Story Stocks^®

Chewy (CHWY) is chewing up some nice gains after delivering a hefty Q3 (Oct) EPS beat and issuing Q4 (Jan) EPS guidance well above consensus. Revenue of $3.12 bln (+8.1% yr/yr) was in line, but the quality of growth impressed as Chewy continued to outperform the broader pet category and expand market share. The results extend the momentum seen in 1H25, underscoring the structural resilience of Chewy's model despite a choppy macro backdrop.

• Revenue growth driven by unit volume, not price, a sign of healthy underlying demand. Active customers: 21.2 mln, up nearly 5% yr/yr, supported by improved marketing efficiency and higher conversion.
• Autoship sales +13.6% yr/yr to $2.61 bln, outpacing total company growth. Autoship remains a major engine for predictability, cost efficiency, and margin expansion.
• Mobile app strength: App customers and app orders both +15% yr/yr, helped by enhanced app functionality and increasing direct traffic.
• Chewy Vet Care continues to surpass expectations, driving high utilization and deepening customer loyalty through recurring, high-margin services. Clinics double as acquisition channels and retention drivers, increasing Autoship and pet health program engagement. SmartEquine acquisition boosts Chewy's premium veterinary, health, and nutraceutical offerings, expanding reach into higher-value verticals.

Briefing.com Analyst Insight

Chewy's Q3 report checks nearly every box investors wanted to see: clean volume-driven growth, strong Autoship momentum, sustained active customer gains, and expanding services-driven engagement. The flywheel of Autoship, Vet Care, and Chewy+ is becoming more apparent, improving both visibility and margin potential. Still, we remain mindful that Chewy is navigating a pet category that has slowed from its pandemic highs. The company is outperforming peers, but the broader backdrop is far from robust.

Execution is strong but sustaining mid-single-digit to high-single-digit growth in a pressured category will require continued customer acquisition efficiency and disciplined cost management. From a valuation perspective, Chewy offers an improving story, but we're not ready to call it a high-conviction momentum name until macro pressure in the pet category eases. For now, we view CHWY as a steady share-gainer with tightening fundamentals, but not necessarily a stock to chase aggressively after big earnings-day pops.