California for any lawsuit filed against the Participant by the Company. Nothing herein shall limit the right of the Company to seek and obtain injunctive relief in any jurisdiction for violation of the portions of this Confidentiality and Inventions Agreement dealing with protection of Confidential Information or the Company Work Product.

Neither this Confidentiality and Inventions Agreement nor any duties or obligations under this Confidentiality and Inventions Agreement may be assigned by the Participant without the prior written consent of the Company. The Participant understands and agrees that the Company may freely assign this Confidentiality and Inventions Agreement. This Agreement shall inure to the benefit of, and shall be binding upon, the permitted assigns, successors in interest (including any Purchaser upon consummation of an Acquisition), personal representatives, estates, heirs, and legatees of each of the parties hereto. Any assignment in violation of this Section 14 shall be null and void.

The rights and obligations of the parties to this Confidentiality and Inventions Agreement will survive termination of my employment with the Company.

In the event that any provision hereof or any obligation or grant of rights by the Participant hereunder is found invalid or unenforceable pursuant to judicial decree or decision, any such provision, obligation or grant of rights shall be deemed and construed to extend only to the maximum permitted by law, the invalid or unenforceable portions shall be severed, and the remainder of this Confidentiality and Inventions Agreement shall remain valid and enforceable according to its terms. This Confidentiality and Inventions Agreement may not be amended, waived or modified, except by an instrument in writing executed by the Participant and a duly authorized representative of the Company.

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EMPLOYEE ACKNOWLEDGES THAT, IN EXECUTING THE GRANT NOTICE TO WHICH THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT IS ATTACHED, EMPLOYEE HAS HAD THE OPPORTUNITY TO SEEK THE ADVICE OF INDEPENDENT LEGAL COUNSEL, AND EMPLOYEE HAS READ AND UNDERSTOOD ALL OF THE TERMS AND PROVISIONS OF THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT. THIS CONFIDENTIALITY AND INVENTIONS AGREEMENT SHALL NOT BE CONSTRUED AGAINST ANY PARTY BY REASON OF THE DRAFTING OR PREPARATION HEREOF.

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SEPARATION AGREEMENT

AND GENERAL RELEASE OF CLAIMS

This SEPARATION AGREEMENT AND GENERAL RELEASE OF CLAIMS (this “Agreement”) is entered into by and between Petco Animal Supplies Stores, Inc. (the “Company”), Darren MacDonald (“Executive”), and solely for purposes of Section 2(c), Scooby LP (“Scooby”). Executive, the Company and Scooby are each referred to herein as a “Party” and collectively as the “Parties.”

WHEREAS, Executive’s employment with the Company terminated effective as of April 12, 2024 (the “Separation Date”);

WHEREAS, Executive holds the Common Series C Units in Scooby set forth on Exhibit A hereto (the “Units”) pursuant to those Common Series C Unit Award Agreements between Executive and Scooby (collectively, the “Award Agreements”), which are vested and unvested as of the Separation Date as set forth on Exhibit A;

WHEREAS, Executive and Petco Animal Supplies, Inc. (“PASI”) are parties to that certain Employment Agreement dated May 25, 2019 (the “Employment Agreement”) and Executive is a participant in the Petco Health and Wellness Company, Inc. Executive Severance Plan (the “Severance Plan”);

WHEREAS, the Company and Scooby wish to provide Executive with certain separation benefits, which are conditioned upon Executive’s execution, delivery and non-revocation of this Agreement; and

WHEREAS, the Parties wish to resolve any and all claims that Executive has or may have against the Company, Scooby and the other Company Parties (as defined below), including any claims that Executive has or may have arising from or relating to Executive’s employment, or the end of Executive’s employment, with any Company Party.

NOW, THEREFORE, in consideration of the promises set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged by Executive and the Company, the Parties, intending to be legally bound, hereby agree as follows:

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Executive acknowledges and agrees that the consideration referenced in this Section 2 represents the entirety of the amounts Executive is eligible to receive as severance pay and benefits from the Company or any other Company Party, including under the Award Agreements, the Employment Agreement, the Severance Plan. Executive further acknowledges that as of the Separation Date, (i) all Units which remain unvested after giving effect to Section 2(c) shall be forfeited upon the Separation Date for no consideration, and Executive shall have no rights with respect thereto; and (ii) Executive will automatically forfeit any and all unvested restricted stock units, performance stock units and stock options granted under the Petco Health and Wellness Company, Inc. 2021 Equity Incentive Plan, and such awards shall terminate automatically and without any further action by the Company and at no cost to the Company.

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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.

Executive waives all rights under Section 1542 or any other law or statute of similar effect in any jurisdiction with respect to the Released Claims. Executive acknowledges that Executive understands the significance and specifically assumes the risk regarding the consequences of such release and such specific waiver of Section 1542.

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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the dates set forth beneath their names below, effective for all purposes as provided above.

 

EXECUTIVE

 

/s/ Darren MacDonald_______________

Darren MacDonald

 

Date: April 16, 2024

 

 

PETCO ANIMAL SUPPLIES STORES, INC.

 

 

By: /s/ Holly May _________________

Name: Holly May _______________

Title:Chief Human Resources Officer__

 

Date:April 17, 2024

 

 

SCOOBY LP

 

 

By:/s/ Nishad Chande

Name:Nishad Chande

Title: Director

 

Date:April 18, 2024

 

 

 

AGREEMENT SHALL NOT BE ENTERED UNTIL ON OR AFTER

APRIL 12, 2024, AS PROVIDED HEREIN.

 

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EXHIBIT A

 

COMMON SERIES C UNITS

 

Date of Grant	Vesting Commencement Date	Distribution Threshold	Vested as of Separation Date	Unvested as of Separation Date	Accelerated under Section 2(c)
7/1/2019	7/1/2019	$0.50	4,000,000	1,000,000	781,421

 

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EXHIBIT B

 

OWBPA NOTICE

 

 

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Exhibit 31.1

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, R. Michael Mohan, certify that:

 

Date: June 5, 2024		By:	/s/ R. Michael Mohan
			R. Michael Mohan
			Interim Chief Executive Officer (Principal Executive Officer)

 

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Exhibit 31.2

CERTIFICATION PURSUANT TO

RULES 13a-14(a) AND 15d-14(a) UNDER THE SECURITIES EXCHANGE ACT OF 1934,

AS ADOPTED PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Brian LaRose, certify that:

 

Date: June 5, 2024		By:	/s/ Brian LaRose
			Brian LaRose
			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

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Exhibit 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Petco Health and Wellness Company, Inc. (the “Company”) for the quarter ended May 4, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, R. Michael Mohan, Interim Chief Executive Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

Date: June 5, 2024		By:	/s/ R. Michael Mohan
			R. Michael Mohan
			Interim Chief Executive Officer (Principal Executive Officer)

 

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Exhibit 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the accompanying Quarterly Report on Form 10-Q of Petco Health and Wellness Company, Inc. (the “Company”) for the quarter ended May 4, 2024, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Brian LaRose, Chief Financial Officer of the Company, hereby certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

 

Date: June 5, 2024		By:	/s/ Brian LaRose
			Brian LaRose
			Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer)

 

