Shares of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) are experiencing a significant pre-market plunge of 8.29% on Friday, following the release of its first-quarter 2025 financial results and disappointing guidance for the second quarter. The pet retailer's performance fell short of market expectations, raising concerns about its growth trajectory in a challenging economic environment.

Petco reported quarterly sales of $1.49 billion, slightly missing analyst estimates of $1.50 billion and marking a 2.3% decrease from the $1.53 billion reported in the same period last year. More concerning was the 1.3% year-over-year decline in comparable sales, which was worse than the 0.6% decline estimated by Wall Street. The company posted a net loss of $0.04 per share, meeting analyst expectations but failing to show improvement from the same quarter last year.

Adding to investor concerns, Petco provided a weak outlook for the second quarter of 2025. The company expects Q2 net sales to decline in the low single digits year-over-year, with adjusted EBITDA projected between $92 million and $94 million. This guidance suggests continued pressure on the company's top-line growth and profitability, despite ongoing turnaround efforts led by CEO Joel Anderson, who joined the company last summer.

Anderson acknowledged the challenges faced by the company during the earnings call, 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." However, the market's negative reaction suggests that investors may be skeptical about the company's ability to navigate the current retail landscape and return to growth in the coming quarters. Despite these challenges, Petco reaffirmed its full-year 2025 outlook, maintaining a cautiously optimistic stance for the longer term.