Shares of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) plummeted 8.29% in pre-market trading on Friday, extending the previous day's after-hours decline. The sharp drop comes in the wake of the company's disappointing first-quarter 2025 financial results and weak guidance for the second quarter, which has raised concerns among investors about the pet retailer's growth trajectory in a challenging economic environment.

Petco reported quarterly sales of $1.49 billion, falling short of analyst estimates of $1.50 billion and marking a 2.3% decrease from the same period last year. The company's comparable sales declined by 1.3% year-over-year, indicating significant challenges in maintaining growth momentum. Petco posted a net loss of $0.04 per share, meeting analyst expectations but failing to show improvement from the previous year. CEO Joel Anderson acknowledged the company's ongoing turnaround efforts, stating, "From your guys' perspective on the outside, you would say we haven't even started. You haven't seen it. But I'll tell you, inside, we're already beginning to identify several levers of growth."

Adding to investor concerns, Petco provided a weak outlook for the second quarter of 2025, expecting Q2 net sales to decline in the low single digits year-over-year. The company also revealed that its direct exposure to tariffs is slightly higher than previously indicated, with 7% of its Petco-branded inventory sourced from China, Canada, and Mexico, up from the 5% reported in March. Despite these challenges, Petco reaffirmed its full-year 2025 outlook, maintaining a cautiously optimistic stance for the longer term. However, the market's negative reaction suggests that investors remain skeptical about the company's ability to navigate the current retail landscape and return to growth in the coming quarters.