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v3.24.1.1.u2

Document and Entity Information - shares	3 Months Ended
	May 04, 2024	Jun. 03, 2024
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	May 04, 2024
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Entity Registrant Name	Petco Health and Wellness Company, Inc.
Entity Central Index Key	0001826470
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Current Fiscal Year End Date	--02-01
Entity Filer Category	Large Accelerated Filer
Entity Shell Company	false
Entity Small Business	false
Entity Emerging Growth Company	false
Title of 12(b) Security	Class A Common Stock, par value $0.001 per share
Trading Symbol	WOOF
Security Exchange Name	NASDAQ
Entity File Number	001-39878
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	81-1005932
Entity Address, Address Line One	10850 Via Frontera
Entity Address, City or Town	San Diego
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	92127
City Area Code	858
Local Phone Number	453-7845
Document Quarterly Report	true
Document Transition Report	false
Class A Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		235,201,143
Class B-1 Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		37,790,781
Class B-2 Common Stock
Document Information [Line Items]
Entity Common Stock, Shares Outstanding		37,790,781

v3.24.1.1.u2

CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024
Current assets:
Cash and cash equivalents	$ 89,717	$ 125,428
Receivables, less allowance for credit losses ($1,821 and $1,806, respectively)	42,081	44,369
Merchandise inventories, net	681,020	684,502
Prepaid expenses	64,983	58,615
Other current assets	26,254	38,830
Total current assets	904,055	951,744
Fixed assets	2,177,472	2,173,015
Less accumulated depreciation	(1,398,944)	(1,356,648)
Fixed assets, net	778,528	816,367
Operating lease right-of-use assets	1,357,576	1,384,050
Goodwill	980,064	980,297
Trade name	1,025,000	1,025,000
Other long-term assets	213,819	205,694
Total assets	5,259,042	5,363,152
Current liabilities:
Accounts payable and book overdrafts	464,524	485,131
Accrued salaries and employee benefits	95,027	101,265
Accrued expenses and other liabilities	198,219	200,278
Current portion of operating lease liabilities	307,989	310,507
Current portion of long-term debt and other lease liabilities	3,680	15,962
Total current liabilities	1,069,439	1,113,143
Senior secured credit facilities, net, excluding current portion	1,574,486	1,576,223
Operating lease liabilities, excluding current portion	1,093,136	1,116,615
Deferred taxes, net	240,653	251,629
Other long-term liabilities	119,019	121,113
Total liabilities	4,096,733	4,178,723
Commitments and contingencies (Notes 4 and 8)
Stockholders' equity:
Preferred stock, $0.001 par value: Authorized - 25.0 million shares; Issued and outstanding - none
Additional paid-in-capital	2,246,756	2,229,582
Accumulated deficit	(1,093,726)	(1,047,243)
Accumulated other comprehensive income	9,008	1,821
Total stockholders’ equity	1,162,309	1,184,429
Total equity	1,162,309	1,184,429
Total liabilities and stockholders' equity	5,259,042	5,363,152
Class A Common Stock
Stockholders' equity:
Common stock value	233	231
Class B-1 Common Stock
Stockholders' equity:
Common stock value	38	38
Class B-2 Common Stock
Stockholders' equity:
Common stock value

v3.24.1.1.u2

CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024
Allowance for credit loss, current	$ 1,821	$ 1,806
Preferred stock, par value per share	$ 0.001	$ 0.001
Preferred stock, shares authorized	25,000,000	25,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Class A Common Stock
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	1,000,000,000	1,000,000,000
Common stock, shares, issued	233,000,000	231,200,000
Common stock, shares, outstanding	233,000,000	231,200,000
Class B-1 Common Stock
Common stock, par value per share	$ 0.001	$ 0.001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares, issued	37,800,000	37,800,000
Common stock, shares, outstanding	37,800,000	37,800,000
Class B-2 Common Stock
Common stock, par value per share	$ 0.000001	$ 0.000001
Common stock, shares authorized	75,000,000	75,000,000
Common stock, shares, issued	37,800,000	37,800,000
Common stock, shares, outstanding	37,800,000	37,800,000

v3.24.1.1.u2

CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Net sales	$ 1,529,140	$ 1,555,908
Cost of sales	950,480	951,426
Gross profit	578,660	604,482
Selling, general and administrative expenses	595,442	576,865
Operating (loss) income	(16,782)	27,617
Interest income	(418)	(1,177)
Interest expense	36,817	37,202
Loss on partial extinguishment of debt	0	441
Other non-operating loss (income)	2,665	(2,819)
Loss before income taxes and income from equity method investees	(55,846)	(6,030)
Income tax benefit	(4,477)	(1,008)
Income from equity method investees	(4,886)	(3,130)
Net loss attributable to Class A and B-1 common stockholders	$ (46,483)	$ (1,892)
Net loss per Class A and B-1 common share:
Basic	$ (0.17)	$ (0.01)
Diluted	$ (0.17)	$ (0.01)
Weighted average shares used in computing net loss per Class A and B-1 common share:
Basic	269,768	266,485
Diluted	269,768	266,485
Products
Net sales	$ 1,279,731	$ 1,316,596
Cost of sales	792,722	805,759
Services and other
Net sales	249,409	239,312
Cost of sales	$ 157,758	$ 145,667

v3.24.1.1.u2

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Statement Of Income And Comprehensive Income [Abstract]
Net Income (Loss)	$ (46,483)	$ (1,892)
Other comprehensive income, net of tax:
Foreign currency translation adjustment	1,665	1,057
Unrealized gain (loss) on derivatives	6,372	(984)
(Gains) losses on derivatives reclassified to income (Note 5), net of tax	(850)	433
Total other comprehensive income, net of tax	7,187	506
Comprehensive loss attributable to Class A and B-1 common stockholders	$ (39,296)	$ (1,386)

v3.24.1.1.u2

CONSOLIDATED STATEMENTS OF EQUITY - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Common Stock Class A Common Stock	Common Stock Class B-1 Common Stock	Common Stock Class B-2 Common Stock	Additional Paid-in Capital	Accumulated deficit	Accumulated Other Comprehensive Loss
Beginning Balance at Jan. 28, 2023	$ 2,381,477	$ 266				$ 2,152,342	$ 232,967	$ (4,098)
Beginning Balance (in shares) at Jan. 28, 2023			228,338	37,791	37,791
Equity-based compensation expense (Note 7)	22,282					22,282
Net loss	(1,892)						(1,892)
Foreign currency translation adjustment, net of tax	1,057							1,057
Unrealized gain (loss) on derivatives (Note 5), net of tax	(984)							(984)
(Gains) losses on derivatives reclassified to income (Note 5), net of tax	433							433
Issuance of common stock, net of tax withholdings	(1,253)	1				(1,254)
Issuance of common stock, net of tax withholdings (in shares)			727
Ending Balance at Apr. 29, 2023	2,401,120	267				2,173,370	231,075	(3,592)
Ending Balance (in shares) at Apr. 29, 2023			229,065	37,791	37,791
Beginning Balance at Feb. 03, 2024	1,184,429	269				2,229,582	(1,047,243)	1,821
Beginning Balance (in shares) at Feb. 03, 2024			231,156	37,791	37,791
Equity-based compensation expense (Note 7)	17,451					17,451
Net loss	(46,483)						(46,483)
Foreign currency translation adjustment, net of tax	1,665							1,665
Unrealized gain (loss) on derivatives (Note 5), net of tax	6,372							6,372
(Gains) losses on derivatives reclassified to income (Note 5), net of tax	(850)							(850)
Issuance of common stock, net of tax withholdings	(275)	2				(277)
Issuance of common stock, net of tax withholdings (in shares)			1,793
Ending Balance at May. 04, 2024	$ 1,162,309	$ 271				$ 2,246,756	$ (1,093,726)	$ 9,008
Ending Balance (in shares) at May. 04, 2024			232,949	37,791	37,791

