Here are a few reasons to be optimistic about Chewy (CHWY)

Shares of Chewy, Inc. (NYSE: CHWY) stayed red on Friday. The stock has gained 10% over the past three months. The pet products retailer has been performing well with top and bottom line growth, boosted by business momentum and strategic initiatives. Here are a few reasons to be optimistic about the company as it continues to gain share in the resilient pet category:

Growth in sales and profits

Chewy’s sales increased 8% year-over-year to $3.12 billion in the first quarter of 2025, driven by strong demand for its products among new and existing customers as well as a favorable mix of core consumables and health and wellness categories. On an adjusted basis, earnings per share increased nearly 13% to $0.35 in Q1 compared to the year-ago period.  

Strong business performance

Chewy saw strong momentum in its business during the first quarter. The company’s Autoship subscription program continues to perform well, driving customer loyalty. It delivered sales of $2.56 billion in Q1, up 15% compared to the previous year. Autoship sales made up 82% of total sales in the quarter.

The retailer saw active customers increase 3.8% to 20.8 million in Q1, helped by growth in new customers and reactivations as well as an improvement in gross churn. Net sales per active customer increased 3.7% YoY to $583.

Strategic initiatives

CHWY continues to make progress on its strategic initiatives such as its Chewy Vet Care (CVC) clinics and its Chewy Plus paid membership program. During the first quarter, Chewy opened three new CVC practices and currently has 11 locations across four states, which are seeing strong demand. This indicates significant room for further expansion. The company remains on track to open 8-10 new clinics in fiscal year 2025.

The Chewy Plus membership program has moved out of its successful testing phase and the company believes this program has the potential to drive strong loyalty and engagement among its customers going forward.

Encouraging outlook

Chewy anticipates sales and earnings growth to continue in the second quarter of 2025. The company has guided for net sales to range between $3.06-3.09 billion in Q2, representing a YoY growth of approx. 7-8%. Adjusted EPS is expected to be $0.30-0.35. The bottom line estimate implies a YoY growth of more than 33% at the midpoint. For fiscal year 2025, the company expects net sales of $12.30-12.45 billion, representing a growth of approx. 6-7% YoY, when adjusted to exclude the impact of the 53^rd week in fiscal year 2024.