Chewy (CHWY) Business Profile

What it does

Chewy is an online retailer of pet food, supplies, medications and other pet-health products. It sells to pet parents through its websites and mobile applications and also works with veterinarians. The company began operating in 2011, is headquartered in Dania Beach, and is led by Chief Executive Officer Sumit Singh.

Its merchandise ranges from everyday food and treats to non-perishable supplies, prescription medications and products for animals such as horses, birds and fish. Chewy carries products from other companies as well as its own private brands. Customers can place individual orders or use Autoship, which automates ordering, payment and delivery.

Chewy also offers services alongside merchandise. Its pharmacy fills prescriptions and prepares customized medications; its telehealth service connects pet parents with veterinary professionals; and CarePlus offers insurance and wellness plans. Chewy Vet Care clinics provide routine appointments, urgent care and surgery. Through PracticeHub, veterinary practices can manage preapproved prescriptions while Chewy handles inventory, fulfillment, shipping and customer service.

The company operates fulfillment centers in the United States and Canada and serves customers in both countries. It also operates customer service centers around the clock. Chewy acquired equine health and nutrition provider SmartPak after the end of its fiscal year ended February 1, 2026, and subsequently acquired Modern Animal.

How it makes money

Chewy primarily earns sales by selling third-party and private-brand pet food, pet products, health and specialty products, together with related shipping fees. It records product and shipping revenue when products are shipped, after promotional discounts, refunds and allowances. Sales taxes collected from customers are excluded.

For fiscal year 2025, ended February 1, 2026, net sales were $12.6 billion; second-quarter fiscal 2026 net sales were $3.33 billion.

Food and veterinary diets are consumables, while hard goods include non-perishable pet supplies. Health and specialty products include prescription and non-prescription healthcare products and merchandise for specialty animals. Chewy also generates revenue from services, including telehealth, insurance-related offerings, loyalty memberships and veterinary clinics. These services are not a significant component of net sales and are managed within the overall platform rather than as standalone offerings.

Autoship lets customers schedule repeat orders, with payment and delivery handled automatically. In the second quarter of fiscal 2026, Autoship customer sales were $2.8 billion, or 84.6% of total net sales. That measure includes both subscription purchases and other purchases made by Autoship customers, so it is not limited to automatically reordered items.

Chewy also offers advertising solutions to its vendor partners. It uses promotional discounts to encourage purchases, and these reduce recorded net sales. For fiscal year 2025, gross margin was 29.8%; Chewy attributed the increase from the prior year to sponsored ads growth and margin growth in consumables.

Customers and how it sells

Chewy serves pet parents across the United States and in Canada through its websites and mobile applications. It offers customer support by phone, email and live chat, with service centers operating around the clock. Its fulfillment network has centers in both countries; Chewy says it can serve over 80% of the U.S. population overnight and almost 100% in two days.

The company ended the second quarter of fiscal 2026 with 21.7 million active customers. Its active-customer measure counts individuals who ordered a product or service and had a shipment or service provided during the preceding 364-day period. The second-quarter count included 43 thousand customers who had transacted with SmartPak since its acquisition. Net sales per active customer were $602 in the quarter, measured over the preceding four fiscal quarters.

Veterinary practices are another customer and partner group. PracticeHub connects their practice-management software to Chewy’s fulfillment and customer service capabilities. As of February 1, 2026, approximately 20,000 veterinary practices were enrolled; Chewy estimated this represented 50% of all U.S. vet clinics. Chewy Vet Care also sees pet owners at its clinics, offering services from routine appointments to surgery.

Suppliers and costs

Chewy partners with approximately 4,000 pet-industry brands and also sells its own private brands. It works with manufacturers to develop and market private-brand products. Its assortment includes food, supplies and medications purchased from third parties, as well as Chewy-branded products.

Cost of goods sold includes the cost of merchandise, inventory freight, shipping supplies, inventory shrinkage and inventory valuation adjustments. Vendor promotions and percentage or volume rebates reduce those costs; some rebates depend on reaching minimum purchase thresholds. Outbound freight and shipping supply costs contributed to the increase in cost of goods sold in fiscal year 2025.

Selling, general and administrative expenses include operating and staffing fulfillment centers, customer service centers and veterinary clinics, as well as corporate payroll, rent, depreciation and other costs. Fulfillment activities include receiving and warehousing inventory, preparing orders, payment processing and responding to customers. Advertising and marketing are separate expenses, including advertising and related staff costs.

