A class action lawsuit filed in the Southern District of California alleges that Petco Health and Wellness Company, Inc. misled investors by overstating the longevity of pandemic-driven growth and its ability to capitalize on pet humanization and premiumization trends. The suit covers investors who acquired Petco securities between Jan. 14, 2021, and June 5, 2025.
Filed by Pomerantz LLP, the complaint contends that Petco executives repeatedly emphasized the enduring nature of growth drivers fueled by the COVID-19 pandemic, including surging pet ownership rates and an influx of younger, health-conscious consumers willing to spend more on premium pet food and services. Petco positioned itself as a wellness-focused pet company capable of delivering consistent, profitable growth, largely through sales of healthy, high-grade pet foods and in-store services like grooming and veterinary care.
At the heart of the complaint are claims that Petco’s business strategy was overly reliant on the assumption that pandemic-era consumer behavior would persist. While the initial surge in pet ownership created strong tailwinds—reflected in rising same-store sales and a valuation bump following its IPO in early 2021—plaintiffs allege that executives failed to adequately warn investors when these trends began to unwind in 2023.
The complaint further asserts that company officials overstated Petco’s ability to retain market share and premium margins amid a broader consumer pullback. Petco reaffirmed its FY2023 earnings guidance in May 2023 despite a decline in profitability, which plaintiffs argue misled investors about the viability of its model as economic pressures mounted.
Petco had leaned into humanization and premiumization trends as central to its brand positioning, mirroring a broader industry shift. Consumers increasingly treated pets as family, fueling demand for natural and functional ingredients, veterinary-grade nutrition, and expanded in-store healthcare offerings. However, the lawsuit alleges that these trends were not robust enough to support Petco’s growth projections absent the temporary boost from pandemic conditions.
The class action seeks damages under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. Investors have until Aug. 29, 2025, to petition the court for lead plaintiff status.
For pet food manufacturers and retailers, the case underscores the risks of over-indexing on temporary demand spikes and overestimating the long-term elasticity of premium pet product spending. The outcome may have implications across the industry as players assess how to balance high-margin offerings with the more price-sensitive post-pandemic consumer base.