v3.24.1.1.u2

CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Cash flows from operating activities:
Net loss	$ (46,483)	$ (1,892)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	49,587	49,255
Amortization of debt discounts and issuance costs	1,218	1,238
Provision for deferred taxes	(13,365)	(5,530)
Equity-based compensation	17,434	22,129
Impairments, write-offs and losses on sale of fixed and other assets	3,508	4
Loss on partial extinguishment of debt	0	441
Income from equity method investees	(4,886)	(3,130)
Amounts reclassified out of accumulated other comprehensive income (Note 5)	(1,129)	575
Non-cash operating lease costs	103,637	106,316
Other non-operating loss (income)	2,665	(2,819)
Changes in assets and liabilities:
Receivables	2,987	4,165
Merchandise inventories	3,076	(15,508)
Prepaid expenses and other assets	(4,511)	(12,115)
Accounts payable and book overdrafts	(19,538)	12,582
Accrued salaries and employee benefits	(5,474)	18,982
Accrued expenses and other liabilities	5,902	(8,736)
Operating lease liabilities	(104,181)	(130,297)
Other long-term liabilities	1,139	1,991
Net cash (used in) provided by operating activities	(8,414)	37,651
Cash flows from investing activities:
Cash paid for fixed assets	(32,641)	(62,050)
Cash paid for acquisitions, net of cash acquired	(100)	(725)
Proceeds from investments	998	0
Net cash used in investing activities	(31,743)	(62,775)
Cash flows from financing activities:
Borrowings under long-term debt agreements	173,000	0
Repayments of long-term debt	(173,000)	(35,000)
Debt refinancing costs	(2,955)	0
Payments for finance lease liabilities	(1,444)	(1,250)
Proceeds from employee stock purchase plan and stock option exercises	830	1,378
Tax withholdings on stock-based awards	(2,059)	(2,210)
Net cash used in financing activities	(5,628)	(37,082)
Net decrease in cash, cash equivalents and restricted cash	(45,785)	(62,206)
Cash, cash equivalents and restricted cash at beginning of period	136,649	213,727
Cash, cash equivalents and restricted cash at end of period	90,864	151,521
Supplemental cash flow disclosures:
Interest paid, net	34,357	37,121
Income taxes paid	1,282	8,934
Supplemental non-cash investing and financing activities disclosure:
Accounts payable and accrued expenses for capital expenditures	$ 14,541	$ 24,767

v3.24.1.1.u2

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Pay vs Performance Disclosure
Net Income (Loss)	$ (46,483)	$ (1,892)

v3.24.1.1.u2

Insider Trading Arrangements	3 Months Ended
	May 04, 2024
Trading Arrangements, by Individual
Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Adopted	false
Rule 10b5-1 Arrangement Terminated	false
Non-Rule 10b5-1 Arrangement Terminated	false

v3.24.1.1.u2

Summary of Significant Accounting Policies	3 Months Ended
	May 04, 2024
Accounting Policies [Abstract]
Summary of Significant Accounting Policies	1. Summary of Significant Accounting Policies Basis of Presentation Petco Health and Wellness Company, Inc. (together with its consolidated subsidiaries, the “Company”) is a pet health and wellness company focused on improving the lives of pets, pet parents, and its own partners. The Company manages its business as one reportable operating segment. In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Consolidated Financial Statements. There have been no significant changes from the significant accounting policies disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024. The accompanying consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. The accompanying consolidated financial statements and these Notes to Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, from which the prior year balance sheet information herein was derived. Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates are based on information that is currently available and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could vary from those estimates under different assumptions or conditions. Derivative Instruments In November 2022, the Company entered into a series of interest rate cap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to the three-month Secured Overnight Financing Rate as published by CME Group ("Term SOFR"). The interest rate caps became effective December 30, 2022 and expire on December 31, 2024. The interest rate caps are accounted for as cash flow hedges, and changes in the fair value of the interest rate caps are reported as a component of accumulated other comprehensive income (loss) ("AOCI"). In March 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective March 31, 2023 and expires on March 31, 2026. In June 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective September 30, 2023 and expires on December 31, 2026. In December 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar becomes effective December 31, 2024 and expires on December 31, 2026. In March 2024, the Company entered into two interest rate collar agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collars become effective on December 31, 2024 and expire on December 31, 2026. The interest rate collars are accounted for as cash flow hedges, and changes in the fair value of the interest rate collars are reported as a component of AOCI. Cash and Cash Equivalents The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows (in thousands):       May 4, 2024     February 3, 2024   Cash and cash equivalents   $ 89,717     $ 125,428   Restricted cash included in other current assets     1,147       11,221   Total cash, cash equivalents and restricted cash in    the statement of cash flows   $ 90,864     $ 136,649

v3.24.1.1.u2

Revenue Recognition	3 Months Ended
	May 04, 2024
Revenue From Contract With Customer [Abstract]
Revenue Recognition	2. Revenue Recognition Net sales by product type and services were as follows (in thousands):     Thirteen weeks ended     May 4, 2024     April 29, 2023   Consumables $ 763,974     $ 763,051   Supplies and companion animals   515,757       553,545   Services and other   249,409       239,312   Net sales $ 1,529,140     $ 1,555,908

v3.24.1.1.u2

Goodwill	3 Months Ended
	May 04, 2024
Goodwill, Impaired, Accumulated Impairment Loss [Abstract]
Goodwill	3. Goodwill During the first quarter of fiscal 2024, due to declines in the Company's share price, the Company performed an interim impairment test of its goodwill and trade name. As the estimated fair value of the Company's reporting unit was in excess of its carrying value, the Company concluded that the carrying amount of goodwill was recoverable and did not record a goodwill impairment charge during the first quarter of fiscal 2024. The fair value of the Company's reporting unit was based upon an equal weighting of the income and market approaches, utilizing estimated cash flows and a terminal value, discounted at a rate of return that reflects the relative risk of the cash flows, as well as valuation multiples derived from comparable publicly traded companies that are applied to operating performance of the reporting unit. Significant assumptions used in the determination of fair value of the reporting unit generally include prospective financial information, discount rates, terminal growth rates, and earnings multiples. The discounted cash flow model used to determine the fair value of the reporting unit during the first quarter of fiscal 2024 reflected the Company's most recent cash flow projections, a discount rate of 13.2%, and a terminal growth rate of 3%. The reporting unit fair value measurement is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs.

