Chewy Inc. has disclosed its second-quarter financial results, showcasing a strong performance with a net sales figure of $3.1 billion, marking an impressive year-over-year increase of 8.6%. This growth surpassed the company’s previously offered guidance, signaling robust demand within the pet care market. Reflecting a shift in consumer buying patterns, Autoship customer sales surged to $2.58 billion, making up 83% of total net sales, and demonstrating a nearly 15% increase from the same period last year.
The number of active customers rose to 20.9 million, an increase of 4.5% year-over-year, emphasizing Chewy’s continued ability to attract and retain its customer base. The company reported a gross margin of 30.4%, a notable expansion of 90 basis points compared to the previous year. Adjusted EBITDA came in at $183.3 million, translating to a 5.9% margin and an increase of over 80 basis points year-over-year.
Chewy also showcased its financial health through nearly $106 million in free cash flow generated during the quarter. Selling, General and Administrative (SG&A) expenses stood at $592.8 million, or 19.1% of net sales, reflecting a reduction in leverage by 30 basis points compared to the previous year. Advertising and marketing expenses amounted to $200.6 million, representing 6.5% of net sales.
The company experienced a significant rise in adjusted net income by 34.8% year-over-year, reaching $141.1 million, while adjusted diluted earnings per share (EPS) settled at $0.33. Furthermore, Chewy executed share repurchases totaling approximately $125 million during the quarter. The balance sheet remains strong, with cash and cash equivalents around $592 million, and an overall liquidity position of approximately $1.4 billion.
For the upcoming third quarter of 2025, Chewy has set a net sales guidance range between $3.07 billion and $3.1 billion, while for the full year, net sales are expected to land between $12.5 billion and $12.6 billion. The company anticipates an adjusted EBITDA margin guidance of 5.4% to 5.7% for the full year.
Despite the strong sales numbers, Chewy anticipates some headwinds moving forward. CEO Sumit Singh highlighted that the company faces temporary rising costs due to increased wages and benefits, as well as higher expenses associated with the ramp-up of its Houston fulfillment center and inbound inventory processing. These factors could impact overall profitability in the near term.
Additionally, Chewy is cautious about potential pricing pressures in the latter half of 2025, stemming from tariff-related costs that may affect its margins. Singh emphasized that while competitive intensity in the market remains high, the company will continue to invest in strategic initiatives such as its Chewy+ membership program and the new ‘Get Real’ line of fresh dog food, which has already garnered positive customer feedback.
The Fresh and Frozen category is projected to experience substantial growth, with expectations of expanding from a market size of $3-4 billion to $8-12 billion in the coming years. Initial customer insights suggest that a significant portion of this segment is being driven by existing Chewy customers.
Overall, Chewy’s strategic focus on enhancing product quality, customer experience, and leveraging its extensive customer base for growth initiatives, combined with a cautious but optimistic outlook toward future sales and profitability, positions the company well in a competitive landscape.
