By Janet H. Cho
The CEO of online pet retailer Chewy says pet owners are feeling "more stretched" these days, an ominous sign for consumer spending.
Shares fell 9% on Tuesday, but pared those losses and were up 2.4% just before noon on Wednesday, with Chewy stock on pace for its largest percentage increase since April 20, when it rose 4.9%, according to Dow Jones Market Data.
The stock has fallen 39.1% this year, has dropped 53.8% over the past 52 weeks, and is off 83% from its all-time closing high of $118.69 on Feb. 12, 2021.
CEO Sumit Singh made the remarks during the J.P. Morgan Technology, Media & Communications Conference. While overall spending on pets remains resilient, Chewy isn't immune to macro challenges.
"In the last couple of months, we are continuing to see and interpret the consumer as being more stretched than we were when we entered the year," Singh said. "There's no shortage of data points that supports that. ... And we are very closely watching these trends for what they mean towards the end of the year. So only time will tell."
Chewy's business is fueled by a very large subscription service and a very large health vertical, including the largest pet pharmacy in the country. People love spending on their pets, so that helps, too. "The emotive nature of the category, alongside these durable levers that we bring to market, puts us in a category which is relatively much more inert to some of these macro headwinds," Singh said.
For example, even as tariff rates increased, Singh noted that because 85% of Chewy's sales come from food and meds, and only 15% comes from discretionary purchases, the company was "relatively well insulated" compared with others.
Rising fuel prices could be a factor, though. They haven't forecast what impact higher fuel costs could make on the year, but Singh said "we have the ability to absorb it again without coming off of our earnings algorithm."
Doug Anmuth, an analyst at J.P. Morgan Securities, said Chewy is the largest pure-play U.S. online pet retailer, with more than 21 million active customers. JPMorgan estimates $13.7 billion in net sales for the company this year, around 85% from Autoship, its subscription platform.
Chewy's pricing is "neck to neck with Amazon," and 3% to 16% better than prices at PetSmart, Target, or food and drug mass retailers, Singh said. "When you subscribe to Autoship, you get an incremental 5% discount on top of the base price, which isn't funded by us. It is funded by suppliers because Autoship builds loyalty and repeat purchase rate, and Chewy does it the best in the industry." When Amazon ran its Pet Day promotions, "we didn't match. We didn't feel the need to match. We saw no loss of demand."
Anmuth noted that Chewy has guided Wall Street to 6.7% earnings before interest, taxes, depreciation, and amortization margin for the year at the midpoint "and we project about $750 million in free cash flow."
"CHWY has been a very disappointing stock this year," Mizuho Securities analysts led by David Bellinger wrote in a Tuesday research note.
"Investors are indicating to us that today's developments represent a soft guide down early in the year, with upside to FY26E numbers off the table," they wrote. Mizuho kept its $50 price target and Outperform rating on the stock, saying: "We have been more cautious on spending in general, but do not yet expect a severe turn lower in demand trends for CHWY."
Mizuho said that at this point, longterm-oriented investors "should be taking a serious look here -- particularly given a sub-$20 share price reminiscent of the late-2023 to mid-2024 framework when Chewy was bleeding customers. Yes, trends are pressured today, but are by no means a disaster warranting such an extreme sell-off."
Chewy, based in Plantation, Florida, will report its fiscal first-quarter 2026 financial results and host a conference call to discuss them on June 10.
Write to Janet H. Cho at janet.cho@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 20, 2026 12:17 ET (16:17 GMT)
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