While the rest of consumer discretionary gets hammered, Chewy is doing just fine.
The online pet retailer reported fourth-quarter results on Tuesday that beat expectations on the metrics that matter most, sending shares surging more than 7% in pre-market trading. Revenue hit $3.265 billion for the quarter, representing 8% year-over-year growth when adjusting for an extra week in the prior year's comparable period. Adjusted EBITDA came in at $162 million — a 5% margin and 120 basis points of improvement from a year ago.
For the full fiscal year, Chewy crossed $12.6 billion in revenue with a profit of $222.8 million. Those aren't the numbers of a company struggling with the consumer downturn — they're the numbers of a company benefiting from the single most durable spending category in American retail.
The Guidance That Got Wall Street's Attention
If the Q4 beat was good, the forward guidance was better. Chewy is projecting fiscal 2026 revenue of $13.6 billion to $13.75 billion, representing 8% to 9% net sales growth and surpassing analyst expectations of $13.58 billion. Adjusted EBITDA margin is expected to expand to 6.6% to 6.8% — roughly 100 basis points of improvement at the midpoint, translating to approximately $900 million to $930 million in adjusted EBITDA.
Management was clear that the growth assumptions are built on low single-digit active customer growth and continued expansion in net sales per active customer — not price inflation. In a retail environment where many of the "growth" stories are really just companies passing along tariff-inflated costs, Chewy's organic volume growth stands out.
The AI and Vet Care Bets
Beyond the headline numbers, two strategic bets are reshaping Chewy's long-term story.
First, the company's push into veterinary care through Chewy Vet Care clinics is emerging as its fastest spending-per-customer compounder. The move vertically integrates the pet health journey — from diagnosis to prescription to food to pharmacy — in a way that deepens customer lock-in and drives higher lifetime value. It's the same playbook Amazon ran with healthcare, but in a category where Chewy already owns the customer relationship.
Second, Chewy expects AI to deliver a "low tens of millions" benefit in 2026, scaling to more than $50 million in annualized savings by 2027. Those savings are coming from customer service automation, demand forecasting, and fulfillment optimization — the unsexy but margin-accretive applications of AI that most retailers are still only piloting.
Why Pet Spending Is Different
The broader thesis here hasn't changed: Americans treat their pets as family members, and pet spending behaves more like a consumer staple than a discretionary purchase. The American Pet Products Association estimates U.S. pet industry expenditures exceeded $150 billion in 2025, and that number has grown through every economic downturn of the past two decades.
That resilience matters more right now than usual. With consumer discretionary stocks in freefall and the NRF reporting that consumers are actively pulling back on non-essential spending, Chewy's category advantage is providing a cushion that most retailers don't have. People will skip the new outfit. They won't skip the dog food.
The stock closed up more than 7% on Wednesday. In a week where most of the sector is bleeding red, Chewy is a reminder that the consumer economy isn't monolithic — and that the companies positioned in recession-resistant categories are the ones that can afford to invest through the downturn.