Pet Supplies grew revenue 14.8% in 2025 while expanding unit margins 1.1 points. But Q4 ad spend surged 31.9% as ROAS dropped from 5.0x to 2.7x. The brands that won combined pricing power with fulfillment discipline.
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Key takeaways
Profitable growth is possible with the right execution: Revenue grew 14.8% and unit margins expanded 1.1 percentage points, proving brands can scale without sacrificing profitability when operational fundamentals are strong
Pricing power held despite macro pressure: ASP rose 4.9% while discounts fell 3.5 percentage points, demonstrating consumer willingness to absorb cost increases for essential pet products
Fulfillment became the unlock for conversion: PO fill rate jumped 11.8 percentage points YoY and conversion improved 3.6 percentage points, making Pet Supplies the most operationally resilient category
Q4 advertising efficiency collapsed: ROAS dropped from 5.0x in September to 2.7x in December as ad spend surged 31.9%, showing holiday growth came at compressed returns
Tariffs disrupted supply chains mid-year: OOS dollar loss spiked in May and June due to aluminum packaging constraints in cat food, highlighting category-specific tariff vulnerabilities
Inventory discipline improved but gaps remain: Reported OOS rates fell 0.6 percentage points, yet total OOS dollar loss still rose 1.6%, indicating forecasting challenges on high-velocity SKUs
