Chewy Inc. ($CHWY) shares have slipped about 10.3% since their last earnings report roughly a month ago, underperforming broader market benchmarks. The company’s Q2 fiscal 2026 results showed adjusted earnings of 36 cents per share, matching estimates, while net sales rose 7.3% to $3.33 billion, slightly beating expectations. Growth was driven by a 208,000 increase in net active customers and a solid autoship subscription base, which now accounts for 84.6% of sales, underscoring the recurring revenue strength. Despite these positives, consumer spending pressures in discretionary categories like treats and premium products have weighed on performance, and gross margins remained flat year-over-year at 30.4%.
In response to recent softness, Chewy lowered the annual fee for its Chewy+ membership program from $79 to $59, aiming to attract more mid-level spenders by making the subscription more accessible. This revamped membership includes perks like free shipping, virtual vet visits, and shopping rewards, with plans to add more services without raising the price. Analysts see this move as a strategic effort to boost subscriber growth and deepen customer engagement amid a challenging retail environment.
Chewy is also expanding its footprint in pet healthcare, with its Chewy Vet Care clinics showing triple-digit revenue growth, signaling a promising avenue for future expansion. However, the stock has faced pressure recently, dropping over 20% in the past six weeks and trading near valuation multiples that reflect cautious investor sentiment. While the company’s scale and recurring revenue model provide resilience, slower revenue growth and margin challenges continue to temper enthusiasm as investors weigh the outlook ahead of the next earnings release.
Did you know?
Subscription services like Chewy’s Autoship program help companies build steady revenue streams by encouraging repeat purchases, which can make their stock performance less volatile compared to one-time sales models.
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