Chewy Autoship Sales Up 15% in Q2: Have Investors Missed the Catalyst?

Chewy, Inc.’s CHWY second-quarter fiscal 2025 results highlight the exceptional momentum in the Autoship subscription program. Autoship customer sales increased 14.9% year over year to $2,576.9 million, representing 83% of total net sales, compared with 78.4% in the same period last year, marking a record high for the company. This outpaced the company’s overall net sales growth of 8.6%, reflecting enhanced customer retention and recurring purchase behavior, providing Chewy with more predictable revenue streams.

Autoship’s increased penetration also offers operational advantages. Management noted that recurring orders enhance demand forecasting and inventory placement, resulting in more efficient use of fulfillment centers and improved shipping optimization. These factors contributed to Chewy’s gross margin, which expanded 90 basis points year over year to 30.4%, demonstrating how Autoship supports both revenue growth and cost efficiency as the company scales.

Chewy is also leveraging its Autoship platform for new product offerings. The “Get Real” fresh dog food line is available exclusively through Autoship, integrating subscription convenience with premium offerings. Chewy+ membership adoption is another tailwind, boosting Autoship enrollment while increasing customer engagement and frequency.

With about 20.9 million active customers, Autoship’s growing share of sales provides Chewy with a more stable and recurring revenue foundation heading into the second half of fiscal 2025. Management highlighted that strength in Autoship and rising Chewy+ adoption underpins confidence in reaching full-year targets of $12.5-$12.6 billion in net sales and an adjusted EBITDA margin of 5.4-5.7%.

What the Latest Metrics Say About Chewy

Chewy shares have risen 23.6% in the past year compared with the industry’s growth of 30.4%. CHWY has comfortably outperformed key peers, such as Central Garden & Pet Company CENT, Petco Health and Wellness Company, Inc. WOOF and Spectrum Brands Holdings, Inc. SPB

During the same period, shares of Central Garden & Pet, Petco Health and Wellness and Spectrum Brands have declined 7.1%, 24.3% and 42.3%, respectively. 
 

From a valuation standpoint, Chewy trades at a forward price-to-sales ratio of 1.20, lower than the industry’s 2.26. CHWY carries a Value Score of D. 

However, CHWY is trading at a premium when compared to peers like Central Garden & Pet (with a forward 12-month P/S ratio of 0.71), Petco Health and Wellness (0.19), and Spectrum Brands (0.45).
 

The Zacks Consensus Estimate for Chewy’s current financial-year sales and earnings per share implies year-over-year growth of 6% and 22.1%, respectively. 
 

Chewy currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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