It has been about a month since the last earnings report for Chewy (CHWY Quick QuoteCHWY - Free Report) . Shares have added about 10.1% in that time frame, outperforming the S&P 500.

But investors have to be wondering, will the recent positive trend continue leading up to its next earnings release, or is Chewy due for a pullback? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Chewy before we dive into how investors and analysts have reacted as of late.

Chewy Q1 Earnings Meet Estimates, Sales Beat on Autoship Strength

Chewy reported solid first-quarter fiscal 2026 results, wherein the top line beat the Zacks Consensus Estimate, and the bottom line met the same. Both metrics showed year-over-year growth.

Chewy noted that while the overall pet category remains resilient, the consumer environment has become more challenging since the company established its initial fiscal 2026 outlook. In response to these evolving conditions, management is updating its full-year sales outlook to reflect softer consumer trends and more conservative internal assumptions.

CHWY’s Quarterly Performance: Key Metrics and Insights

Chewy posted adjusted earnings of 43 cents per share, which came in line with the Zacks Consensus Estimate. The figure increased from 35 cents in the prior-year period.

The company reported net sales of $3,357.2 million, surpassing the Zacks Consensus Estimate of $3,352 million. The figure increased 7.7% from $3,116 million posted in the year-ago period.

The Autoship subscription program remained a cornerstone of Chewy’s model. Autoship customer sales grew 10.5% year over year to $2,832.6 million from $2,562.7 million, outpacing overall net sales growth. The metric represented 84.4% of total net sales.

The company ended the quarter with 21.5 million active customers, increasing 3.6% year over year. 

Chewy’s net sales per active customer reached $597. The metric reflects a 2.4% year-over-year increase from $583.

CHWY’s Margin & Cost Performance

Chewy’s gross profit increased 3.6% year over year to $1,011.4 million from $923.8 million. The gross margin expanded by 50 basis points (bps) year over year to 30.1%, driven primarily by continued growth in sponsored ads, favorable category mix and operating discipline.

Adjusted SG&A expenses reached $593 million in the fiscal first quarter. As a percentage of net sales, this metric declined 90 basis points year over year to 17.7%, due to lower variable costs from productivity improvements and AI-led efficiencies.

Advertising and marketing expenses for the fiscal first quarter were $206.1 million compared with $193.8 million in the prior-year period. As a percentage of sales, advertising and marketing expenses were 6.1%.

The adjusted EBITDA increased 31.3% year over year to $253.1 million from $192.7 million. The adjusted EBITDA margin increased 130 bps year over year to 7.5% from 6.2%, driven by adjusted EBITDA flow-through of greater than 25%. This level of profitability expansion reflects the structural strengthening of Chewy's earnings model.

CHWY’s Financial Health Snapshot

CHWY ended the quarter with approximately $485.2 million in cash, cash equivalents and $34.9 million in marketable securities. Total shareholders’ equity stood at $424.2 million.

The company generated net cash provided by operating activities of $108.5 million and free cash flow of $70.8 million for the quarter, up 45.4% from the prior-year period. Capital expenditures were $37.7 million, consistent with ongoing investment needs across the network.

Capital allocation remained active. The company repurchased $200 million of common stock during the quarter, reflecting continued emphasis on returning cash to shareholders alongside strategic investments.

What to Expect From CHWY in the Future?

Chewy revised its full-year fiscal 2026 net sales outlook, with expectations between $13.4 billion and $13.55 billion compared with the previous guidance range of $13.6 billion to $13.75 billion. The updated outlook includes expected net sales contributions of approximately $80 million from SmartPak and approximately $70 million from Modern Animal during fiscal 2026.

Adjusted EBITDA margin is expected to be in the range of 6.6-6.8%, roughly a 100 bps year-over-year increase at the midpoint. This outlook reflects a more conservative view of consumer spending patterns and category growth assumptions. Management emphasized that the change was tied to slower expected net sales per active customer expansion, driven by weaker discretionary attachment and premiumization.

For the second quarter of fiscal 2026, the company expects net sales in the range of $3.3-$3.33 billion, reflecting 6-7% year-over-year growth. The outlook assumes a generally stable operating environment and consumer trends compared with the end of the first quarter. The company continues to see healthy customer engagement, strength in Autoship and ongoing market share gains. However, near-term pressure remains on discretionary attachment and premiumization behavior. Management is also introducing quarterly adjusted EBITDA margin guidance to provide greater transparency amid varying profitability drivers.

Chewy expects second-quarter adjusted EBITDA margin to be between 6.3% and 6.4%, representing approximately 50 basis points of year-over-year expansion at the midpoint. Profitability is expected to face pressure from tougher gross margin comparisons due to prior-year non-recurring MAP pricing benefits and elevated fuel surcharge costs. However, ongoing SG&A discipline and operational efficiency improvements are expected to support margin performance during the quarter.

How Have Estimates Been Moving Since Then?

Since the earnings release, investors have witnessed a downward trend in fresh estimates.

The consensus estimate has shifted -18.29% due to these changes.

VGM Scores

Currently, Chewy has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a score of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Chewy has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.

Performance of an Industry Player

Chewy is part of the Zacks Internet - Commerce industry. Over the past month, PetMed (PETS Quick QuotePETS - Free Report) , a stock from the same industry, has gained 6.5%. The company reported its results for the quarter ended March 2026 more than a month ago.

PetMed reported revenues of $42.82 million in the last reported quarter, representing a year-over-year change of -7.9%. EPS of -$0.19 for the same period compares with -$0.56 a year ago.

PetMed is expected to post earnings of $0.12 per share for the current quarter, representing a year-over-year change of +135.3%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for PetMed. Also, the stock has a VGM Score of B.