v3.24.1.1.u2

Senior Secured Credit Facilities	3 Months Ended
	May 04, 2024
Debt Disclosure [Abstract]
Senior Secured Credit Facilities	4. Senior Secured Credit Facilities On March 4, 2021, the Company entered into a $1,700.0 million secured term loan facility maturing on March 4, 2028 (the “First Lien Term Loan”) and a secured asset-based revolving credit facility with availability of up to $500.0 million, subject to a borrowing base, maturing on March 4, 2026 (the “ABL Revolving Credit Facility”). In March 2024, the Company amended the ABL Revolving Credit Facility, which now consists of two tranches, to increase its total availability from $500.0 million to $581.0 million and extend the maturity on a portion of this availability. The first tranche has availability of up to $35.0 million, subject to a borrowing base, maturing on March 4, 2026. The second tranche has availability of up to $546.0 million, subject to a borrowing base, maturing on March 29, 2029. Interest on the ABL Revolving Credit Facility is now based on, at the Company's option, either the base rate subject to a 1% floor, or Term SOFR subject to a floor of 0%, plus an applicable margin. All other key terms of the ABL Revolving Credit Facility remained unchanged. As of May 4, 2024, the Company was in compliance with its covenants under the First Lien Term Loan and the ABL Revolving Credit Facility. Term Loan Facilities Interest on the First Lien Term Loan is based on, at the Company’s option, either a base rate or Term SOFR plus the credit spread adjustment recommended by the Alternative Reference Rates Committee ("Adjusted Term SOFR"), subject to a 0.75% floor, payable upon maturity of the SOFR contract, in either case plus the applicable rate. The base rate is the greater of the bank prime rate, federal funds effective rate plus 0.5% or Adjusted Term SOFR plus 1.0%. The applicable rate is 2.25% per annum for a base rate loan or 3.25% per annum for an Adjusted Term SOFR loan. Principal and interest payments commenced on June 30, 2021. Principal payments are normally $4.25 million quarterly. In March 2023, the Company voluntarily prepaid $35.0 million of the First Lien Term Loan using existing cash on hand. The repayment was applied to the remaining principal payments in order of scheduled payment date and, as a result, the entire remaining balance was included in senior secured credit facilities, net, excluding current portion in the consolidated balance sheets as of May 4, 2024 and February 3, 2024. The Company accounted for the repayment as a partial extinguishment and recognized a loss on debt extinguishment of $0.4 million for the thirteen week period ended April 29, 2023. As of May 4, 2024, the outstanding principal balance of the First Lien Term Loan was $1,595.3 million ($1,579.6 million, net of the unamortized discount and debt issuance costs). As of February 3, 2024, the outstanding principal balance of the First Lien Term Loan was $1,595.3 million ($1,578.6 million, net of the unamortized discount and debt issuance costs). The weighted average interest rate on the borrowings outstanding was 8.9% and 9.0% as of May 4, 2024 and February 3, 2024, respectively. Debt issuance costs are being amortized over the contractual term to interest expense using the effective interest rate in effect at issuance. As of May 4, 2024 and February 3, 2024, the estimated fair value of the First Lien Term Loan was approximately $1,356.0 million and $1,497.6 million, respectively, based upon Level 2 fair value hierarchy inputs. Revolving Credit Facilities In March 2024, the Company amended the ABL Revolving Credit Facility to increase its total availability and extend the maturity on a portion of the availability. Fees of $3.0 million relating to the Company’s entry into the amendment were capitalized as debt issuance costs. These fees consisted of arranger fees and other third-party expenses. The unamortized portion of the debt issuance costs of the ABL Revolving Credit Facility previously capitalized is being amortized over the amended contractual term. As of May 4, 2024 and February 3, 2024, no amounts were outstanding under the ABL Revolving Credit Facility. At May 4, 2024, $527.6 million was available under the ABL Revolving Credit Facility, which is net of $53.4 million of outstanding letters of credit issued in the normal course of business and no borrowing base reduction for a shortfall in qualifying assets. As of May 4, 2024 and February 3, 2024, unamortized debt issuance costs of $5.1 million and $2.4 million, respectively, relating to the ABL Revolving Credit Facility were outstanding and were being amortized using the straight-line method over the remaining term of the agreement. The ABL Revolving Credit Facility has availability up to $581.0 million and a $150.0 million letter of credit sub-facility. The availability is limited to a borrowing base, which allows borrowings of up to 90% of eligible accounts receivable plus 90% of the net orderly liquidation value of eligible inventory plus up to $50.0 million of qualified cash of the Company to which the Company and guarantors have no access, less reserves as determined by the administrative agent. Letters of credit reduce the amount available to borrow under the ABL Revolving Credit Facility by their face value. Prior to the March 2024 amendment, interest on the ABL Revolving Credit Facility was based on, at the Company’s option, either the base rate or Adjusted Term SOFR subject to a floor of 0%, in either case, plus an applicable margin. Following the March 2024 amendment, interest on the ABL Revolving Credit Facility is now based on, at the Company’s option, either the base rate subject to a 1% floor, or Term SOFR subject to a floor of 0%, plus an applicable margin. The applicable margin is currently equal to 25 basis points in the case of base rate loans and 125 basis points in the case of Term SOFR loans. The applicable margin is adjusted quarterly based on the average historical excess availability as a percentage of the Line Cap, which represents the lesser of the aggregate ABL Revolving Credit Facility and the borrowing base, as follows: Average Historical Excess Availability   Applicable Margin for Term SOFR Loans     Applicable Margin for Base Rate Loans   Less than 33.3% of the Line Cap     1.75 %     0.75 % Less than 66.7% but greater than or equal to 33.3% of    the Line Cap     1.50 %     0.50 % Greater than or equal to 66.7% of the Line Cap     1.25 %     0.25 %   The ABL Revolving Credit Facility is subject to an unused commitment fee. If the actual daily utilized portion exceeds 50%, the unused commitment fee is 0.25%. Otherwise, the unused commitment fee is 0.375% and is not dependent upon excess availability.

v3.24.1.1.u2

Derivative Instruments	3 Months Ended
	May 04, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Derivative Instruments	5. Derivative Instruments The interest rate caps and collars are accounted for as cash flow hedges because they are expected to be highly effective in hedging variable rate interest payments. Changes in the fair value of the cash flow hedges are reported as a component of AOCI. As of May 4, 2024, AOCI included unrealized gains of $5.1 million ($3.9 million, net of tax). As of February 3, 2024, AOCI included unrealized losses of $2.2 million ($1.7 million, net of tax). Approximately $1.1 million of pre-tax gains and $0.6 million of pre-tax losses deferred in AOCI were reclassified to interest expense during the thirteen week periods ended May 4, 2024 and April 29, 2023, respectively. The Company currently estimates that $2.3 million of losses related to trade date costs on its cash flow hedges that are currently deferred in AOCI will be reclassified to interest expense in the consolidated statement of operations within the next twelve months. This estimate could vary based on actual amounts as a result of changes in market conditions. The cash flow hedges are reflected in the Company’s consolidated balance sheets as follows (in thousands):   Assets (Liabilities)   Balance sheet location   May 4, 2024     February 3, 2024   Current asset portion of cash flow hedges   Other current assets   $ 3,703     $ 2,259   Non-current asset portion of cash flow    hedges   Other long-term assets     2,643       —   Current liability portion of cash flow    hedges   Accrued expenses and other liabilities     —       (124 ) Non-current liability portion of cash flow    hedges   Other long-term liabilities     —       (3,067 ) Total cash flow hedges       $ 6,346     $ (932 )

