Chewy Shares Climb on Strong Q3 Earnings and Margin Growth
The online pet retailer surpassed revenue and profit estimates, signaling market share gains despite a competitive landscape.
Chewy, Inc. (NYSE: CHWY) shares gained ground after the online pet products retailer posted third-quarter financial results that topped Wall Street expectations, showcasing robust profitability and continued market share expansion.
The company reported adjusted diluted earnings per share of $0.32 on revenue of $3.12 billion for the quarter ending October 27, 2025. This performance narrowly exceeded analyst consensus estimates, which had projected earnings of $0.30 per share on $3.10 billion in revenue. Following the announcement, Chewy's stock was trading at $34.84, reflecting investor optimism.
In a statement that highlighted the company's resilience, CEO Sumit Singh said Chewy continues to "outperform the pet category and expand market share." The results come amid a competitive environment where consumers are increasingly shifting their pet spending online, a trend Chewy has consistently capitalized on.
The company's net sales grew 8.3% year-over-year, a significant figure in the mature pet supply market. More impressively, Chewy demonstrated strong operational efficiency. Its adjusted EBITDA margin increased by 100 basis points to 5.8%, and gross margin expanded by 50 basis points to 29.8%. This indicates that Chewy is not just growing its sales but is also becoming more profitable with each dollar of revenue. According to the company's 8-K filing, net income for the quarter stood at $59.2 million.
"Profits once again growing faster than sales underscores the power of our platform and our team's relentless focus on execution," Singh added in the company's official press release.
The results offer a positive signal for the broader pet care industry, which has seen steady growth fueled by what analysts call the "humanization of pets." This trend involves pet owners spending more on premium food, healthcare, and other discretionary items, treating their pets as family members. Chewy's vast selection and subscription-based Autoship model have positioned it as a primary beneficiary of this durable consumer shift.
Analysts are now closely watching Chewy's ability to maintain its growth trajectory. Prior to the earnings release, JPMorgan Chase & Co. held an "Overweight" rating on the stock with a $45 price target. The current average analyst target price sits at $44.81, suggesting further upside potential. However, some firms, such as UBS, have expressed caution, recently lowering their price target while maintaining a "Neutral" rating, pointing to a competitive landscape that includes giants like Amazon and specialty retailers.
With a market capitalization of over $14 billion, Chewy has solidified its position as a leader in the digital pet space. The company's focus on customer service, including its 24/7 support and personalized recommendations, remains a key differentiator. Looking ahead, investors will be focused on the company's outlook for the crucial holiday quarter and its strategies for navigating inflationary pressures and evolving consumer spending habits.