Chewy Q2 Sales Beat Driven By Customer Growth
Chewy reported Q2 adjusted EPS of 36 cents, matching expectations. Net sales rose 7.3% to $3.33 billion, aided by a 208,000 net customer increase.
Chewy, Inc. delivered second-quarter fiscal 2026 adjusted earnings of 36 cents per share, a 9.1% year-over-year increase that aligned with analyst consensus. Net sales climbed 7.3% to $3,330.2 million, slightly exceeding the consensus estimate of $3,322 million. The performance was driven by sustained customer acquisition and market share gains, rather than temporary pricing effects.
According to the GN stocks/earnings-beat report, the company added 208,000 net active customers sequentially, excluding additions from the Modern Animal acquisition. This organic growth in the customer base supported a 3.8% increase in total active customers to 21.705 million, validating the firm's execution strategy in a competitive pet care market.
Recurring Revenue Drives Sales Growth
Autoship customer sales increased 9.3% to $2,817.2 million, representing 84.6% of total net sales. This segment grew faster than the overall business, reinforcing the recurring nature of Chewy's revenue model. While treat sales slowed due to consumer pressure in discretionary categories, mid-teens growth in hard goods outpaced the broader market.
Organic net sales, excluding SmartPak and Modern Animal, rose 5.7% year over year. Net sales per active customer advanced 1.9% to $602, a 3.8% increase on a normalized basis. Management attributed this to customer cohort maturation and increased engagement in health and pharmacy categories.
Cost Discipline Improves Adjusted EBITDA
Adjusted EBITDA rose 23.7% to $226.7 million, supported by disciplined promotional activity and lower variable costs to serve. Gross margin held steady at 30.4%, up 30 basis points sequentially. Adjusted SG&A declined to 18.4% of sales from 19.1%, reflecting fulfillment utilization and automation gains.
Approximately $10 million of margin upside came from timing benefits, including earlier tariff refunds and shifted rebates. More than $5 million came from discrete items such as gift-card breakage and vendor-funded merchandising. These factors allowed the company to maintain profitability despite macroeconomic headwinds.
Company Raises Fiscal 2026 Outlook
Chewy raised its fiscal 2026 net sales guidance to a range of $13.46 billion to $13.57 billion, implying reported growth of 6.8% to 7.7%. This exceeds the previous guidance of $13.40 billion to $13.55 billion. Organic growth is projected between 5.5% and 6.3%.
The company deployed $200 million toward share repurchases, buying back 9.9 million shares. It completed the $400 million Modern Animal acquisition and raised $600 million through its inaugural term loan. Free cash flow fell 15.5% to $89.5 million, but total available liquidity remained above $1 billion.
