#Chewy, Inc. Reports Strong Q1 Results
Chewy, Inc. (NYSE: CHWY) reported net sales of $3.36 billion for the first quarter of fiscal 2026, ended May 3, 2026, as adjusted EBITDA reached a quarterly record of $253.1 million, a 31.3% increase from the same period a year earlier.
The online pet retailer operates in a US pet products market that has faced pressure from consumers pulling back on discretionary spending. Chewy competes with Amazon and brick-and-mortar chains, including PetSmart and Petco, in the broader pet supplies category, where e-commerce has continued to take share from physical retail.
#Adjusted EBITDA Hits Quarterly Record as Margin Expands 130 Basis Points
Adjusted EBITDA margin came in at 7.5% for the quarter, up from 6.2% in Q1 fiscal 2025. The company recorded net income of $94.8 million, including share-based compensation expense and related taxes of $73.4 million, compared with net income of $62.4 million in the year-prior period.
Net margin expanded to 2.8%, an improvement of 80 basis points year over year. Gross margin reached 30.1%, up 50 basis points from the prior-year quarter.
Adjusted net income for the period was $179.9 million, an increase of $31.0 million year over year. Adjusted diluted earnings per share were $0.43, compared with $0.35 in Q1 fiscal 2025.
#Autoship Sales Grow 10.5% and Reach 84.4% of Net Revenue
Autoship customer sales, the company's subscription-style recurring order program, totaled $2.83 billion in the quarter, up 10.5% year over year. Autoship revenue represented 84.4% of net sales, compared with 82.2% in Q1 fiscal 2025.
Active customers rose 3.6% to 21.5 million. Net sales per active customer reached $597, up from $583 a year earlier.
"Chewy continues to outperform the pet category while expanding profitability and free cash flow," Sumit Singh, Chief Executive Officer of Chewy, said in the earnings release. "Our first quarter results demonstrate the resilience of our business model and the strength of our execution, as we delivered 7.7% net sales growth, nearly 200,000 net customer additions, and record profitability in the quarter, despite a more dynamic consumer backdrop."
#Free Cash Flow Rises 45.4% as Company Deploys Capital on Buybacks and Acquisition
Free cash flow was $70.8 million in Q1 fiscal 2026, up 45.4% from $48.7 million in Q1 fiscal 2025. Net cash from operating activities reached $108.5 million, compared with $86.4 million in the prior-year period.
Chewy spent $200.0 million on share repurchases during the quarter and $174.8 million related to its previously announced acquisition of SmartPak, net of cash acquired. Cash and cash equivalents ended the period at $485.2 million, down from $860.1 million at the start of the fiscal year.
The balance sheet reflected goodwill of $113.2 million, up from $39.4 million at February 1, 2026, and intangible assets of $88.3 million, reflecting the acquisition completed during the quarter.