Shares of Petco Health and Wellness Company, Inc. (WOOF) soared 21.67% in after-hours trading on Thursday, 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 155.56% increase compared to 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 by 0.26%, the company's ability to improve profitability in a challenging retail landscape impressed investors.
The company's turnaround efforts, led by CEO Joel Anderson, are showing signs of progress. 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.
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, and 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. However, comparable sales decreased by 1.4% year-over-year, indicating that Petco still faces challenges in driving top-line growth.
Looking ahead, Petco maintained its full-year net sales outlook but cautioned that it expects third-quarter net sales to be down in the low single digits year-over-year. Despite this near-term headwind, the market's enthusiastic response suggests that investors are focusing on Petco's ability to navigate the current retail environment successfully and its potential for long-term growth in the pet care industry.