Can Chewy Maintain Its Momentum in Active Customer Growth?

Chewy CHWY demonstrated a noticeable acceleration in active customer growth in the first quarter of fiscal 2025, reflecting the success of its ongoing customer acquisition and retention strategies. The company closed the quarter with 20.8 million active customers, a 3.8% year-over-year increase, and added approximately 240,000 customers sequentially.

The growth was supported by a combination of robust gross customer additions and a meaningful reduction in churn, indicating that Chewy is not only bringing in more customers but also retaining them more effectively.

Management noted that the quality of new customer cohorts has significantly improved, demonstrated by higher reorder rates and increased customer spending levels. This is further reflected in the company’s financial performance, with net sales rising 8.3% year over year to $3.12 billion for the fiscal first quarter.

Net Sales Per Active Customer rose 3.7% year-over-year to $583, signaling stronger engagement. Growth drivers include the continued expansion of Autoship subscriptions, the broader adoption of healthcare services like pharmacy and vet clinics, and the full-scale launch of the Chewy+ paid membership program.

Chewy reaffirmed its expectation of low-single-digit active customer growth for fiscal 2025 but acknowledged that the current trajectory points toward the higher end of that range. The company also maintained its full-year revenue guidance between $12.3 billion and $12.45 billion, implying 6-7% year-over-year growth, adjusted for the extra 53rd week in fiscal 2024.

How Do CENT & WOOF Stack Up Against CHWY’s Sales Growth

Chewy's net sales have outperformed those of its key competitors, including Central Garden & Pet Company CENT and Petco Health and Wellness Company, Inc. WOOF.

Central Garden & Pet reported second-quarter fiscal 2025 net sales of $833.5 million, down 7.4% year over year, impacted by weather delays and the loss of two product lines. Despite this, Central Garden & Pet saw strong performance in its Wild Bird and e-commerce businesses, helping offset broader sales softness.

Petco Health and Wellness reported first-quarter fiscal 2025 net sales of $1.49 billion, down 2.3% year over year due to store closures. Petco Health and Wellness expects 2025 net sales to decline in the low-single digits and adjusted EBITDA between $375 million and $390 million, assuming stable tariff levels.

CHWY’s Price Performance, Valuation & Estimates

Shares of Chewy have gained 27.3% year to date compared with the industry’s growth of 7.7%.

From a valuation standpoint, CHWY trades at a forward price-to-sales ratio of 1.38X, below the industry’s average of 2.02X. It has a Value Score of C.

The Zacks Consensus Estimate for CHWY’s fiscal 2025 earnings implies year-over-year growth of 10.3%, whereas the same for fiscal 2026 indicates an uptick of 7.3%. Estimates for fiscal 2025 and 2026 have been unchanged in the past 30 days.

CHWY 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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