Chewy (CHWY) Stock: Dip Buy Opportunity?
- shares of Chewy, the online pet supplies retailer, experienced a 10% drop Wednesday despite reporting first-quarter earnings and revenue that exceeded expectations.
- While net income saw a decrease of approximately 7% to $62.4 million due to increased costs, earnings per share remained steady at 15 cents, matching the figure from...
- Chewy also reported a 3.8% increase in active customers, bringing the total to 20.76 million, a figure that surpassed analysts' projections and exceeded the 2.1% growth rate observed...
Chewy (CHWY) stock dropped 10% despite a robust Q1 earnings report, sparking debate: Is this a dip buy opportunity? News Directory 3 explores Chewy’s financial performance, revealing an 8% revenue increase, surpassing $3.12 billion, and a 3.8% rise in active customers to 20.76 million. Despite these strong indicators, the stock price fell, possibly due to valuation concerns and shrinking margins. While Q1 earnings per share held steady at 15 cents, adjusted earnings climbed to 35 cents. Autoship sales also saw a notable jump, up 15%. We analyze the factors behind the stock’s downturn,including the company’s maintained financial outlook for the year. Discover what’s next for Chewy and it’s potential to sustain growth.
Chewy Stock Dips Despite Strong Q1 Earnings Report
Updated June 12, 2025
shares of Chewy, the online pet supplies retailer, experienced a 10% drop Wednesday despite reporting first-quarter earnings and revenue that exceeded expectations. The company’s Q1 performance revealed an 8% increase in revenue, reaching $3.12 billion and surpassing the estimated $3.08 billion.
While net income saw a decrease of approximately 7% to $62.4 million due to increased costs, earnings per share remained steady at 15 cents, matching the figure from Q1 2024. adjusted earnings, which exclude specific items, rose by 13% year-over-year to 35 cents per share, exceeding estimates of 33 cents.
Chewy also reported a 3.8% increase in active customers, bringing the total to 20.76 million, a figure that surpassed analysts’ projections and exceeded the 2.1% growth rate observed in fiscal year 2024. Net sales per active customer also rose by 3.7% to $583. Autoship sales saw a 15% jump, reaching $2.56 billion and accounting for 82% of total sales.
“Fiscal year 2025 is off to a strong start as the momentum at Chewy continues,” said Sumit Singh, CEO of Chewy.“We delivered topline growth exceeding the high-end of our net sales guidance range, year-over-year growth in active customers, and compelling profitability and free cash flow generation.”
The company maintained its financial outlook for the remainder of the fiscal year,projecting net sales between $3.06 billion and $3.09 billion for the second quarter, representing a year-over-year growth of 7% to 8%. However, this projection is slightly lower than the growth experienced in Q1. Adjusted earnings are expected to range from 30 cents to 35 cents per share,falling below the Q1 figure at the midpoint.
For the full year, Chewy anticipates sales ranging from $12.30 billion to $12.45 billion, indicating a 4% to 5% increase compared to the previous year.The adjusted EBITDA margin is targeted at 5.4% to 5.7%,an increase from 4.8% in 2024. Despite the positive earnings report, concerns about shrinking margins and a possibly slower pace of sales growth may have contributed to the stock’s decline. Chewy’s high valuation,trading at 51 times earnings,might also be a factor as investors take profits.
What’s next
Investors will be watching Chewy’s performance closely in the coming quarters to see if the company can maintain its growth trajectory and improve its margins.The next earnings report will provide further insights into the company’s ability to navigate rising costs and sustain its high valuation.