Chewy (CHWY +0.94%), the largest online pet retailer in the United States, will report its fourth quarter and full-year earnings on March 25. Should you buy its stock -- which has declined more than 70% over the past five years -- before it posts those latest numbers? Why did Chewy's stock stumble over the past few years?Chewy challenged brick-and-mortar pet stores by selling products online, and it grew rapidly in fiscal 2020 (which ended in Jan. 2021) as more pet owners stayed home during the pandemic. Du ...

Core Insights - Chewy, the largest online pet retailer in the U.S., went public in June 2019 at $22 per share and reached an all-time high of $118.69 in February 2021, showcasing its market dominance and rapid growth [1][2] Sales and Customer Growth - In fiscal 2020, Chewy's net sales surged by 47%, active customers increased by 43%, and net sales per active customer rose by 3%, largely driven by the pandemic [3] - Growth in active customers and net sales slowed in fiscal 2021 as the pandemic effects waned, with a decline in active customers in fiscal 2022 and 2023 due to rising inflation and increased competition from Amazon [4] - Year-over-year metrics show a decline in active customer growth from 8% in FY 2021 to a projected 5% in 9M 2025, while net sales growth decreased from 24% in FY 2021 to a projected 8% in 9M 2025 [5] Strategic Developments - Despite the slowdown, Chewy has been gaining active customers and increasing net sales per active customer through growth in Autoship subscriptions, private label products, integrated ads, and pet health insurance [6] - In Q3 2025, 83.9% of net sales came from Autoship customers, up from 79.2% in FY 2024, indicating a strong reliance on this subscription model [7] Stock Performance - Chewy's stock has declined over 70% from its all-time high, reflecting a cooling growth trajectory in the post-pandemic market [8]

Core Insights - Chewy (CHWY) experienced significant growth in active customers, reaching 20.8 million, a 3.8% year-over-year increase, with an addition of approximately 240,000 customers sequentially [1][11] - The company demonstrated improved customer retention and acquisition strategies, evidenced by a reduction in churn and higher reorder rates [2][3] Customer Growth and Retention - Chewy's active customer growth was supported by robust gross customer additions and a meaningful reduction in churn, indicating effective retention strategies [2] - The quality of new customer cohorts improved, leading to higher reorder rates and increased spending levels [3] Financial Performance - Net sales for the fiscal first quarter rose 8.3% year-over-year to $3.12 billion, driven by the expansion of Autoship subscriptions, healthcare services, and the Chewy+ membership program [3][4] - Net Sales Per Active Customer increased by 3.7% year-over-year to $583, indicating stronger customer engagement [4] Future Outlook - Chewy expects low-single-digit active customer growth for fiscal 2025, with current trends suggesting a potential for higher growth within that range [5] - The company maintained its full-year revenue guidance between $12.3 billion and $12.45 billion, implying a 6-7% year-over-year growth [5] Competitive Positioning - Chewy's net sales growth outperformed key competitors such as Central Garden & Pet Company (CENT) and Petco Health and Wellness Company, Inc. (WOOF) [6] - Central Garden & Pet reported a 7.4% year-over-year decline in net sales, while Petco experienced a 2.3% decline due to store closures [7][8] Stock Performance and Valuation - Chewy's shares have gained 27.3% year-to-date, significantly outperforming the industry growth of 7.7% [9] - The company trades at a forward price-to-sales ratio of 1.38X, below the industry average of 2.02X, indicating potential value [12] Earnings Estimates - The Zacks Consensus Estimate for Chewy's fiscal 2025 earnings implies a year-over-year growth of 10.3%, with a 7.3% increase expected for fiscal 2026 [13]