Pet Owners Are Cutting Back on Treats — Chewy Sees Discretionary Spending Pressure

Chewy Inc. (NYSE:CHWY) stock fell Wednesday after the online pet retailer reported second-quarter adjusted earnings in line with Wall Street expectations, while sales came in slightly below estimates. The company also raised its full-year revenue and profitability outlook.

Chewy reported adjusted earnings of 36 cents per share, matching the consensus estimate and management’s guidance of 36 cents.

Sales rose 7.3% year over year to $3.33 billion, slightly below the $3.361 billion consensus estimate. Revenue came in at the top end of management’s $3.30 billion-$3.33 billion guidance.

Autoship Sales, Customers Grow

“The durability of our recurring revenue base, continued customer growth, and disciplined execution give us confidence to raise our full-year revenue and profitability outlook,” CEO Sumit Singh said.

Autoship customer sales rose 9.3% to $2.82 billion and accounted for 84.6% of net sales. Chewy’s Autoship program lets customers schedule recurring deliveries of pet food and other supplies.

Active customers increased 3.8% year over year to 21.705 million.

Chewy Raises 2026 Outlook

Chewy expects third-quarter sales of $3.323 billion to $3.358 billion, compared with the $3.332 billion consensus estimate. It forecast an adjusted EBITDA margin of 6.6% to 6.7%.

The company raised its fiscal 2026 sales outlook to $13.46 billion-$13.57 billion from $13.4 billion-$13.55 billion. Wall Street expects $13.553 billion.

Chewy also lifted its adjusted EBITDA margin forecast to 6.7%-6.8% from 6.6%-6.8%.

Consumer Pressure Weighs On Treat Demand

During the quarter, Singh said Chewy did not see a “meaningful recovery” among pressured pet consumers. However, he said conditions did not deteriorate further.

Treat sales growth slowed more sharply than core food growth as consumers remained cautious about discretionary purchases.

Chewy continues to expect AI initiatives to generate cost savings in the low tens of millions of dollars in fiscal 2026. Those savings could reach about $50 million on an annualized basis in fiscal 2027.

Management plans to reinvest some efficiency gains in marketing, AI and other growth initiatives. Chewy said its recurring revenue model and strategic investments should help it outperform the broader pet market despite macroeconomic pressure.

CHWY Stock Price Activity: Chewy shares fell 10.27% to $20.88 Wednesday at the time of publication, according to Benzinga Pro data.

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