v3.24.1.1.u2

Fair Value Measurements	3 Months Ended
	May 04, 2024
Fair Value Disclosures [Abstract]
Fair Value Measurements	6. Fair Value Measurements Assets and Liabilities Measured on a Recurring Basis The following table presents information about assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):     May 4, 2024       Level 1     Level 2     Level 3   Assets (liabilities):                   Money market mutual funds   $ 33,888     $ —     $ —   Investments of officers' life insurance   $ —     $ 15,493     $ —   Non-qualified deferred compensation plan   $ —     $ (21,095 )   $ —         February 3, 2024       Level 1     Level 2     Level 3   Assets (liabilities):                   Money market mutual funds   $ 80,186     $ —     $ —   Investments of officers' life insurance   $ —     $ 14,945     $ —   Non-qualified deferred compensation plan   $ —     $ (20,355 )   $ —     The fair value of money market mutual funds is based on quoted market prices, such as quoted net asset values published by the fund as supported in an active market. Money market mutual funds included in the Company’s cash and cash equivalents were $33.8 million and $69.6 million as of May 4, 2024 and February 3, 2024, respectively. Also included in the Company’s money market mutual funds balances were $0.1 million and $10.6 million as of May 4, 2024 and February 3, 2024, respectively, which relate to the Company’s restricted cash, and are included in other current assets in the consolidated balance sheets. The Company maintains a deferred compensation plan for key executives and other members of management, which is funded by investments in officers’ life insurance. The fair value of this obligation is based on participants’ elected investments, which reflect the closing market prices of similar assets. In February 2022, the Company amended a collaboration agreement with a vendor, and as part of the amendment the Company was granted a right to receive equity and warrants for common shares of the vendor that is subject to certain performance conditions and other contingencies. The Company's interest in these rights is accounted for as an investment in an equity security without a readily determinable fair value. When an upward or downward adjustment occurs, the resulting gains or losses are included in other non-operating income in the consolidated statements of operations. In April 2023, the Company sold its interest in Rover Group, Inc. Class A common stock to a buyer at a price determined based on the daily volume weighted average price, in addition to a premium, over an agreed upon period. The Company's interest in the unsettled cash proceeds were remeasured at fair value at each reporting period, and the resulting gains or losses were included in other non-operating income in the consolidated statements of operations. Assets Measured on a Non-Recurring Basis The Company’s non-financial assets, which primarily consist of goodwill, other intangible assets, fixed assets and equity and other investments, are reported at carrying value, or at fair value as of the date of the Company’s acquisition of Petco Holdings, Inc. LLC on January 26, 2016, and are not required to be measured at fair value on a recurring basis. However, on a periodic basis (at least annually for goodwill and indefinite-lived intangibles or whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable), non-financial assets are assessed for impairment. If impaired, the carrying values of the assets are written down to fair value using Level 3 inputs. The Company’s trade name has an indefinite life. The Company performs its annual impairment test during the fourth quarter of each fiscal year, or more frequently when warranted by events or changes in circumstances. During the first quarter of fiscal 2024, due to declines in the Company's share price, the Company performed an interim impairment test of its goodwill and indefinite-lived trade name. Refer to Note 3 for further discussion of the results of impairment testing performed on the Company’s goodwill. The fair value of the Company’s trade name was estimated by management using the relief from royalty valuation method, which estimates the hypothetical royalties that would have to be paid if the trade name was not owned. The fair value of the Company's trade name reflected the Company's most recent revenue projections, a discount rate of 14.2% and a terminal growth rate of 3%. The Company concluded that the fair value of its trade name exceeded its carrying value, and therefore no trade name impairment charge was recorded during the first quarter of fiscal 2024. The Company's trade name fair value measurement is classified as Level 3 in the fair value hierarchy because it involves significant unobservable inputs. There were no indications of impairment of the Company’s equity and other investments during the thirteen week periods ended May 4, 2024 and April 29, 2023. During the thirteen week periods ended May 4, 2024 and April 29, 2023, the Company recorded fixed asset and right-of-use asset impairment charges of $3.5 million and $0.1 million, respectively.

v3.24.1.1.u2

Stockholders' Equity	3 Months Ended
	May 04, 2024
Stockholders Equity Note [Abstract]
Stockholders' Equity	7. Stockholders’ Equity   Equity-Based Compensation Equity-based compensation awards under the Company’s current equity incentive plan (as amended, the “2021 Equity Incentive Plan”) include restricted stock units (“RSUs,” which include performance-based stock units), restricted stock awards (“RSAs”), non-qualified stock options, and other equity compensation awards. The Company also has an employee stock purchase plan (“ESPP”). The Company’s controlling parent, Scooby LP, also maintains an incentive plan (the “2016 Incentive Plan”) under which it has awarded partnership unit awards to certain current and former employees, consultants, and non-employee directors of the Company that are restricted profit interests in Scooby LP subject to a distribution threshold (“Series C Units”). The following table summarizes the Company’s equity-based compensation expense by award type (in thousands):       Thirteen weeks ended       May 4, 2024     April 29, 2023   RSUs and RSAs   $ 10,722     $ 14,496   Options     5,553       5,085   ESPP     320       432   Other awards     839       2,116   Total equity-based compensation expense   $ 17,434     $ 22,129     Activity under the 2021 Equity Incentive Plan was as follows (shares and dollars in thousands):       RSUs and RSAs     Options   Nonvested/outstanding, February 3, 2024     9,618       6,310   Granted     10,218       7,407   Vested and delivered/exercised     (2,144 )     —   Forfeited/expired     (1,631 )     (292 ) Nonvested/outstanding, May 4, 2024     16,061       13,425   Unrecognized compensation expense as of May 4, 2024   $ 60,199     $ 7,548   Weighted average remaining expense period as of May 4, 2024   1.9  years     0.8  years     The ESPP allows eligible employees to contribute up to 15% of their base earnings towards purchases of Class A common stock, subject to an annual maximum. The purchase price will be 85% of the lower of (i) the fair market value of the stock on the associated lookback date and (ii) the fair market value of the stock on the last day of the related purchase period. Series C Unit activity under the 2016 Incentive Plan was as follows (in thousands):       Units   Outstanding, February 3, 2024     198,145   Granted     —   Forfeited     (4,402 ) Outstanding, May 4, 2024     193,743   Vested, May 4, 2024     188,143   No additional Series C Units have been or will be awarded following the Company’s initial public offering. As of May 4, 2024, unrecognized compensation expense related to the unvested portion of Scooby LP’s Series C Units was $1.2 million, which is expected to be recognized over a weighted average period of 1.0 years. In addition to acceleration upon a change in control, a portion of grantees’ Series C Units may vest upon certain levels of direct or indirect sales by Scooby LP of the Company’s Class A common stock, and all unvested Series C Units will fully accelerate in the event Scooby LP sells 90% of its direct or indirect holdings of the Company’s Class A common stock. Loss Per Share Potentially dilutive securities include potential Class A common shares related to outstanding stock options, unvested RSUs and RSAs, and the ESPP, calculated using the treasury stock method. The calculation of diluted shares outstanding excludes securities where the combination of the exercise or purchase price (in the case of options and the ESPP) and the associated unrecognized compensation expense is greater than the average market price of Class A common shares because the inclusion of these securities would be anti-dilutive. All outstanding equity awards were excluded from the calculation of diluted loss per Class A and B-1 common share in the thirteen weeks ended May 4, 2024 and April 29, 2023, as their effect would be antidilutive in a net loss period.

v3.24.1.1.u2

Commitments and Contingencies	3 Months Ended
	May 04, 2024
Commitments And Contingencies Disclosure [Abstract]
Commitments and Contingencies	8. Commitments and Contingencies The Company is involved in legal proceedings and is subject to other claims and litigation arising in the ordinary course of its business. The Company has made accruals with respect to certain of these matters, where appropriate, which are reflected in the Company’s consolidated financial statements but are not, individually or in the aggregate, considered material. For other matters, the Company has not made accruals because management has not yet determined that a loss is probable or because the amount of loss cannot be reasonably estimated. While the ultimate outcome of the matters cannot be determined, the Company currently does not expect that these matters will have a material adverse effect on its consolidated financial statements. The outcome of any litigation is inherently uncertain, however, and if decided adversely to the Company, or if the Company determines that settlement of particular litigation is appropriate, the Company may be subject to liability that could have a material adverse effect on its consolidated financial statements.

