Chewy Outperforms In Tough Market, Though Industry Trends Signal Slower Rebound, Says Analyst

Chewy Inc. (NYSE:CHWY) reported on Wednesday a third-quarter 2025 adjusted earnings of 32 cents per share, beating the consensus of 13 cents and within the management guidance of 28 cents to 33 cents.

• Chewy shares are experiencing downward pressure. Why is CHWY stock trading lower?

The retailer of pet supplies reported sales of $3.117 billion, up 8.3% year over year, compared to the consensus of $3.099 billion and the management guidance of $3.07 billion-$3.1 billion.

"Chewy continues to outperform the pet category and expand market share, with profits once again growing faster than sales," said Sumit Singh, CEO of Chewy.

"We exceeded the high end of our net sales guidance, grew margins, and delivered strong free cash flow generation," Singh added.

Needham wrote Chewy posted another solid quarter of share gains, with third-quarter net sales ahead of guidance and driven primarily by unit volume, not price.

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Core trends remain healthy as Autoship again outgrew total company sales, active customers delivered their strongest year-over-year gain since 2021, and funnel efficiency improved across direct traffic, app engagement, conversion and churn.

Needham Analyst Bernie McTernan said management's early 2026 outlook mirrors 2025, pointing to low single-digit industry growth, weak household formation, and minimal pricing power — indicating that a full demand normalization is still pushed out.

Needham reiterated a Hold rating on Chewy.

“We continue to view CHWY as a consistent share taker with a durable growth algorithm, though category constraints imply limited top-line acceleration until pet adoption and household formation improve,” the analyst added.

Chewy operates in a defensive category, where pet spending typically holds up in downturns and higher costs are usually passed on to consumers, particularly in consumables. These dynamics have helped the company outperform in a challenging consumer backdrop.

However, Needham cautions that consumer trends over the next six–12 months could pressure Chewy's premium positioning.

CHWY Price Action: CHWY stock is down 1.87% at $34.71 at the last check on Thursday.

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