CHWY's Vet Care Expansion Strengthens Its High-Margin Health Business

Chewy, Inc.’s CHWY continued expansion in veterinary services is reinforcing the strength of its high-margin health business and supporting long-term profitability growth. Through Chewy Vet Care (“CVC”), the company is building a differentiated pet healthcare ecosystem that extends beyond retail and deepens customer engagement.

The company opened 10 Vet Care practices in fiscal 2025, reaching the high end of its planned range and bringing its total footprint to 18 locations across five states. Management highlighted that performance continues to exceed expectations, supported by strong utilization and consistently high customer and veterinarian satisfaction scores. This strong early traction validates the scalability of the clinic model and reflects rising demand for integrated pet healthcare services.

Importantly, Vet Care is emerging as a major customer value driver. Management noted that CVC serves as both a customer acquisition engine and an engagement flywheel, helping deepen relationships with high-value pet parents. Notably, the business is now the fastest NSPAC (net sales per active customer) compounder across Chewy’s platform, underscoring its ability to drive higher customer spending and retention.

The expansion is also contributing to profitability. Chewy’s growing mix of health and wellness offerings supported gross margin expansion to 29.4% in fourth-quarter fiscal 2025, up 90 basis points year over year. Health-related services, including Vet Care, remain structurally higher-margin than the core retail business, making them a key lever for long-term earnings growth.

Looking ahead, management expects veterinary care to remain a key pillar of value creation. Chewy’s fiscal 2026 guidance of $13.6-$13.75 billion in net sales, indicating 8-9% year-over-year growth, along with the adjusted EBITDA margin guidance of 6.6-6.8%, implies continued contribution from high-margin health categories. With ongoing expansion and deeper ecosystem integration, Vet Care is poised to further enhance growth and profitability.

How Do BARK & WOOF Stack Up Against CHWY’s Margin Growth

Chewy's margin has outperformed those of its key competitors, including BARK, Inc. BARK and Petco Health and Wellness Company, Inc. WOOF.

BARK reported third-quarter fiscal 2026 gross profit of $61.6 million, down 22.3% year over year. The gross margin stood at 62.5% versus 62.7% in the prior-year period, with the slight decline primarily driven by revenue mix. Despite this, both DTC and Commerce gross margins improved sequentially and year over year, reflecting solid operational execution by BARK.

Petco Health and Wellness reported fourth-quarter fiscal 2025 gross profit of $581 million, down 1.4% year over year, whereas the gross margin expanded 37 basis points to 38.3%. The improvement was supported by pricing, promotional discipline and mix benefits, reflecting continued progress in profitability initiatives by Petco Health and Wellness.

CHWY’s Price Performance, Valuation & Estimates

Shares of Chewy have lost 21.2% in the past year against the industry’s growth of 6.9%.

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From a valuation standpoint, CHWY trades at a trailing price-to-sales ratio of 0.79X, below the industry’s average of 1.79X. It has a Value Score of A.

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The Zacks Consensus Estimate for CHWY’s fiscal 2026 earnings implies year-over-year growth of 27.6%, whereas the same for fiscal 2027 indicates an uptick of 23%. Estimates for fiscal 2026 and 2027 have been revised upward by 5 cents and 7 cents, respectively, in the past 30 days.

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CHWY currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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