WS Investor
09 Sep 2026, 14:09
Chewy Stock Falls 7% Despite Strong Q2 Results and Raised Outlook
Chewy (NYSE: CHWY) shares fell about 7% Wednesday despite reporting stronger fiscal second-quarter earnings and raising its full-year outlook, as investors appeared unimpressed by underlying sales growth and flat gross margins.
Second-quarter net sales increased 7.3% year over year to $3.33 billion, landing at the high end of the company’s guidance. Excluding contributions from SmartPak and Modern Animal, however, organic sales growth was a more moderate 5.7%.
Profitability improved significantly. Net income reached $80.5 million, while net margin expanded 40 basis points to 2.4%. Adjusted EBITDA climbed $43.4 million to $226.7 million, with adjusted EBITDA margin expanding 90 basis points to 6.8%. Adjusted diluted EPS increased to $0.36 from $0.33 a year earlier.
Gross margin remained unchanged year over year at 30.4%, potentially limiting enthusiasm around the otherwise strong margin performance.
Chewy said its recurring revenue base and continued customer growth supported the quarter, while management raised its full-year revenue and profitability outlook following results that exceeded its expectations.
The 7% decline suggests investors may have been looking for stronger organic growth or greater gross-margin expansion, despite Chewy’s improved earnings and upgraded outlook.
Chewy (NYSE: CHWY) shares fell about 7% Wednesday despite reporting stronger fiscal second-quarter earnings and raising its full-year outlook, as investors appeared unimpressed by underlying sales growth and flat gross margins.
Second-quarter net sales increased 7.3% year over year to $3.33 billion, landing at the high end of the company’s guidance. Excluding contributions from SmartPak and Modern Animal, however, organic sales growth was a more moderate 5.7%.
Profitability improved significantly. Net income reached $80.5 million, while net margin expanded 40 basis points to 2.4%. Adjusted EBITDA climbed $43.4 million to $226.7 million, with adjusted EBITDA margin expanding 90 basis points to 6.8%. Adjusted diluted EPS increased to $0.36 from $0.33 a year earlier.
Gross margin remained unchanged year over year at 30.4%, potentially limiting enthusiasm around the otherwise strong margin performance.
Chewy said its recurring revenue base and continued customer growth supported the quarter, while management raised its full-year revenue and profitability outlook following results that exceeded its expectations.
The 7% decline suggests investors may have been looking for stronger organic growth or greater gross-margin expansion, despite Chewy’s improved earnings and upgraded outlook.
