What impacted Chewy's operating profit in Q2 2025?

Chewy's operating profit in Q2 2025 was impacted by several key factors:

1. **Cost of Goods Sold (COGS)**: The increase in COGS from $8.0 billion in the previous year to $8.4 billion was a significant contributor to the decline in gross profit margin, which narrowed from 28.4% to 28.2%. This rise in COGS, primarily due to higher product and shipping costs, directly affected the company's operating profit.
2. **Operating Expenses**: Chewy's operating expenses fell from 28.9% of revenue to 28.4%. While this improvement of 50 basis points indicated better operating efficiencies, the absolute amount of operating expenses remained a significant expense, impacting the overall operating profit.
3. **Gross Margin Expansion**: Although Chewy achieved strong margin expansion, with a 120 basis point increase in gross margin to 29.5%, this improvement was partly offset by the need to invest in marketing and fulfillment costs, which increased to $804.1 million. This investment was necessary to support the company's growth and maintain its competitive edge but had a dampening effect on operating profit.
4. **Inflationary Pressures**: As Chewy noted, high inflation was influencing consumer behavior, causing customers to become more discerning about where they shop. This shift in consumer mindset, coupled with increased pricing pressures, likely impacted the company's operating profit margin.

In summary, while Chewy made strides in improving its gross margin and operating efficiencies, the rise in COGS, increased operating expenses, and the strategic investments to counter inflationary pressures collectively impacted its operating profit in Q2 2025.