Petco relaunched its rewards program to remove friction for customers. Redemption volumes came in so far above projections that the company booked a mid-single-digit millions hit to sales. The miss traces back to a hire most loyalty teams don't have.
Petco's Q2 2026 earnings call delivered an unusual admission: the company's own loyalty program cost it money. CEO Joel Anderson told investors that after Petco Perks relaunched, customer point redemption volumes far exceeded initial projections. CFO Sabrina Simmons was more specific about the damage, pointing to a mid-single-digit millions impact on sales. Prior to the relaunch, Petco had been tracking above its second quarter outlook of 0.3% growth. It ended the quarter essentially flat.
That's a strange outcome for a program designed to do the opposite. The relaunch, effective in late June, was built to remove friction: members now earn 10 points per dollar spent on most products and 30 points per dollar on private label items, with 1,000 points redeemable for a $1 discount. Removing friction worked exactly as intended. Customers redeemed more, faster, and in volumes the company's model hadn't accounted for. Petco has since deployed guardrails on redemption velocity and believes the peak has passed, but the guardrails came after the cost was already booked, not before.
Every point a retailer issues is a liability the moment it's earned. It represents a discount the company will eventually honor, and the size of that liability depends entirely on assumptions: how many points get redeemed, how quickly, and how many simply expire unused. Get those assumptions right, and a loyalty relaunch drives engagement at a predictable cost. Get them wrong, and the exact behavior the program was designed to encourage becomes the thing that erodes the quarter.
Petco's program did exactly what its marketing brief asked: it made redemption easier and drove customers to engage with it. The miss wasn't in the marketing. It was in the financial model underneath the marketing, and in who owned pressure-testing it before launch.
We wrote in our piece on hiring a VP of Loyalty and Retention Marketing that 89% of retailers now run some form of loyalty program, and that Starbucks proved a relaunch can move the needle on earnings when it's executed well. Petco's stumble is the other side of that same coin: the tiering, personalization, and engagement strategy that a VP of Loyalty typically owns is only half of what a program relaunch needs. The other half is a financial model detailed enough to survive contact with real customer behavior, and that model usually belongs to a different skill set entirely.
| What a VP of Loyalty Marketing Owns | What a Loyalty Economics Hire Owns |
|---|---|
| Tiering, perks structure, and personalization strategy | Redemption curve forecasting based on comparable programs and transaction history |
| Campaign design and member engagement | Breakage assumptions for points that go unredeemed |
| Brand partnerships and program positioning | Stress-testing the point-to-dollar ratio against high and low redemption scenarios |
| Customer experience across the redemption journey | Live monitoring that flags redemption velocity early enough to act on it |
Most retailers have hired for the left column. Fewer have a dedicated owner for the right column, and in a lot of organizations, the responsibility sits split between a marketing analyst who understands the program mechanics and a finance team that reviews the numbers quarterly, well after the redemption behavior has already happened. Neither owns the pre-launch modeling outright, which is exactly the gap Petco's earnings call exposed. The company said it acted swiftly to add guardrails once the redemption spike was visible. A dedicated loyalty economics owner is the hire whose job is to have built those guardrails into the program before it ever went live.
The guardrail Petco added after launch is the same work a loyalty economics hire does before launch. The difference is whether the cost shows up as a modeled scenario in a planning deck or as a line item on an earnings call.
Petco isn't in a weak position overall. The company reported its second consecutive quarter of positive same-store sales growth, up 0.6% year over year, an improvement after four straight quarters of comp declines, and leadership expects the loyalty program to become a real growth catalyst once personalization capabilities mature into 2027. That context matters, because it means the redemption miss wasn't a sign the program itself was a bad idea. It was a sign the launch was underwritten by a marketing plan without an equally rigorous financial one sitting next to it.
For a retail hiring manager, the lesson isn't "don't relaunch your loyalty program." It's that a relaunch needs two owners in the room before launch, not one owner and a finance team that finds out the results at quarter-end. A Director of Pricing and Revenue Management, the hire we covered in our guide to that role, sometimes ends up absorbing this work by default, since discount economics and point economics rest on similar modeling skills. Whether that ownership sits with a pricing hire, a dedicated loyalty analytics role, or a joint mandate between marketing and finance, the requirement is the same: someone has to model the redemption curve, stress-test it, and own the monitoring, and that someone has to be in place before the program goes live, not assembled in response to a quarter that already missed.
Specialized hires like this routinely take five to twelve weeks to fill, a timeline we broke down in how long it should take to fill a commerce role in 2026. A retailer planning a loyalty relaunch for next year's peak season is already on the clock for a hire that needs to be in place well before the guardrails become urgent.
Petco relaunched its Petco Perks loyalty program in late June 2026, simplifying it so members earn 10 points per dollar on most products and 30 points per dollar on private label items, with 1,000 points redeemable for a $1 discount. On the company's Q2 2026 earnings call, CEO Joel Anderson said customer point redemption volumes far exceeded initial projections, and CFO Sabrina Simmons said the program created a mid-single-digit millions impact on sales, which came in essentially flat year over year after tracking above the quarter's 0.3% growth outlook prior to launch.
A loyalty program's points are a liability the moment they're issued, since every point represents a discount the retailer will eventually honor. Petco redesigned the program to remove friction from redemption, and members responded by redeeming points faster and in higher volumes than the company's financial model anticipated. Because the discount rate on outstanding points was underpriced relative to actual redemption behavior, the gap flowed straight through to sales, turning what should have been an engagement win into a mid-single-digit millions drag on the quarter.
A VP of Loyalty and Retention Marketing owns the customer-facing side of a program: tiering, personalization, campaign strategy, and engagement. A loyalty program economics or analytics hire owns the financial modeling underneath it: forecasting redemption curves, setting breakage assumptions, stress-testing point-to-dollar ratios, and building the monitoring that catches a redemption spike before it shows up as a sales miss. Many retailers have the first hire and not the second, which means nobody is explicitly responsible for pressure-testing the model before it goes live.
Before launch, retailers need a modeled redemption curve based on comparable programs and their own transaction data, a breakage assumption for points that will never be redeemed, a stress test of what happens if redemption comes in meaningfully above or below that curve, and live monitoring that flags redemption velocity early enough to adjust the program rather than react to a quarter that's already closed. Petco built guardrails on redemption velocity, but only after launch, which is the step that needed to happen before go-live.
Before launch. The cost of modeling a program's economics upfront is a fraction of the cost of correcting it mid-flight, and the correction still has to happen with real customers already inside the program, real financial guidance already given to investors, and a support and finance team scrambling to build the guardrails that should have existed at launch. Retailers building or relaunching a loyalty program should have this ownership in place before the redemption mechanics go live, not after the first quarter's numbers come in.