Chewy 2026 Q1 Earnings Net Income Declines 6.7%

Chewy (CHWY) reported its fiscal 2026 Q1 earnings on Jun 11th, 2025. Chewy's earnings missed analysts' expectations, reporting a net income of $62.4 million compared to the anticipated $68.9 million. However, the company exceeded revenue forecasts, achieving $3.12 billion in net sales versus the projected $3.08 billion. Despite the revenue beat, Chewy reaffirmed its full-year outlook and did not raise guidance, signaling caution. The company's adjusted EBITDA margin guidance for the full year is set at 5.4% to 5.7%.

Revenue
Chewy's revenue for 2026 Q1 grew by 8.3% to reach $3.12 billion, marking an increase from $2.88 billion in the same quarter of the previous year. The Consumables segment contributed significantly with $2.18 billion, while Hardgoods generated $342.20 million. Other categories added $595.90 million to the total, reflecting a robust performance across diverse product segments.

Earnings/Net Income
Chewy maintained a stable EPS at $0.15 for 2026 Q1, consistent with the previous year. However, the net income saw a decline of 6.7%, dropping from $66.90 million in 2025 Q1 to $62.40 million in 2026 Q1. Chewy's steady EPS suggests stable earnings despite the drop in net income.

Price Action
The stock price of Chewy edged down 2.14% during the latest trading day, tumbled 13.79% over the most recent full trading week, and climbed 3.01% month-to-date.

Post Earnings Price Action Review
The strategy of buying Chewy shares when there's a revenue miss and holding for 30 days has proven ineffective. Backtesting revealed a significant loss of -14.75%, accompanied by a Sharpe Ratio of -0.07 and a maximum drawdown of -75.57%. This data underscores the strategy's high risk and lack of returns, as it underperformed the benchmark by 51.99%. Investors faced substantial losses, highlighting the difficulty in predicting stock movements based solely on earnings results. The approach carried considerable risk without delivering the expected financial gains, emphasizing the need for more comprehensive investment strategies.

CEO Commentary
Sumit Singh - CEO & Director expressed optimism regarding Chewy's strong performance, stating, "Our Q1 results are a testament to the hard work and dedication of every Chewy team member." He highlighted that net sales grew by over 8% to $3.12 billion, driven by new and existing customer participation, particularly in the Autoship subscription program, which accounted for approximately 82% of sales. Singh emphasized the continued expansion of Chewy Vet Care practices as a strategic priority, noting that "the encouraging signs of success…remain strong." He asserted confidence in Chewy's long-term outlook, citing a targeted adjusted EBITDA margin of 10% and substantial free cash flow generation.

Guidance
Chewy expects Q2 2025 net sales to range between $3.06 billion and $3.09 billion, reflecting 7% to 8% year-over-year growth. The full-year 2025 net sales outlook is maintained at $12.3 billion to $12.45 billion, with a similar growth rate. The adjusted EBITDA margin guidance for the full year is set at 5.4% to 5.7%, and the anticipated adjusted diluted EPS for Q2 is between $0.30 and $0.35. CapEx is projected at the low end of 1.5% to 2% of net sales, with an effective tax rate expected to be in the range of 20% to 22%.

Additional News
Chewy recently announced its participation in J.P. Morgan’s 53rd Annual Global Technology, Media and Communications Conference, showcasing its strategic initiatives and future outlook. Additionally, CFO David Reeder is set to depart the company in the coming months to pursue a role in the semiconductor industry, posing potential transitional challenges. Meanwhile, Chewy has been actively buying back stock, a move that aligns with its strategic financial management goals amid rising share prices throughout the year. These developments highlight Chewy's dynamic approach to maintaining strong industry presence and adapting to leadership changes while focusing on shareholder value.