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Chewy’s CEO Says Pets Rule, But Market’s in the Doghouse

Chewy’s Strong Q1 Shows Pet Parents Are Still Spending, But Wall Street Wants More

•• 1 Min
Chewy’s CEO Says Pets Rule, But Market’s in the Doghouse

Chewy, Inc. (NYSE: CHWY) is wagging its tail with confidence, as CEO Sumit Singh boldly declared no signs of consumer weakness at the online pet supplies giant, even as the stock took a 12.1% hit on Wednesday. With first-quarter results beating expectations and Autoship sales soaring, is the market’s reaction just a case of chasing its own tail? Let’s dig into the numbers, the CEO’s bark, and why investors might be barking up the wrong tree.

Chewy’s Q1: A Treat-Filled Report Card

Chewy’s first-quarter 2025 earnings were nothing to growl about. The company reported net sales of $3.12 billion, an 8.3% year-over-year leap, surpassing its own guidance of $3.06 billion to $3.09 billion and analyst estimates of $3.08 billion Chewy Announces First Quarter 2025 Financial Results. Adjusted net income climbed to $148.9 million, up $11.8 million from last year, with adjusted earnings per share at $0.36, beating the $0.32 Wall Street expected Chewy Stock Tumbles as Net Income Falls Short of Estimates.

But here’s where the fur starts to fly: GAAP net income came in at $62.4 million, or $0.15 per share, missing analyst forecasts of $68.9 million, or $0.16 per share. Adjusted EBITDA, however, was a meaty $192.7 million, up 18% year over year, with a record-breaking 6.2% margin Pet Food Retailer Chewy Clocks Q1 Earnings Beat, Guides .... Autoship sales, the recurring revenue golden retriever, jumped 14.8%, hitting an all-time high as a percentage of total sales.

Sumit Singh: “No Consumer Weakness, Period.”

In a June 11 interview with Yahoo Finance’s Brian Sozzi, Singh didn’t mince words: “We haven’t [seen consumer weakness] at Chewy. The momentum that we’ve carried out of Q1 actually has continued [into the second quarter]” Chewy has quick reaction time to supply chain disturbances: CEO. He backed this up with data: new customer cohorts are spending more, with higher reorder rates and no signs of “trading down” to cheaper products. Translation? Pet parents are still splurging on their furry friends, recession fears be damned.

Singh’s confidence is rooted in Chewy’s customer metrics. Active customer growth outpaced Wall Street’s expectations, and net sales per active customer rose in the low single digits year over year. The Autoship program, a subscription-like model for pet essentials, is driving loyalty, with customers committing to repeat purchases at record levels Chewy’s Q1 2025 Earnings Call: Navigating Contradictions ....

Why the Stock Got a Bath

Despite the tasty earnings, Chewy’s stock took a 12.1% dive, closing at $40.26 on June 11 Yahoo Finance, CHWY Quote. Why the sour mood? Investors were hoping for a “beat and raise” party, but Chewy only reaffirmed its full-year operating margin guidance of 5.4% to 5.7% and issued a Q2 EPS forecast of $0.30 to $0.35, slightly below the $0.31 consensus Pet Food Retailer Chewy Clocks Q1 Earnings Beat, Guides ....

Jefferies analyst Kaumil Gajrawala summed it up: “Momentum continues with first quarter sales (+8.3%), EBITDA ($193 million; +18% year over year), and net customer adds ahead of Street. But the high bar wasn’t met. The market was looking for a beat and raise, and they reiterated” Chewy’s Q1 2025 Earnings Call: Navigating Contradictions .... After a 50% stock surge from April 8 to June 6, per Yahoo Finance data, investors were primed for more fireworks.

The Pet Market: Still Fetching Growth

Chewy’s performance isn’t just a one-trick pony. The pet supplies industry is thriving, and Chewy’s focus on innovations like the Chewy Plus program and vet clinics is keeping it ahead of the pack Here’s What Key Metrics Tell Us About Chewy (CHWY) Q1 .... Singh’s strategic vision, as shared in a McKinsey interview, emphasizes building a “destination for pet parents,” which seems to be paying off Building a destination for pet parents: Views from Chewy’s Sumit Singh.

The lack of consumer weakness is particularly telling. Unlike other retail sectors fretting over inflation or recession fears, Chewy’s customers are sticking to their premium pet food and toys. Autoship’s 14.8% growth and record-high sales share signal that pet owners aren’t cutting back—Fido’s still eating like a king.

What’s Next for Chewy?

Looking ahead, Chewy’s guidance suggests steady paws. The company projects $550 million in free cash flow for 2026 and expects Q2 gross margins to improve sequentially Chewy has quick reaction time to supply chain disturbances: CEO. But the market’s reaction shows it’s a finicky beast, and Chewy will need to keep delivering to win back investor love.

For now, Singh’s claim holds water: consumer demand at Chewy is as resilient as a chew toy. The stock dip? Maybe just a case of Wall Street having a ruff day.

Sources:

  • Chewy Announces First Quarter 2025 Financial Results
  • Chewy Stock Tumbles as Net Income Falls Short of Estimates
  • Pet Food Retailer Chewy Clocks Q1 Earnings Beat, Guides ...
  • Chewy has quick reaction time to supply chain disturbances: CEO
  • Chewy’s Q1 2025 Earnings Call: Navigating Contradictions ...
  • Here’s What Key Metrics Tell Us About Chewy (CHWY) Q1 ...
  • Building a destination for pet parents: Views from Chewy’s Sumit Singh
  • Earnings call transcript: Chewy beats Q1 2025 earnings forecasts, but shares dip
Chewy

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