Chewy falls after Q1 miss; Autoship and vet care cited

Chewy Inc. shares declined after the company reported fiscal first-quarter earnings per share below analyst estimates and issued guidance signaling weaker demand in the near term.

The company reported revenue growth of 7.7% year over year for the quarter. Gross margin improved by 50 basis points to 30.1%, and adjusted EBITDA rose by $60 million. Management lowered its near-term outlook after the results.

At a JPMorgan conference, CEO Sumit Singh told attendees the U.S. consumer is more “stretched” than at the start of 2026. Executives said customers are prioritizing essentials like pet food and medicine and cutting back on discretionary items such as toys as inflationary pressures reappear.

Investors sold shares after the update. The stock traded near a 52-week low just under $20 and has fallen roughly 40% year to date. On current multiples the shares trade at about 0.67 times sales. Analysts maintain a consensus rating of Strong Buy, with an average price target near $40.

Company management identified Autoship, the subscription program, as a key source of recurring revenue. Autoship orders produce repeat demand for pet food and medications that executives described as predictable and difficult for competitors to displace.

Chewy also highlighted growth opportunities in veterinary services and its pharmacy and prescription business. The company is expanding Vet Care clinics and scaling its pharmacy operations, which management says will broaden the addressable market and increase customer retention over time.

The guidance call identified discretionary pet spending-items such as toys and accessories-as the area most exposed to consumer belt-tightening. Management characterized the current softness as linked to the inflationary environment rather than a structural change in pet ownership. Company representatives noted that pet spending has been resilient in past downturns and that discretionary categories have tended to rebound as consumer purchasing power recovers.

Investors have also watched reductions in holdings by investor Ryan Cohen, which market participants have viewed as a persistent source of selling pressure. Chewy will face further scrutiny in coming quarters as investors assess whether margin gains and EBITDA improvements continue while the healthcare and prescription businesses scale.