Q4 2025 Chewy Inc Earnings Call Transcript
Key Points
- Chewy Inc (CHWY) delivered strong net sales growth of 8.1% in Q4 and 8.3% for the full year 2025, reaching over $12.6 billion.
- The company achieved significant margin expansion, with a full-year gross margin of 29.8%, representing a 60 basis point increase year-over-year.
- Chewy Inc (CHWY) reported record free cash flow of $562.4 million for fiscal year 2025, highlighting improved earnings quality and capital efficiency.
- Autoship customer sales, which represent a recurring revenue model, reached $10.5 billion for the year, accounting for 83.3% of total net sales.
- The company is leveraging AI to drive efficiencies, expecting AI-driven efficiencies to contribute a low tens of millions of dollars benefit in 2026, with a path to approximately $50 million or more in annualized savings by 2027.
- Chewy Inc (CHWY) anticipates low single-digit industry growth in 2026, with little or no contribution from pricing, which may limit revenue growth potential.
- The company is not expecting a meaningful rebound in pet household formation, which could impact customer acquisition and growth.
- Gross margin expansion is expected to be more moderate in 2026 compared to 2025, potentially affecting overall profitability growth.
- Chewy Inc (CHWY) is facing challenges in stabilizing the recently acquired SmartEquine business, which may not materially contribute to the P&L in 2026.
- The company is still in a test and learn phase with its Chewy+ program, and is not providing specific guidance on its impact, indicating uncertainty in its contribution to growth.
Hello, everyone. Thank you for joining us, and welcome to the Chewy fourth quarter 2025 earnings call. (Operator Instructions) I will now hand the call over to Natalie Nowak, Head of Investor Relations. Natalie, please go ahead.
Thank you for joining us on the call today to discuss our fourth quarter and full year results for fiscal year 2025. Joining me today are Chewy's CEO, Sumit Singh; and CFO, Chris Deppe. Our earnings release, which was filed with the SEC earlier today, has been posted to the Investor Relations section of our website. In addition to the earnings release, a presentation summarizing our results is also still available on our website at investor.chewy.com.
On our call today, we will be making forward-looking statements, including statements concerning Chewy's financial results and performance, industry trends, strategic initiatives, share repurchase program and the environment in which we operate. Such statements are considered forward-looking statements under the Private
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