CHWY Stock Hits Over 1-Month Low After Flat Q2 Gross Margin Overshadows Raised Outlook

(MENAFN- AsiaNet News)

• Chewy's Q2 net sales rose 7.3% to $3.33 billion, while gross margin stayed flat at 30.4%.
• Adjusted diluted EPS of $0.36 was in line with consensus, while adjusted EBITDA of $226.7 million topped FiscalAI estimate.
• Chewy raised FY26 sales guidance to $13.46 billion to $13.57 billion and narrowed adjusted EBITDA margin guidance to 6.7% to 6.8%.

Chewy Inc. (CHWY) stock fell in morning trade on Wednesday, putting shares on track to hit an over one-month low, even as the company reported higher second-quarter sales and raised its full-year outlook.

The online pet retailer's net sales increased 7.3% year on year to $3.33 billion, meeting Wall Street's consensus estimate as per FiscalAI. Adjusted diluted earnings per share (EPS) rose to $0.36 from $0.33, missing FiscalAI's estimate by roughly 1%.

CHWY stock fell as much as 7% in morning trade, hitting levels last seen in late-July, and was among the top trending tickers on Stocktwits at the time of writing.

Sales Rise, But Gross Margin Stays Flat

Chewy's cost of goods sold (COGS) increased to $2.319 billion from $2.162 billion, a 7.3% rise that nearly matched sales growth, leaving gross margin unchanged at 30.4% in the second quarter (Q2).

Profitability below the gross-margin line was stronger. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) jumped 23.7% to $226.7 million, with adjusted EBITDA margin expanding 90 basis points to 6.8%.

Chewy Raises Full-Year Outlook

“The durability of our recurring revenue base, continued customer growth, and disciplined execution give us confidence to raise our full-year revenue and profitability outlook,” said Chewy CEO Sumit Singh.

Chewy now expects FY26 net sales of $13.46 billion to $13.57 billion, up from its previous $13.4 billion to $13.55 billion range. However, it narrowed adjusted EBITDA margin guidance to between 6.7% and 6.8% from 6.6% to 6.8%. Third-quarter (Q3) adjusted EBITDA margin is expected between 6.6% and 6.7%.

According to Investing, analysts flagged Chewy's declining liquidity. Chewy ended Q2 with $611 million in cash, down from $860.1 million at fiscal year-end, while long-term debt stood at $588.7 million.

What Retail Investors Think About CHWY Stock?

Retail traders remained upbeat despite the decline. Investor sentiment on Stocktwits surrounding CHWY turned 'extremely bullish' from 'neutral' territory a week earlier, amid 'extremely high' message volume.

CHWY stock retail sentiment on September 9 as of 10:57 a.m. ET | Source: Stocktwits

One Stocktwits user said they are waiting for a deeper pullback before considering re-entry, while watching for Chewy's vet services and prescription businesses to gain traction.

View this Stocktwits post

CHWY stock has fallen nearly 35% this year and almost 50% in the last 12 months.

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