Chewy, Inc. CHWY used its fiscal second-quarter 2026 earnings call to emphasize a steadier pet-spending backdrop, continued share gains and a higher full-year outlook, with CEO Sumit Singh and CFO Chris Deppe assuming no meaningful consumer recovery.
The company reported adjusted earnings per share (EPS) of $0.36, which matched the Zacks Consensus Estimate. Revenues of $3.33 billion topped the consensus mark of $3.32 billion. Deppe also stressed that timing and discrete benefits boosted fiscal second-quarter profitability.
Chewy Price, Consensus and EPS Surprise
Chewy price-consensus-eps-surprise-chart | Chewy Quote
CHWY Sees Stable Demand Without Recovery
CEO Sumit Singh said that the pet market did not meaningfully recover in the fiscal second quarter, but it also did not deteriorate further from trends seen exiting the first quarter.
Singh said that Chewy continued to outperform the broader pet category by roughly two to three times, supported by share gains across established businesses and newer platforms.
Responding to William Blair, Singh said that pricing is not providing a net benefit in fiscal 2026. Deppe added that guidance assumes current consumer trends remain broadly consistent rather than improve.
Chewy Lifts Full-Year Outlook
Deppe said that fiscal 2026 net sales are now expected to be between $13.46 billion and $13.57 billion, including organic growth of 5.5% to 6.3%. The midpoint assumes no meaningful consumer improvement.
Deppe narrowed adjusted EBITDA margin guidance to 6.7%-6.8% from 6.6%-6.8%. He stressed that essentially all fiscal second-quarter profitability upside reflected about $10 million of timing benefits and more than $5 million of discrete benefits.
For the fiscal third quarter, Deppe guided to sales of $3.323 billion to $3.358 billion, adjusted EBITDA margin of 6.6% to 6.7% and adjusted EPS of around $0.39.
CHWY Leans on Customers and Autoship
Singh said that Chewy ended the fiscal second quarter with 21.7 million active customers, up 3.8% year over year, while net sales per active customer reached $602.
Deppe said that Autoship sales rose 9.3% and represented 84.6% of total net sales. He also reported 208,000 sequential net active-customer additions, including 43,000 unique SmartPak customers.
A Guggenheim analyst pressed management on softer treat sales. Singh said that core food and medications remain consumer priorities, while treats and toppers are more exposed to discretionary budget pressure.
Chewy Scales Health and New Growth Platforms
Singh said that Chewy Vet Care again delivered triple-digit revenue growth. He added that Modern Animal performed ahead of expectations, reinforcing his confidence in the combined veterinary platform.
Singh said that SmartPak exceeded initial expectations. He also said a refreshed Chewy Plus program will add more health benefits while preserving the program's margin contribution profile.
Asked by Morgan Stanley about reinvestment, Singh pointed to self-funded growth levers in marketing, customer engagement and new products. He said that fiscal 2027 reinvestment levels have not yet been determined.
CHWY Converts AI Into Productivity Gains
Singh said that Chewy's AI strategy is moving toward measurable financial impact. Its Kai assistant is resolving about 30% of selected customer chats through self-service.
Singh expects AI initiatives to generate low tens of millions of dollars in cost savings in fiscal 2026, scaling to about $50 million on an annualized basis in fiscal 2027.
Responding to JPMorgan, Singh expressed high confidence in those efficiencies but cautioned against treating them as pure incremental profit. Deppe said that more than 50% of volume flows through automated states, supporting further cost-to-serve reductions.
Chewy Keeps Focus on Profitable Share Gains
Singh closed with a focus on customer growth, wallet-share expansion, health, sponsored ads, AI and automation, while stressing that the outlook does not depend on a broader pet-market rebound.
Deppe's guidance paired a narrower sales range with higher profitability expectations while still accounting for softer discretionary spending and normal second-half seasonality.
Singh and Deppe centered the earnings call on execution, market-share gains and funding growth within Chewy's earnings framework rather than relying on stronger external demand.
CHWY's Zacks Signals Stay Mixed
CHWY carries a Zacks Rank #4 (Sell), with a Value Score of B, a Growth Score of A, a Momentum Score of A and a VGM Score of A. Those Style Scores reflect favorable characteristics across value, growth and momentum.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Zacks methodology treats Style Scores as complements to the Zacks Rank and gives the Rank primacy in stock selection. The current rank therefore tempers the favorable Style Scores and reflects an unfavorable earnings-estimate-revision backdrop. The Rank can change as estimates are revised after the just-reported results.
Research Chief Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
This company targets millennial and Gen Z audiences, generating nearly $1 billion in revenue last quarter alone. A recent pullback makes now an ideal time to jump aboard. Of course, all our elite picks aren’t winners but this one could far surpass earlier Zacks’ Stocks Set to Double like Nano-X Imaging which shot up +129.6% in little more than 9 months.
Free: See Our Top Stock And 4 Runners UpWant the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chewy (CHWY): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).