Chewy lowers FY2026 sales forecast after solid first quarter

American online pet retailer Chewy entered fiscal year (FY) 2026 by reporting a net income of $94.8 million (€82.5M) for the first quarter (Q1) ended 3 May, up 52% year-over-year (YoY).

“The underlying drivers of profitability expansion remain structural in nature and continue to strengthen, including the expansion of sponsored ads, product mix shift into higher-margin categories, including health, and operating expense leverage from automation and scale,” CEO Sumit Singh says.

Net sales for the quarter grew 7.7% YoY to $3.4 billion (€2.9B), within its guidance range. This growth was supported by a 10.5% YoY rise in autoship customer sales, which accounted for 84.4% of total quarterly net sales. Gross margin was 30.1%, improving by 50 basis points (bps) YoY.

Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) increased by $60.4 million (€52.5M) YoY to $253.1 million (€220.2M). Adjusted EBITDA margin reached 7.5%, up 130 bps from the previous year.

Customer base grows

According to the CEO, the company added 170,000 net active customers, ending the quarter with 21.5 million, a 3.6% YoY increase. Net sales per active customer (NSPAC) reached $597 (€519), compared to $583 (€507) in Q1 FY2025.

Meanwhile, within its veterinary network, Chewy Vet Care (CVC), 4 in 10 consumers were new to the retailer, and NSPAC was approximately $900 (€783).

Acquisitions

During the quarter, Chewy expanded its veterinary clinic footprint through the acquisition of Modern Animal, which closed shortly after the quarter ended. For the fiscal year, Modern Animal is expected to contribute approximately $290 million (€252.3M) in revenue.

The acquisition added 29 clinics to CVC, bringing its total portfolio to 47 locations. By the end of FY2026, the company expects to operate approximately 60 clinics and plans to open 10 to 12 new locations.

Last year, the company also completed the acquisition of SmartEquine from animal health technology and services company Covetrus. “The revenue contribution from the business was in line with our previously communicated $80 million (€69.6M) net sales expectation for full-year 2026,” says Chris Deppe, Chewy’s CFO.

Guidance

For the second quarter, net sales are forecast to range from $3.3 billion (€2.87B) to $3.33 billion (€2.9B).

Chewy lowered its full-year net sales guidance to $13.4 billion (€11.7B) to $13.6 billion (€11.8B) from its previous forecast of $13.6 billion (€11.8B) to $13.8 billion (€11.96B), while maintaining its adjusted EBITDA margin outlook of 6.6% to 6.8%.

CEO Sumit Singh notes that the updated guidance now reflects a “more appropriately conservative” view.

“While we remain confident in the long-term trajectory of the business, we are also recognizing that the consumer pet environment has become incrementally more challenged since we initially established our fiscal 2026 outlook earlier this year,” he concludes.