Key Takeaways
- Shares of Chewy climbed approximately 13% following the company’s announcement of 2026 revenue projections between $13.6B and $13.75B, surpassing analyst forecasts
- Fourth-quarter revenue reached $3.26 billion, representing an 8.1% increase when adjusted for the additional week in the prior-year period
- The company’s active customer base expanded 4% to reach 21.3 million, while average revenue per customer increased 2.2% to $591
- Management anticipates AI-powered operational efficiencies will generate $50M or more in annual savings by 2027, with initial benefits in the “low tens of millions” projected for 2026
- The Chewy Vet Care division now operates 18 facilities and represents the company’s fastest-expanding business unit on a per-customer revenue basis
The online pet supplies retailer delivered fourth-quarter financial results on Wednesday that aligned with market expectations, though it was the forward-looking 2026 guidance that catalyzed significant investor enthusiasm.
The company projected full-year 2026 revenue in the range of $13.6 billion to $13.75 billion. This forecast exceeded the Street consensus estimate of $13.58 billion, triggering a surge of approximately 13% in share price, with the stock settling near $26.50 at market close.
Fourth-quarter revenue totaled $3.26 billion, reflecting a 0.5% increase on a reported basis and an 8.1% gain when normalized for the calendar shift that added an extra week to the prior year’s comparison. Results met analyst expectations. Gross profit margin expanded by 90 basis points to reach 29.4%, while adjusted EBITDA increased from $124.5 million to $162.3 million year-over-year.
Adjusted earnings per share registered at $0.27, falling just one cent short of the $0.28 consensus estimate. On a GAAP basis, net income reached $39.2 million, translating to $0.09 per share, compared to $22.8 million in the year-ago quarter.
The active customer count grew 4% year-over-year to 21.3 million users. Average net sales per active customer rose 2.2% to $591. Chief Executive Officer Sumit Singh highlighted that pet parents continue to elevate their spending on companion animals, increasingly viewing them as family members and upgrading to higher-quality products — a behavioral shift he anticipates will persist.
Chief Financial Officer Chris Deppe clarified that the 2026 revenue outlook assumes no pricing inflation tailwinds. Instead, anticipated growth will stem from customer acquisition and increased wallet share among the existing customer base.
Artificial Intelligence Driving Cost Efficiencies
Chewy has been investing in AI capabilities over recent quarters and is now beginning to implement these technologies across multiple operational areas, including customer service, logistics, and distribution networks.
Singh indicated that AI-enabled productivity gains should contribute benefits in the “low tens of millions” during 2026, escalating to approximately $50 million or greater in annualized cost savings by 2027. The company is simultaneously scaling operations at its advanced fulfillment facility in Houston as another component of its efficiency optimization strategy.
For the first quarter of fiscal 2026, the company issued revenue guidance of $3.33 billion to $3.36 billion, with adjusted earnings per share expected between $0.40 and $0.45, figures that generally aligned with analyst projections.
Veterinary Care Business Gaining Momentum
Chewy Vet Care expanded by 10 additional clinic locations throughout fiscal 2025, elevating the total footprint to 18 operating practices. The CVC network currently serves customers across five states, with ambitions for nationwide reach.
Singh noted that CVC is outperforming internal projections on customer satisfaction metrics and is proving effective as a customer acquisition channel that deepens relationships with high-lifetime-value consumers. Management characterized it as the fastest-growing business line measured by revenue per active customer.
The company also finalized its acquisition of SmartEquine, a platform focused on equine healthcare. This transaction is projected to contribute approximately $80 million in net sales during 2026 — representing less than 1% of consolidated revenue, yet signaling strategic diversification beyond conventional companion animals.
Notwithstanding Wednesday’s strong rally, Chewy shares have declined nearly 20% over the trailing twelve months and trade substantially below the 52-week peak of $48.62.
