Key Takeaways
- Chewy (CHWY) stock climbed approximately 13% following the announcement of 2026 revenue projections between $13.6B and $13.75B, surpassing analyst expectations
- Fourth-quarter revenue reached $3.26 billion, representing an 8.1% increase when accounting for the additional week in the prior year’s quarter
- The company’s active customer base expanded 4% to reach 21.3 million, while average revenue per active customer increased 2.2% to $591
- The pet retailer anticipates artificial intelligence initiatives will generate over $50M in annual cost reductions by 2027, with initial benefits of “low tens of millions” projected for 2026
- The Chewy Vet Care division has expanded to 18 facilities and represents the company’s fastest-expanding segment measured by sales per active customer
Chewy delivered fourth-quarter financial results on Wednesday that essentially aligned with analyst projections, but the company’s forward-looking 2026 guidance captured investor attention and drove significant stock movement.
The online pet products company projected full-year 2026 revenue ranging from $13.6 billion to $13.75 billion. This forecast exceeded the Wall Street consensus estimate of $13.58 billion, propelling shares upward by approximately 13% during the trading session to settle near $26.50.
Fourth-quarter revenue totaled $3.26 billion, reflecting a 0.5% increase on a reported basis and an 8.1% gain after adjusting for the calendar difference from the previous year’s comparable period. This figure met analyst expectations. The company’s gross margin expanded by 90 basis points to reach 29.4%, while adjusted EBITDA increased from $124.5 million to $162.3 million.
Adjusted earnings per share registered at $0.27, falling one cent short of the $0.28 consensus estimate. On a GAAP basis, net income reached $39.2 million, or $0.09 per diluted share, compared to $22.8 million in the year-ago period.
The active customer count increased 4% year-over-year to 21.3 million. Average net sales per active customer rose 2.2% to $591. Chief Executive Officer Sumit Singh highlighted that pet parents are increasingly viewing their animals as family members and upgrading to higher-quality products — a behavioral shift he anticipates will persist.
Chief Financial Officer Chris Deppe clarified that the 2026 revenue guidance assumes no pricing inflation tailwinds. Instead, projected growth will be driven by attracting new customers and encouraging increased spending among the existing customer base.
Artificial Intelligence Driving Operational Efficiency
Chewy has spent multiple quarters establishing its artificial intelligence capabilities and is now beginning to implement these technologies throughout its operations, including customer service functions, logistics networks, and distribution facilities.
Singh indicated that AI-powered operational improvements should contribute benefits in the “low tens of millions” during 2026, escalating to approximately $50 million or greater in annualized savings by 2027. The company is simultaneously scaling operations at its advanced fulfillment facility in Houston as another component of its comprehensive cost-optimization strategy.
For the first quarter of 2026, Chewy provided guidance calling for revenue between $3.33 billion and $3.36 billion, with adjusted EPS ranging from $0.40 to $0.45, generally consistent with analyst forecasts.
Veterinary Services Business Gaining Traction
Chewy Vet Care established 10 additional clinics during fiscal 2025, expanding its network to 18 total locations. CVC presently operates across five states, with ambitions for nationwide coverage.
Singh reported that CVC performance is surpassing internal projections regarding customer satisfaction metrics and is serving as an effective customer acquisition channel that deepens relationships with valuable consumers. Management characterized the division as the fastest-expanding business unit when measured by net sales per active customer.
The company also finalized its acquisition of SmartEquine, a platform focused on equine health services. This transaction is anticipated to contribute approximately $80 million in net sales during 2026 — representing less than 1% of consolidated revenue, though it demonstrates strategic diversification beyond conventional companion animals.
Notwithstanding Wednesday’s sharp rally, Chewy stock has declined nearly 20% over the trailing twelve months and continues trading substantially below its 52-week peak of $48.62.