v3.24.1.1.u2

Summary of Significant Accounting Policies (Policies)	3 Months Ended
	May 04, 2024
Accounting Policies [Abstract]
Basis of Presentation	Basis of Presentation Petco Health and Wellness Company, Inc. (together with its consolidated subsidiaries, the “Company”) is a pet health and wellness company focused on improving the lives of pets, pet parents, and its own partners. The Company manages its business as one reportable operating segment. In the opinion of management, the accompanying consolidated financial statements contain all adjustments necessary for a fair presentation as prescribed by accounting principles generally accepted in the United States (“GAAP”). All adjustments were comprised of normal recurring adjustments, except as noted in these Notes to Consolidated Financial Statements. There have been no significant changes from the significant accounting policies disclosed in Note 1 of the Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024. The accompanying consolidated financial statements have been prepared in accordance with GAAP for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. Interim financial results are not necessarily indicative of results anticipated for the full year. The accompanying consolidated financial statements and these Notes to Consolidated Financial Statements should be read in conjunction with the audited consolidated financial statements and Notes to Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2024, from which the prior year balance sheet information herein was derived.
Use of Estimates	Use of Estimates The preparation of these consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. These estimates are based on information that is currently available and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could vary from those estimates under different assumptions or conditions.
Derivative Instruments	Derivative Instruments In November 2022, the Company entered into a series of interest rate cap agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to the three-month Secured Overnight Financing Rate as published by CME Group ("Term SOFR"). The interest rate caps became effective December 30, 2022 and expire on December 31, 2024. The interest rate caps are accounted for as cash flow hedges, and changes in the fair value of the interest rate caps are reported as a component of accumulated other comprehensive income (loss) ("AOCI"). In March 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective March 31, 2023 and expires on March 31, 2026. In June 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar became effective September 30, 2023 and expires on December 31, 2026. In December 2023, the Company entered into an interest rate collar agreement to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collar becomes effective December 31, 2024 and expires on December 31, 2026. In March 2024, the Company entered into two interest rate collar agreements to limit the maximum interest on a portion of the Company’s variable-rate debt and decrease its exposure to interest rate variability relating to three-month Term SOFR. The interest rate collars become effective on December 31, 2024 and expire on December 31, 2026. The interest rate collars are accounted for as cash flow hedges, and changes in the fair value of the interest rate collars are reported as a component of AOCI.
Cash and Cash Equivalents	Cash and Cash Equivalents The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows (in thousands):       May 4, 2024     February 3, 2024   Cash and cash equivalents   $ 89,717     $ 125,428   Restricted cash included in other current assets     1,147       11,221   Total cash, cash equivalents and restricted cash in    the statement of cash flows   $ 90,864     $ 136,649

v3.24.1.1.u2

Summary of Significant Accounting Policies (Tables)	3 Months Ended
	May 04, 2024
Accounting Policies [Abstract]
Schedule of Cash and Cash Equivalents and Restricted Cash	The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the consolidated balance sheets to the total amounts reported in the consolidated statements of cash flows (in thousands):       May 4, 2024     February 3, 2024   Cash and cash equivalents   $ 89,717     $ 125,428   Restricted cash included in other current assets     1,147       11,221   Total cash, cash equivalents and restricted cash in    the statement of cash flows   $ 90,864     $ 136,649

v3.24.1.1.u2

Revenue Recognition (Tables)	3 Months Ended
	May 04, 2024
Revenue From Contract With Customer [Abstract]
Summary of Net Sales by Product Type and Services	Net sales by product type and services were as follows (in thousands):     Thirteen weeks ended     May 4, 2024     April 29, 2023   Consumables $ 763,974     $ 763,051   Supplies and companion animals   515,757       553,545   Services and other   249,409       239,312   Net sales $ 1,529,140     $ 1,555,908

v3.24.1.1.u2

Senior Secured Credit Facilities (Tables)	3 Months Ended
	May 04, 2024
Debt Disclosure [Abstract]
Applicable Margin for Adjusted Term SOFR Loans and Base Rate Loans based on Average Historical Excess Availability	The applicable margin is adjusted quarterly based on the average historical excess availability as a percentage of the Line Cap, which represents the lesser of the aggregate ABL Revolving Credit Facility and the borrowing base, as follows: Average Historical Excess Availability   Applicable Margin for Term SOFR Loans     Applicable Margin for Base Rate Loans   Less than 33.3% of the Line Cap     1.75 %     0.75 % Less than 66.7% but greater than or equal to 33.3% of    the Line Cap     1.50 %     0.50 % Greater than or equal to 66.7% of the Line Cap     1.25 %     0.25 %

v3.24.1.1.u2

Derivative Instruments (Tables)	3 Months Ended
	May 04, 2024
Derivative Instruments and Hedging Activities Disclosure [Abstract]
Summary of Cash Flow Hedges Reflected in Consolidated Balance Sheets	The cash flow hedges are reflected in the Company’s consolidated balance sheets as follows (in thousands):   Assets (Liabilities)   Balance sheet location   May 4, 2024     February 3, 2024   Current asset portion of cash flow hedges   Other current assets   $ 3,703     $ 2,259   Non-current asset portion of cash flow    hedges   Other long-term assets     2,643       —   Current liability portion of cash flow    hedges   Accrued expenses and other liabilities     —       (124 ) Non-current liability portion of cash flow    hedges   Other long-term liabilities     —       (3,067 ) Total cash flow hedges       $ 6,346     $ (932 )

v3.24.1.1.u2

Fair Value Measurements (Tables)	3 Months Ended
	May 04, 2024
Fair Value Disclosures [Abstract]
Schedule of Information About Assets and Liabilities Measured at Fair Value on Recurring Basis	The following table presents information about assets and liabilities that are measured at fair value on a recurring basis and indicate the fair value hierarchy of the valuation techniques utilized to determine such fair value (in thousands):     May 4, 2024       Level 1     Level 2     Level 3   Assets (liabilities):                   Money market mutual funds   $ 33,888     $ —     $ —   Investments of officers' life insurance   $ —     $ 15,493     $ —   Non-qualified deferred compensation plan   $ —     $ (21,095 )   $ —         February 3, 2024       Level 1     Level 2     Level 3   Assets (liabilities):                   Money market mutual funds   $ 80,186     $ —     $ —   Investments of officers' life insurance   $ —     $ 14,945     $ —   Non-qualified deferred compensation plan   $ —     $ (20,355 )   $ —

