Chewy (CHWY) Beats on Profit Even as Pet Spending Stays Soft

Chewy (CHWY) and Petco (WOOF) reported stronger sales in cat products and weaker dog-related sales. General Mills (GIS) saw similar trends, with cat food sales up and dog food down. Cat ownership grew faster than dog ownership, with cats costing less overall. Chewy's Q2 sales rose 7.3% YoY, and it raised full-year guidance, but its stock is down 43.72% YTD.

Chewy expects AI to reduce costs by $50M in fiscal 2027, up from low tens of millions this year. CEO Sumit Singh attributes savings to AI tools in customer service, pharmacy, and veterinary care. The company's AI assistant, Cai, handles 30% of chats without human agents. AI tools also improve internal operations and pharmacy processes. Chewy built the AI infrastructure in-house, giving it a competitive advantage. The savings will offset wage inflation and fund growth initiatives.

Chewy Inc. shares rose 6.78% to $19.06 after Goldman Sachs maintained a Buy rating but lowered its price target to $34 from $46. The company reported Q1 earnings beat but reduced its fiscal 2026 sales outlook, prompting multiple analysts to cut price targets. Chewy's stock is down 56.34% over the past year and trades near its 52-week low.

Chewy (CHWY) shares rose 6% to $21.75, despite a 34% YTD decline. The company reported 7.3% sales growth, raised full-year revenue guidance, and maintained gross margin at 30.4%. Cash decreased to $611M due to acquisitions and share buybacks. The broader pet-care sector has underperformed, with the PAWZ ETF down 10% YTD. Investors await Q3 2026 results to assess margin expansion and potential bottom.

Chewy (CHWY) reported Q2 2026 net sales of $3.33B, up 7.3%, and adjusted EPS of $0.36. The company raised its full-year outlook, but analysts downgraded the stock and cut price targets. CHWY stock fell 10% intraday after the results. Active customers rose 3.8% to 21.7M. Organic revenue growth slowed to 5.7%, and adjusted EBITDA margin benefited from non-recurring items. Analysts debate whether the slowdown is cyclical or structural.

Chewy Inc. (CHWY) reported Q2 net sales of $3.33B, up 7.3% YoY, meeting estimates. Adjusted EPS rose to $0.36, missing estimates by 1%. Gross margin remained unchanged at 30.4%, while adjusted EBITDA increased 23.7% to $226.7M. Chewy raised its FY26 revenue outlook but narrowed EBITDA margin guidance. CHWY stock fell 7% in morning trade, hitting a one-month low.