Shares of Petco Health and Wellness Company, Inc. (WOOF) surged 12.46% in Tuesday's trading session following the release of its better-than-expected third-quarter earnings report for 2025. The pet retailer demonstrated resilience in a challenging market, surprising investors with positive financial results and an improved outlook.

Petco reported earnings per share of $0.03 for the third quarter, significantly beating the analyst consensus estimate of $0.00. This marks a substantial turnaround from the $0.02 loss per share reported in the same period last year. While revenue came in at $1.5 billion, slightly below the estimated $1.473 billion and representing a 3.1% year-over-year decrease, the company showed improvements in other key financial metrics. Notably, Petco's gross profit margin increased by approximately 0.8 percentage points to 38.9%, and operating income rose by $25.2 million to $29.2 million.

Investors responded positively to Petco's strategic initiatives and improved outlook. The company announced plans to close about 20 stores in fiscal year 2025 as part of its ongoing efforts to optimize its retail footprint. Additionally, Petco revised its fiscal 2025 earnings outlook upward, signaling confidence in its multi-phased transformation strategy focused on enhancing profitability. Despite a 2.2% decline in comparable sales, the market appears to be betting on the company's ability to navigate challenges and drive long-term growth in the competitive pet care sector.