Chewy Raises Full-Year Outlook After Q2 Sales Reach $3.33 Billion

Chewy raised its full-year sales and profitability outlook after fiscal second-quarter net sales reached $3.33 billion, up 7.3% from a year earlier. The online pet retailer said the quarter ended August 2, 2026, landed at the high end of its sales guidance, while adjusted EBITDA margin came in above its expectations.

The company now expects fiscal 2026 net sales of $13.46 billion to $13.57 billion, compared with the $13.40 billion to $13.55 billion range it issued after the first quarter. Chewy also lifted the lower end of its adjusted EBITDA margin outlook, calling for 6.7% to 6.8% for the year versus the previous 6.6% to 6.8% range.

Chewy’s second-quarter results showed net income of $80.5 million, up from $62.0 million a year earlier, and adjusted EBITDA of $226.7 million, up 23.7%. Active customers increased 3.8% to 21.705 million, while Autoship customer sales rose 9.3% to $2.82 billion.

Guidance moves higher after the June reset

The latest outlook is a modest upward revision rather than a return to the sales expectations Chewy set at the start of the fiscal year. In March, the company guided to fiscal 2026 net sales of $13.60 billion to $13.75 billion. After the first quarter, it reduced that range to $13.40 billion to $13.55 billion while keeping adjusted EBITDA margin guidance at 6.6% to 6.8%.

That June range is documented in Chewy’s first-quarter earnings presentation. The new forecast raises the low end of the sales range by $60 million and the high end by $20 million. The profitability change is similarly focused on the downside of the range, with the 6.8% upper bound unchanged and the lower bound moving to 6.7%.

Chewy’s current presentation also calls for full-year sales growth of approximately 6.8% to 7.7%, or about 5.5% to 6.3% when contributions from SmartPak and Modern Animal are excluded. For the third quarter, management expects net sales of $3.323 billion to $3.358 billion and an adjusted EBITDA margin of 6.6% to 6.7%.

The Q2 result provides some support for that revision. Reported sales growth was 7.3%, but growth excluding SmartPak and Modern Animal was 5.7%. That gap makes the acquired businesses relevant to the top-line comparison while also showing that Chewy’s underlying business continued to expand year over year.

Autoship and customer growth remain central to sales

Chewy ended the quarter with 21.705 million active customers, up from 20.906 million a year earlier. The company said the latest figure includes about 43,000 active customers attributable to SmartPak and excludes customer additions related to Modern Animal. Net sales per active customer rose 1.9% to $602 from $591.

Autoship remained the largest part of the sales base. Customer sales through the recurring-delivery program reached $2.817 billion, up from $2.577 billion in the year-earlier quarter, and represented 84.6% of total net sales. That share was 83.0% a year earlier, so Autoship grew faster than the business as a whole and accounted for a larger portion of quarterly revenue.

The recurring-sales mix helps explain why management highlighted the durability of the revenue base when raising the outlook. It also means customer count and spending per customer both matter to the company’s growth profile. In Q2, Chewy had more active customers and higher net sales per active customer, giving the company two sources of growth before considering the additional revenue contributed by SmartPak and Modern Animal.

Across the first half of fiscal 2026, net sales totaled $6.687 billion, up 7.5% from $6.220 billion in the comparable period last year. That pace was slightly above the second quarter’s 7.3% growth rate and gives Chewy a larger revenue base heading into the second half.

Profitability improves while free cash flow slips

Gross margin was 30.4% in the second quarter, unchanged from the prior-year period. Even with the flat gross margin, net margin increased to 2.4% from 2.0%, and net income rose 29.8% to $80.5 million. Diluted earnings per share were $0.20, compared with $0.14 a year earlier.

On Chewy’s non-GAAP measure, adjusted EBITDA increased to $226.7 million from $183.3 million, while adjusted EBITDA margin expanded 90 basis points to 6.8% from 5.9%. Adjusted diluted earnings per share were $0.36, up from $0.33. The 6.8% quarterly adjusted EBITDA margin also matches the top end of the company’s revised full-year margin range.

Cash generation was less uniformly positive. Net cash provided by operating activities increased to $137.4 million from $133.9 million, but capital expenditures rose to $47.9 million from $28.0 million. Because Chewy defines free cash flow as operating cash flow less capital expenditures, free cash flow declined to $89.5 million from $105.9 million.

For the first 26 weeks of the fiscal year, net income reached $175.3 million, up 40.9%, while adjusted EBITDA increased 27.6% to $479.8 million. Free cash flow for the same period was $160.3 million, up 3.7%. Those half-year figures show stronger earnings growth than sales growth, although the second-quarter cash-flow result was weaker than a year ago.

Chewy’s next quarterly benchmark is already set. For fiscal Q3, management expects $3.323 billion to $3.358 billion in net sales and a 6.6% to 6.7% adjusted EBITDA margin, figures that will determine how much room remains within the newly raised full-year outlook.