Shares of Petco Health and Wellness Company, Inc. (WOOF) soared 18.89% in pre-market trading on Friday, following the release of the company's second-quarter 2025 financial results. The pet retailer delivered a surprising earnings beat and raised its full-year earnings outlook, despite facing challenges in the current economic environment.

Petco reported quarterly earnings of $0.05 per share, significantly outperforming analyst expectations of a $0.01 loss. This represents a remarkable turnaround from the $0.09 loss per share reported in the same period last year. While quarterly sales of $1.489 billion slightly missed the analyst consensus estimate of $1.493 billion, the company's ability to improve profitability in a challenging retail landscape impressed investors.

Key highlights from the quarter include: - A 120 basis point expansion in gross profit margin to 39.3% - A $41 million year-over-year increase in operating income to $43 million - A $30 million rise in adjusted EBITDA to $114 million These improvements demonstrate the company's success in implementing cost-saving measures and optimizing its operations.

Petco raised its full-year adjusted EBITDA guidance to $385 million–$395 million, up from the previous outlook of $375 million to $390 million. This increase in guidance, coupled with the company's focus on strengthening its economic model and improving retail operating fundamentals, has boosted investor confidence in Petco's long-term prospects.

CEO Joel Anderson commented, "The first half of this year established a solid foundation for our transformation as we continued to strengthen our economic model and improve retail operating fundamentals." This statement suggests that the company's turnaround efforts are gaining traction, which is likely contributing to the positive market reaction.