Petco Health and Wellness Company, Inc. (WOOF) shares surged 5.33% in pre-market trading on Thursday following the release of its fourth-quarter financial results. The pet retailer reported better-than-expected revenue and outlined strategies to improve profitability, sparking investor optimism.

The company posted Q4 sales of $1.60 billion, surpassing analysts' estimates of $1.56 billion. Petco's gross margin saw a significant improvement, increasing by 1,180 basis points to 38%. The adjusted EBITDA came in at $96.1 million, with a margin rate of 6.2%, exceeding expectations. These strong financial results demonstrate Petco's resilience in a challenging retail environment.

Looking ahead, Petco is focusing on enhancing profitability through various initiatives. The company plans to close 20 to 30 underperforming stores in 2025, following the closure of 25 locations in 2024. Additionally, Petco is optimizing its product assortment, allocating more shelf space to top-selling brands, and improving its omnichannel capabilities. While the company expects overall net sales to decline by low single digits in 2025, its emphasis on cost control and operational improvements is aimed at boosting long-term profitability and shareholder value.