v3.24.1.1.u2

Stockholders' Equity (Tables)	3 Months Ended
	May 04, 2024
Stockholders Equity Note [Abstract]
Summary of Equity-based Compensation Expense by Award Type	The following table summarizes the Company’s equity-based compensation expense by award type (in thousands):       Thirteen weeks ended       May 4, 2024     April 29, 2023   RSUs and RSAs   $ 10,722     $ 14,496   Options     5,553       5,085   ESPP     320       432   Other awards     839       2,116   Total equity-based compensation expense   $ 17,434     $ 22,129
Schedule of Nonvested Share Activity	Activity under the 2021 Equity Incentive Plan was as follows (shares and dollars in thousands):       RSUs and RSAs     Options   Nonvested/outstanding, February 3, 2024     9,618       6,310   Granted     10,218       7,407   Vested and delivered/exercised     (2,144 )     —   Forfeited/expired     (1,631 )     (292 ) Nonvested/outstanding, May 4, 2024     16,061       13,425   Unrecognized compensation expense as of May 4, 2024   $ 60,199     $ 7,548   Weighted average remaining expense period as of May 4, 2024   1.9  years     0.8  years
Schedule of Series C Unit Activity Under 2016 Incentive Plan	Series C Unit activity under the 2016 Incentive Plan was as follows (in thousands):       Units   Outstanding, February 3, 2024     198,145   Granted     —   Forfeited     (4,402 ) Outstanding, May 4, 2024     193,743   Vested, May 4, 2024     188,143

v3.24.1.1.u2

Summary of Significant Accounting Policies - Additional Information (Details)	3 Months Ended
	May 04, 2024 Segment
Summary Of Significant Accounting Policies [Line Items]
Number of operating segments	1

v3.24.1.1.u2

Summary of Significant Accounting Policies - Schedule of Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024
Accounting Policies [Abstract]
Cash and cash equivalents	$ 89,717	$ 125,428
Restricted cash included in other current assets	$ 1,147	$ 11,221
Restricted Cash and Cash Equivalents, Asset, Statement of Financial Position [Extensible List]	Other current assets	Other current assets
Total cash, cash equivalents and restricted cash in the statement of cash flows	$ 90,864	$ 136,649

v3.24.1.1.u2

Revenue Recognition - Summary of Net Sales by Product Type and Services (Details) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Disaggregation Of Revenue [Line Items]
Net sales	$ 1,529,140	$ 1,555,908
Consumables
Disaggregation Of Revenue [Line Items]
Net sales	763,974	763,051
Supplies and companion animals
Disaggregation Of Revenue [Line Items]
Net sales	515,757	553,545
Services and other
Disaggregation Of Revenue [Line Items]
Net sales	$ 249,409	$ 239,312

v3.24.1.1.u2

Goodwill (Additional Information) (Details) - Level 3	May 04, 2024
Goodwill [Line Items]
Discounted cash flow to determine fair value discount rate percent	13.20%
Discounted cash flow terminal growth rate percent	3.00%

v3.24.1.1.u2

Senior Secured Credit Facilities - Additional Information (Details) - USD ($)			1 Months Ended		3 Months Ended		12 Months Ended
	Dec. 12, 2022	Mar. 04, 2021	Mar. 31, 2024	Mar. 31, 2023	May 04, 2024	Apr. 29, 2023	Feb. 03, 2024
Line Of Credit Facility [Line Items]
Credit facility, covenant compliance					the Company was in compliance with its covenants under the First Lien Term Loan and the ABL Revolving Credit Facility.
Loss on extinguishment and modification of debt					$ 0	$ (441,000)
Letter of credit sub facility					$ 150,000,000
Maximum borrowing capacity of eligible accounts receivable in percentage					90.00%
Borrowing capacity of net orderly liquidation value of eligible inventory in percentage					90.00%
Qualified cash					$ 50,000,000
Amended Revolving Credit Facility
Line Of Credit Facility [Line Items]
Outstanding principal balance, net of unamortized discount and debt issuance costs					0		$ 0
First Lien Term Loan
Line Of Credit Facility [Line Items]
Borrowings under credit facility		$ 1,700,000,000
Credit facility, maturity date		Mar. 04, 2028
Debt instrument floor rate	0.75%
Quarterly principal payments	$ 4,250,000
Credit facility principal repaid				$ 35,000,000
Outstanding principal balance, gross					1,595,300,000		1,595,300,000
Outstanding principal balance, net of unamortized discount and debt issuance costs					$ 1,579,600,000		$ 1,578,600,000
Weighted average interest rate					8.90%		9.00%
First Lien Term Loan | Level 2
Line Of Credit Facility [Line Items]
Estimated fair value of credit facility					$ 1,356,000,000		$ 1,497,600,000
First Lien Term Loan | Base Rate
Line Of Credit Facility [Line Items]
Debt instrument basis spread on variable rate	0.50%
Applicable annual rate	2.25%
First Lien Term Loan | Applicable Margin for Adjusted SOFR Loans
Line Of Credit Facility [Line Items]
Debt instrument basis spread on variable rate	1.00%
Applicable annual rate	3.25%
Amended Revolving Credit Facility
Line Of Credit Facility [Line Items]
Borrowings under credit facility			$ 581,000,000
Debt instrument floor rate							0.00%
Line of credit facility, unused commitment fee percentage					0.375%
Amended Revolving Credit Facility | Actual Daily Utilized Portion Exceeds 50%
Line Of Credit Facility [Line Items]
Line of credit facility, unused commitment fee percentage					0.25%
Amended Revolving Credit Facility | Tranche One
Line Of Credit Facility [Line Items]
Borrowings under credit facility			$ 35,000,000
Credit facility, maturity date			Mar. 04, 2026
Amended Revolving Credit Facility | Tranche Two
Line Of Credit Facility [Line Items]
Borrowings under credit facility			$ 546,000,000
Credit facility, maturity date			Mar. 29, 2029
Amended Revolving Credit Facility | Base Rate
Line Of Credit Facility [Line Items]
Debt instrument floor rate			1.00%
Debt instrument basis spread on variable rate					0.25%
Amended Revolving Credit Facility | SOFR
Line Of Credit Facility [Line Items]
Debt instrument floor rate			0.00%
Debt instrument basis spread on variable rate					1.25%
ABL Revolving Credit Facility
Line Of Credit Facility [Line Items]
Credit facility, initiation date		Mar. 04, 2021
Borrowings under credit facility		$ 500,000,000
Credit facility, maturity date		Mar. 04, 2026
Unamortized debt issuance costs					$ 5,100,000		$ 2,400,000
Arranger fees and other third party expenses capitalized as debt issuance costs			$ 3,000,000
Borrowings available under credit facility					527,600,000
Outstanding letters of credit					53,400,000
Borrowings base reduction					0
Maximum borrowing capacity					$ 581,000,000

v3.24.1.1.u2

Senior Secured Credit Facilities - Applicable Margin for Adjusted Term SOFR Loans and Base Rate Loans based on Average Historical Excess Availability (Details) - Amended Revolving Credit Facility	3 Months Ended
	May 04, 2024
Applicable Margin for Term SOFR Loans | Less than 33.3% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	1.75%
Applicable Margin for Term SOFR Loans | Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	1.50%
Applicable Margin for Term SOFR Loans | Greater than or Equal to 66.7% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	1.25%
Applicable Margin for Base Rate Loans
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	0.25%
Applicable Margin for Base Rate Loans | Less than 33.3% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	0.75%
Applicable Margin for Base Rate Loans | Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	0.50%
Applicable Margin for Base Rate Loans | Greater than or Equal to 66.7% of the Line Cap
Line Of Credit Facility [Line Items]
Applicable Margin Rate for Loans based on Average Historical Excess Availability	0.25%

