Key Takeaways
- Chewy shares climbed approximately 13% following the announcement of 2026 revenue projections between $13.6B and $13.75B, surpassing Wall Street expectations
- Fourth-quarter revenue reached $3.26 billion, representing an 8.1% increase when accounting for an additional week in the prior-year period
- The company’s active customer base expanded 4% to reach 21.3 million, while average revenue per customer increased 2.2% to $591
- Management anticipates artificial intelligence initiatives will generate over $50 million in annual cost reductions by 2027, with initial savings in the “low tens of millions” projected for 2026
- The Chewy Vet Care division has expanded to 18 facilities and represents the company’s fastest-growing category on a per-customer revenue basis
Chewy delivered fourth-quarter financial results on Wednesday that aligned closely with analyst projections, though it was the company’s forward-looking 2026 guidance that captured investor attention.
The online pet retailer projected full-year 2026 revenue in the range of $13.6 billion to $13.75 billion. This forecast exceeded the Street consensus estimate of $13.58 billion, triggering a sharp rally that lifted shares approximately 13% during Wednesday’s session to settle near $26.50.
Fourth-quarter revenue totaled $3.26 billion, reflecting a modest 0.5% increase on an as-reported basis but climbing 8.1% after normalizing for the calendar shift that added an extra week to last year’s comparison period. The figure met analyst expectations. Gross profit margin expanded by 90 basis points to 29.4%, while adjusted EBITDA improved from $124.5 million to $162.3 million year-over-year.
Adjusted earnings per share reached $0.27, falling just one cent short of the consensus estimate of $0.28. On a GAAP basis, net income came in at $39.2 million, or $0.09 per diluted share, compared to $22.8 million in the year-ago quarter.
The company’s active customer count increased 4% year-over-year to 21.3 million. Net sales per active customer rose 2.2% to $591. CEO Sumit Singh highlighted that pet parents are increasingly viewing their animals as family members and upgrading to higher-quality product offerings — a behavioral shift management expects to persist.
CFO Chris Deppe emphasized that the 2026 revenue outlook assumes no contribution from price increases. Instead, the company expects growth to be driven by both new customer acquisition and expanded wallet share from its existing base.
Artificial Intelligence Driving Operational Efficiency
Chewy has been investing in artificial intelligence capabilities over recent quarters and is now beginning to implement these technologies across multiple areas of the business, including customer service operations, supply chain management, and warehouse fulfillment.
Singh indicated that AI-enabled improvements should contribute savings in the “low tens of millions” during 2026, scaling to approximately $50 million or higher in annualized benefits by 2027. The company is simultaneously bringing online its advanced fulfillment facility in Houston, which forms part of its comprehensive cost optimization strategy.
For the first quarter of fiscal 2026, Chewy provided revenue guidance of $3.33 billion to $3.36 billion alongside adjusted earnings per share of $0.40 to $0.45, figures that generally matched analyst expectations.
Veterinary Care Footprint Grows
Chewy Vet Care launched 10 additional clinic locations throughout fiscal 2025, expanding its network to 18 total practices. CVC currently maintains a presence across five states, with ambitions for nationwide rollout.
Singh reported that CVC performance is outpacing internal projections in terms of customer satisfaction metrics and is proving effective as both an acquisition channel and a retention mechanism for the company’s most valuable customers. Management characterized the veterinary segment as delivering the strongest growth in net sales per active customer across all business lines.
The company also finalized its purchase of SmartEquine, a digital platform serving the equine health market. This transaction is expected to contribute approximately $80 million in net sales during 2026 — representing less than 1% of consolidated revenue, though it demonstrates strategic intent to diversify beyond conventional companion animals.
Notwithstanding Wednesday’s strong performance, Chewy stock has declined nearly 20% over the trailing twelve-month period and continues trading substantially below its 52-week peak of $48.62.
