Shares of Petco Health and Wellness Company, Inc. (NASDAQ: WOOF) plummeted 9.94% in after-hours trading on Thursday 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, 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. Comparable sales decreased by 1.3% year-over-year, indicating challenges in maintaining growth momentum. The company posted a net loss of $0.04 per share, which met analyst expectations but failed 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 these challenges, Petco reaffirmed its full-year 2025 outlook, maintaining a cautiously optimistic stance for the longer term.

CEO Joel Anderson commented on the results, stating, "We are pleased to deliver first quarter earnings results ahead of our guidance and to reaffirm our outlook for fiscal 2025, which now incorporates the impact of tariffs. This performance is a testament to the execution of our nearly 30,000 team members and the resilience of the category in which we operate." 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.