A class action lawsuit was filed against Petco Health and Wellness Company (WOOF) by Levi & Korsinsky on June 30, 2025. The plaintiffs (shareholders) alleged that they bought WOOF stock at artificially inflated prices between January 14, 2021, and June 5, 2025 (Class Period) and are now seeking compensation for their financial losses. Investors who bought Petco Health stock during that period can click here to learn about joining the lawsuit.
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Petco Health and Wellness is a specialty retailer in the pet industry, offering products, services, and solutions for pet lovers. The company operates both brick-and-mortar stores and an online platform. Recently, Petco has opened more than 100 in-store veterinary hospitals.
During the COVID-19 pandemic, Petco focused on selling primarily premium and high-grade pet food, capitalizing on the surge in pet-related spending. The company’s claims about these pandemic-related tailwinds and differentiated product strategy are alleged to be overstated and are at the heart of the current complaint.
Petco Health’s Misleading Claims
According to the lawsuit, Petco and six of its current and/or former senior officers and/or directors (the Defendants) repeatedly made false and misleading public statements throughout the Class Period. In particular, they are accused of omitting truthful information about the effects of “pandemic-related tailwinds” on its business, and the efficacy of certain business strategies, from SEC filings and related material.
During the Class Period, the defendants repeatedly highlighted Petco’s pet care ecosystem and the competitive advantage created by the company’s digitally-led, multichannel experience. In a press release dated March 8, 2022, Petco’s former CEO stated that the company’s focus on long-term, sustainable growth, supported by consistent execution amid strategic growth opportunities, was yielding positive results. For Fiscal Year 2022, Petco began the year in a stronger position than before.
Additionally, Petco experienced another strong year in Fiscal 2022, backed by demand for its differentiated merchandise. The CEO added, “The addition of exclusive and formerly independent only store brands such as Backcountry and Stella & Chewy’s, have been powerful in driving our premium mix and accessing new customers.”
Finally, in its annual report for Fiscal 2023, Petco noted a softening in discretionary spending and a shift in consumer preferences toward more value-centric products, driven by the inflationary macroeconomic environment. To address this challenge, Petco expanded its assortment to include more national brands and implemented strategic pricing actions to provide more balanced price points, aiming to appeal to a broader consumer base.
However, subsequent events (detailed below) reveal that the defendants failed to inform investors that the company’s pandemic-related tailwinds were unsustainable. Moreover, the defendants downplayed the true scope and severity of the foregoing issues, the magnitude of changes needed to rectify those issues, and the likely negative impacts of their mitigation strategy on Petco’s comparable sales metric.
Plaintiffs’ Arguments
The plaintiffs maintain that the defendants deceived investors by lying and withholding critical information about the business practices and prospects during the Class Period. Importantly, the defendants are accused of misleading investors about Petco’s ability to deliver sustainable and profitable growth in the years to come.
The information became clear through a series of partial disclosures. The final truth emerged on June 5, 2025, when Petco released disappointing results for the first quarter of fiscal 2025. Petco reported a 1.3% year-over-year decline in comparable sales, significantly larger than the 0.6% decline that Wall Street had estimated. Following the news, WOOF stock fell 23.2% the same day.
Following the results, several analysts expressed concerns about Petco’s declining comparable sales and market share in the wake of the company’s “profitability-focused turnaround plan.”
To conclude, the defendants failed to inform investors about the unsustainability of Petco’s pandemic-related tailwinds and overstated the company’s ability to deliver sustainable, profitable growth. Due to these issues, WOOF stock has lost over 9.5% so far this year.
