Petco’s in the Doghouse After Closing 30 Stores and Losing Share to Amazon/Walmart

On my second day skiing as a teenager, I made the rookie mistake of trying a black diamond slope. No training, no grace…  just a chaotic, flailing tumble that ended with snow in places snow should never be (if you’re catching my drift). That’s exactly what Petco’s stock chart looks like right now: a black diamond free fall with no end in sight.

Shares of Petco Health and Wellness plunged 24.1% after the company dropped a Q1 earnings report that felt more like a vet bill… painful and full of bad news. The stock closed the day at $2.78, a new low that had investors howling. And honestly, the ticker symbol WOOF has never felt more accurate.

Technically, Petco beat expectations on adjusted EBITDA and earnings per share. Sounds good, right? Not so fast. The company’s guidance for Q2 was a big letdown, calling for more revenue declines and soft demand recovery. In plain English: sales are still slipping, and management doesn’t see a quick rebound coming. Net sales fell 2.3% year-over-year, same-store sales dipped 1.3%, and they’ve closed 30 stores over the past year… including five in just the last quarter.

Part of this slide is thanks to big dogs like Chewy and Amazon. They’ve built faster, cheaper, and way more convenient ways for pet parents to get their hands on food, toys, and meds… no leash or drive to the store required. And when you toss in the pricing pressure from Walmart and other mass merchandisers, Petco is stuck trying to fetch customers in an ultra-competitive, low-margin market.

Analysts aren’t exactly wagging their tails either (can't stop won't stop with the puns). Bank of America’s Kendall Toscano reiterated a Sell rating and dropped a $2.50 price target on the stock. While Petco has made some progress on cost control, Toscano warned about the company’s weak sales trends, slow vet hospital expansion, and ongoing threat of market share loss to online rivals. Basically, unless you see a major turnaround somehow, this is one stock to keep in the crate.

I know this kind of price collapse can sometimes smell like opportunity. But be careful… Petco’s stock is notoriously volatile, with 72 moves greater than 5% over the past year (which is insane). Two months ago, the stock jumped 35% after a solid Q4 earnings report and upbeat guidance. That optimism is now MIA.

Year-to-date, Petco is down 31.5%, and the stock is trading 51% below its 52-week high of $5.77. To put that in perspective, if you bought $1,000 worth of Petco at its IPO in 2021, you’d be looking at… $95.58 today. While this could definitely be the bottom… until Petco proves it can compete with Amazon’s convenience, Chewy’s loyalty, and Walmart’s pricing, I’m not buying the turnaround.

At the time this article was published Stocks.News holds positions in Amazon as mentioned in this article.