v3.24.1.1.u2

Senior Secured Credit Facilities - Applicable Margin for Adjusted Term SOFR Loans and Base Rate Loans based on Average Historical Excess Availability (Parenthetical) (Details) - Amended Revolving Credit Facility	3 Months Ended
	May 04, 2024
Less than 33.3% of the Line Cap | Applicable Margin for Term SOFR Loans | Maximum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	33.30%
Less than 33.3% of the Line Cap | Applicable Margin for Base Rate Loans | Maximum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	33.30%
Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap | Applicable Margin for Term SOFR Loans | Maximum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	66.70%
Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap | Applicable Margin for Term SOFR Loans | Minimum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	33.30%
Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap | Applicable Margin for Base Rate Loans | Maximum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	66.70%
Less than 66.7% but Greater than or Equal to 33.3% of the Line Cap | Applicable Margin for Base Rate Loans | Minimum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	33.30%
Greater than or Equal to 66.7% of the Line Cap | Applicable Margin for Term SOFR Loans | Minimum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	66.70%
Greater than or Equal to 66.7% of the Line Cap | Applicable Margin for Base Rate Loans | Minimum
Line Of Credit Facility [Line Items]
Percentage of average historical excess availability of loans	66.70%

v3.24.1.1.u2

Derivative Instruments - Additional Information (Details) - USD ($) $ in Thousands	3 Months Ended		12 Months Ended
	May 04, 2024	Apr. 29, 2023	Feb. 03, 2024
Derivative [Line Items]
Unrealized gain (loss) on derivatives	$ 6,372	$ (984)
Cash Flow Hedging [Member]
Derivative [Line Items]
Pre-tax gain (loss) deferred in reclassified to interest expense	1,100	$ (600)
Unrealized gains (losses) included in AOCI, before tax	5,100		$ (2,200)
Unrealized gain (loss) on derivatives	3,900		$ (1,700)
Estimated losses on interest rate caps deferred in AOCI reclassified to interest expense	$ 2,300

v3.24.1.1.u2

Derivative Instruments - Summary of Cash Flow Hedges Reflected in Consolidated Balance Sheets (Details) - Cash Flow Hedging [Member] - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024
Derivative [Line Items]
Current asset portion of cash flow hedges	$ 3,703	$ 2,259
Derivative Asset, Current, Statement of Financial Position [Extensible Enumeration]	Other Assets Current	Other Assets Current
Non-current asset portion of cash flow hedges	$ 2,643
Derivative Asset, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Assets Noncurrent	Other Assets Noncurrent
Current liability portion of cash flow hedges		$ (124)
Derivative Liability, Current, Statement of Financial Position [Extensible Enumeration]	Accrued Liabilities Current	Accrued Liabilities Current
Non-current liability portion of cash flow hedges		$ (3,067)
Derivative Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration]	Other Liabilities Noncurrent	Other Liabilities Noncurrent
Total cash flow hedges	$ 6,346	$ (932)

v3.24.1.1.u2

Fair Value Measurements - Schedule of Information About Assets and Liabilities Measured at Fair Value on Recurring Basis (Details) - Recurring - USD ($) $ in Thousands	May 04, 2024	Feb. 03, 2024
Level 1 | Money Market Mutual Funds
Assets (liabilities):
Asset fair value	$ 33,888	$ 80,186
Level 1 | Investments of Officers' Life Insurance
Assets (liabilities):
Asset fair value	0	0
Level 2 | Money Market Mutual Funds
Assets (liabilities):
Asset fair value	0	0
Level 2 | Investments of Officers' Life Insurance
Assets (liabilities):
Asset fair value	15,493	14,945
Level 3 | Money Market Mutual Funds
Assets (liabilities):
Asset fair value	0	0
Level 3 | Investments of Officers' Life Insurance
Assets (liabilities):
Asset fair value	0	0
Non-qualified Deferred Compensation Plan | Level 1
Assets (liabilities):
Liabilities fair value	0	0
Non-qualified Deferred Compensation Plan | Level 2
Assets (liabilities):
Liabilities fair value	(21,095)	(20,355)
Non-qualified Deferred Compensation Plan | Level 3
Assets (liabilities):
Liabilities fair value	$ 0	$ 0

v3.24.1.1.u2

Fair Value Measurements - Additional Information (Details)	3 Months Ended
	May 04, 2024 USD ($)	Apr. 29, 2023 USD ($)	Feb. 03, 2024 USD ($)
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Net proceeds from sale of common stock	$ 998,000	$ 0
Impairment of fixed asset and right-of-use asset	$ 3,500,000	$ 100,000
Discount Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Percentage of revenue projections	14.2
Terminal Growth Rate
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Percentage of revenue projections	3
Trade Name
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Trade name impairment charge, recorded	$ 0
Cash and Cash Equivalents
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market mutual funds	33,800,000		$ 69,600,000
Restricted Cash | Other Current Assets
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Money market mutual funds	$ 100,000		$ 10,600,000

v3.24.1.1.u2

Stockholders' Equity - Summary of Equity-based Compensation Expense by Award Type (Details) - USD ($) $ in Thousands	3 Months Ended
	May 04, 2024	Apr. 29, 2023
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	$ 17,434	$ 22,129
RSUs and RSAs
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	10,722	14,496
Employee Stock Option
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	5,553	5,085
ESPP
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	320	432
Other Awards
Employee Service Share Based Compensation Allocation Of Recognized Period Costs [Line Items]
Total equity-based compensation expense	$ 839	$ 2,116

v3.24.1.1.u2

Stockholders' Equity - Schedule of Nonvested Share Activity (Details) - 2021 Equity Incentive Plan shares in Thousands, $ in Thousands	3 Months Ended
	May 04, 2024 USD ($) shares
RSUs and RSAs
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Nonvested/outstanding, February 3, 2024	9,618
Granted	10,218
Vested and delivered/exercised	(2,144)
Forfeited/expired	(1,631)
Nonvested/outstanding, May 4, 2024	16,061
Unrecognized compensation expense as of May 4, 2024 | $	$ 60,199
Weighted average remaining expense period as of May 4, 2024	1 year 10 months 24 days
Employee Stock Option
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Options outstanding, February 3, 2024	6,310
Granted	7,407
Forfeited/expired	(292)
Options outstanding, May 4, 2024	13,425
Unrecognized compensation expense as of May 4, 2024 | $	$ 7,548
Weighted average remaining expense period as of May 4, 2024	9 months 18 days

v3.24.1.1.u2

Stockholders' Equity - Additional Information (Details) $ in Millions	3 Months Ended
	May 04, 2024 USD ($) shares
2016 Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Number of additional shares awarded | shares	0
Unrecognized compensation expense related to the unvested portion | $	$ 1.2
Unrecognized compensation expense, expected to be recognized over weighted average period	1 year
Class A Common Stock
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Employee stock purchase plan maximum percentage of earnings to purchase shares by eligible participants	15.00%
Purchase price as a percentage of the lesser of the market value of such shares at either the lookback date or last day of related purchase period	85.00%
Class A Common Stock | 2016 Incentive Plan
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Threshold percentage of direct and indirect holdings of common stock	90.00%

v3.24.1.1.u2

Stockholders' Equity - Schedule of Series C Unit Activity Under 2016 Incentive Plan (Details) - 2016 Incentive Plan	3 Months Ended
	May 04, 2024 shares
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Outstanding, February 3, 2024	198,145,000
Granted	0
Forfeited	(4,402,000)
Outstanding, May 4, 2024	193,743,000
Vested, May 4, 2024	188,143,000

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