Chewy thrives on subscriptions — over 8 in 10 sales come from regulars

Chewy has kicked off its fiscal year 2025 (FY2025) with a solid performance driven by customer growth, increased sales per customer and expanding profitability.

The American online pet retailer reported net sales of $3.1 billion (€2.9B) for its first quarter ending 4 May 2025, marking an 8.3% year-over-year (YoY) increase. This is down from the $3.3 billion (€3B) seen in the last quarter of FY2024.

Autoship sales and improved margin performance enabled the company to deliver $192.7 million (€179 million) in adjusted EBITDA, representing a 6.2% margin and its highest quarterly adjusted EBITDA in over a year. In the previous quarter, it was $124.5 million (€115.8M).

Profit margin gain

Gross profit for the quarter was $924 million (€859M), translating to a gross margin of 29.6%, a modest improvement over the prior year and a significant recovery from the dip seen in Q4 FY2024.

This increase was attributed partly to pricing efficiency and a return to normalized operational costs following a one-time hit in the previous quarter.

Net income was $62.4 million (€58M), which amounts to diluted earnings per share of $0.15 (€0.14). On an adjusted basis, net income totaled $148.9 million (€139M) or $0.35 (€0.33) per diluted share.

Customer expenditure

Net sales per active customer, a key performance indicator, have shown steady growth, increasing from $579 (€538) at the end of FY2024 to $583 (€542) in Q1 FY2025. The figure has risen each year since FY2022, when it stood at $496 (€461).

Chewy’s Chief Financial Officer (CFO), David Reeder, recently stated that the company is moving forward with a strategy centered on predictability, infrastructure and expanding services.

Despite their influence on previous results, there was no specific mention of Chewy’s vet clinics in the presentation.

Subscription power

Chewy’s autoship program is a key driver of its performance, enabling the company to benefit from a more stable revenue stream.

These customers, who commit to regularly scheduled deliveries, accounted for $2.6 billion (€2.4 billion) during the quarter, representing over 82% of total net sales. Autoship sales were up 15% YoY, well ahead of the company’s overall net sales growth.

The number of active autoship customers rose by 240,000 to 20.8 million. Net sales per active customer reached $583 (€542), up from $562 (€523) in Q1 FY2024.

Chewy has also focused on technology, supply chain optimization and fulfillment center performance to help drive productivity and profitability.

According to the company’s CEO, Sumit Singh, the fiscal year is off to a “strong start.”

“We delivered topline growth exceeding the high-end of our net sales guidance range, year-over-year growth in active customers, and compelling profitability and free cash flow generation. These results are a testament to the resiliency of the pet category and underscore the strength of Chewy’s value proposition and our ability to continue to gain market share.”

Looking ahead

Chewy’s guidance for the second quarter of FY2025 is net sales in the range of $3.06 billion to $3.09 billion (€2.85B to €2.87B), representing 7-8% YoY growth.

For the full 2025 fiscal year, the company expects net sales to be between $12.3 billion and $12.45 billion (€11.44B and €11.58B) and an adjusted EBITDA margin of between 5.4% and 5.7%. Adjusted diluted EPS is projected at $0.30–$0.35 (€0.28–€0.33).

Favorable trends in consumer behavior and sustained engagement with the autoship program are seen as key drivers behind the optimistic outlook.