Chewy, Inc.

Chewy reported Q1 fiscal 2026 net sales of approximately $3.36 billion, up 7.7% year over year. Adjusted diluted EPS was $0.43, adjusted net income was approximately $180 million, adjusted EBITDA was approximately $253 million, and adjusted EBITDA margin was 7.5%, up about 130 basis points year over year. Gross margin was 30.1%, up about 50 basis points year over year, and free cash flow was approximately $71 million, up over 45% year over year. For Q2, the company expects net sales of $3.30 billion to $3.33 billion, adjusted EBITDA margin of 6.3% to 6.4%, and adjusted diluted EPS of about $0.36. For full year fiscal 2026, Chewy now expects net sales of $13.40 billion to $13.55 billion and maintained adjusted EBITDA margin guidance of 6.6% to 6.8%, implying about $900 million of adjusted EBITDA at the midpoint.

Sumit Singh framed the quarter as evidence that Chewy’s model remains durable, with share gains, recurring revenue strength, and expanding profitability despite a weaker consumer backdrop. He emphasized structural advantages in Autoship, health, AI, fulfillment, and customer experience, and repeatedly argued that the company is gaining share in a resilient pet category. His tone was confident but more cautious on near-term demand, acknowledging softer premiumization and attachment trends while saying the long-term growth and margin algorithm remains unchanged.

Chris Deppe highlighted Q1 net sales of about $3.36 billion, gross margin of 30.1%, non-GAAP SG&A of about $593 million, adjusted EBITDA of about $253 million, and free cash flow of about $71 million. He said Q1 free cash flow reflected about $109 million of operating cash flow and $38 million of capex, and noted roughly $200 million of share repurchases during the quarter. He also said Chewy ended the quarter with about $520 million of cash, cash equivalents, and marketable securities, over $1 billion of total available liquidity, and launched a $600 million Term Loan B, targeting net leverage below 2x adjusted EBITDA over time. On guidance, he lowered full-year sales outlook to $13.40 billion-$13.55 billion, kept EBITDA margin guidance at 6.6%-6.8%, and said weighted average diluted shares are now expected to be about 420 million, down 5 million.

Analysts focused heavily on the softer consumer backdrop, asking whether the revenue reset was macro-driven versus share loss, and whether lower customer additions reflect a change in competitive behavior. Management said the pressure appears macro-related, citing weaker industry impressions, stronger Chewy clicks, solid reorder and reactivation trends, and no meaningful change in competitive intensity; they also said Amazon’s grocery push was not changing the competitive environment. Another key topic was AI savings and clinic expansion: management reaffirmed low tens of millions of AI benefit in fiscal 2026 and said the expectation for fiscal 2027 remains $50 million-plus, while CVC/Modern Animal will reach roughly 60 clinics exiting fiscal 2026 with 10 to 12 new openings still planned for the year.