Chewy invests in fulfillment automation and technology. It expects costs per transaction to decrease as sales volume grows, given the fixed-cost component of its technology platform. In the second quarter of fiscal 2026, the company said improved fulfillment-center utilization and lower variable costs to serve contributed to lower non-GAAP selling, general and administrative expenses as a percentage of sales.

Competitive position

Chewy competes with online retailers, retailers that sell both online and in stores, suppliers’ own websites, traditional stores and veterinary providers. Its market also includes pet specialty stores, mass merchants, food stores, wholesale clubs, farm and feed stores, and drug stores. Chewy does not identify individual competitors.

Price, selection and availability, delivery speed and reliability, and customer service are important competitive factors. Chewy offers approximately 190,000 products and services, sells its own brands, and uses Autoship for automatic reordering. Its fulfillment network can serve over 80% of the U.S. population overnight, while its customer service representatives can draw on customer and pet profiles when helping shoppers.

Our reading: Autoship and the range of products offer a meaningful source of customer retention, although customers can still purchase pet products through many other channels. Our reading: The fulfillment network and customer-service model support convenience and differentiation, but price and delivery remain areas of direct competition. Our reading: PracticeHub and veterinary services add connections with pet owners and practices, though the service businesses are not yet a significant component of net sales.

Chewy says competition is particularly strong online as shopping shifts from stores to e-commerce. Its sponsored advertising solutions also give vendor partners a way to reach customers on its platform.

Growth opportunities

Chewy’s growth plans include acquiring customers, increasing spending by existing customers, expanding private brands and adding pet-health products and services. It also intends to invest in technology, automation, marketing and supply-chain capacity. The company says customers have historically spent more per purchase after their first year as they discover more of its offerings.

The health strategy includes pharmacy, telehealth, CarePlus, PracticeHub and veterinary clinics. Chewy had 18 Chewy Vet Care clinics at the end of 2025. It also acquired SmartPak, an equine health and nutrition business, and completed the acquisition of Modern Animal in the second quarter of fiscal 2026. Chewy said both acquired businesses performed ahead of the assumptions in its prior outlook.

Net sales increased 6.2% to $12.6 billion in fiscal year 2025. In the second quarter of fiscal 2026, sales increased 7.3% year over year; excluding SmartPak and Modern Animal, organic net sales increased 5.7%. Chewy expects fiscal year 2026 net sales of $13.46 billion to $13.57 billion, including organic net sales growth of 5.5% to 6.3%. Its outlook does not assume a meaningful recovery in the consumer environment.

The company is also deploying artificial intelligence tools in customer care, pharmacy and veterinary clinics. It expects AI-related initiatives to generate low-tens of millions of dollars of cost savings in fiscal 2026, scaling to approximately $50 million on an annualized basis in fiscal 2027.

Structural risks

• Competition: Competition in pet health and retail, particularly online, presents an ongoing threat. Customers can also buy from physical retailers, veterinary providers and suppliers’ own websites.
• Customer growth and retention: Chewy’s recent growth rates may not be sustainable. Continued sales growth depends on acquiring and retaining customers, increasing their spending and growing participation in Autoship.
• Consumer spending: Inflation, elevated interest rates and economic uncertainty can affect demand, purchase frequency and product mix. In the second quarter of fiscal 2026, treats sales growth slowed more sharply than core food growth amid pressure on discretionary purchases.
• Expansion and integration: New offerings and markets can require experience Chewy does not yet have. Acquisitions can bring integration problems, unanticipated costs, regulatory challenges and disruption to existing business relationships.
• Operations and vendors: Growth depends on attracting and retaining vendors, maintaining scalable technology and fulfillment infrastructure, and delivering orders in line with customer expectations. Changes in vendor payment terms and inventory can also affect working capital and free cash flow.
• Profitability and financing: Chewy said essentially all of its second-quarter adjusted EBITDA outperformance relative to expectations came from timing-related and discrete items. It also issued a term loan during the quarter in which it acquired Modern Animal.

Bottom line

Our reading

Chewy is an online pet retailer built around repeat purchases, with Autoship, customer service and fulfillment supporting its relationship with customers. Its health and veterinary businesses give it additional ways to serve those customers, but merchandise remains the main source of sales. The business must sustain customer growth and manage delivery and product costs while competing across online and physical channels; acquisitions add another demand on execution.