Core Viewpoint - UPS is undergoing a significant restructuring due to a planned reduction in deliveries for Amazon, which is expected to lead to a decline in revenue and necessitate changes in its delivery network [1][4]. Group 1: Financial Performance - In 2024, Amazon accounted for 11% of UPS's revenue but contributed between 20% and 25% of U.S. network volume, indicating a reliance on low-margin packages [4]. - UPS's revenue declined in the fourth quarter of 2025, but revenue per piece increased by 8.3%, reflecting a shift towards more profitable operations [7]. - The adjusted operating margin for the U.S. segment improved to 10.2% in Q4 2025, up from 10.1% in the previous year, despite costs related to grounding aircraft [7]. Group 2: Operational Changes - UPS plans to reduce Amazon volume by 1 million pieces per day in 2025 and another 1 million in 2026, aiming for a more economically viable business model [5]. - The company closed 93 buildings in the U.S. in 2025, consolidating its network and achieving $3.5 billion in cost savings [5]. - UPS eliminated 48,000 positions in 2025, with an additional 30,000 job cuts planned for 2026, resulting in a significant reduction in labor hours [6]. Group 3: Future Outlook - The company anticipates a challenging path ahead, with expected overall adjusted operating margin of 9.6% in 2026, down from 9.8% in 2025, due to revenue declines and restructuring costs [8].

Core Viewpoint - Chewy (NYSE: CHWY) remains a strong investment opportunity despite its stock price doubling since 2024, primarily due to the potential for rising profit margins driven by strategic initiatives [1]. Profit Margins - Chewy has achieved consistent profitability and cash generation over the past two years, currently reporting a 2% net profit margin and a 4% free cash flow margin (1.2% when including stock-based compensation). There is potential for further margin improvement as management focuses on higher-margin growth areas [2]. Key Growth Areas - **Autoship**: Chewy's Autoship subscription plans constitute 83% of total sales, providing predictable and steady revenue that can be further streamlined [3]. - **Chewy Vet Care**: The company aims to operate 20 Chewy Vet Care clinics by year-end, which will enhance its physical presence and tap into the higher margins typical of veterinary services [5]. - **Get Real**: The launch of a private-label healthy and fresh dog food product, Get Real, is expected to offer higher margins and align well with the Autoship subscription model [8]. - **Advertising**: The sponsored ads business is a significant contributor to Chewy's profitability, with management projecting that it could grow to represent 1% to 3% of total revenue [9]. - **Chewy+**: The new $49 annual membership program, Chewy+, has received positive feedback and already accounts for 3% of June sales, with potential for generating substantial high-margin membership fees [10]. Valuation - Chewy is currently trading at 29 times forward earnings, but with anticipated earnings growth, it is considered a top stock to consider [10].