Chewy Stock Soars as Q4 Sales Surge 15% to $3.25B

Chewy Inc. (CHWY) shares surged in premarket trading on Wednesday, March 26, 2025, after the online pet supplies retailer reported a 15% year-over-year increase in revenue for the fourth quarter of 2024. The company's net sales jumped to $3.25 billion, surpassing analyst estimates of $3.2 billion. This impressive performance has reignited bullish sentiment among investors, who are now eyeing the stock as a potential long-term winner in the e-commerce sector.



The key driver behind Chewy's strong revenue growth was its Autoship program, which accounted for 80.6% of Q4 revenue, up from 76.4% in the previous year. This subscription model ensures recurring revenue streams and encourages repeat purchases, which is crucial for maintaining a competitive edge in the retail-cyclical industry. Additionally, Chewy's focus on e-commerce efficiency and innovation, such as improving its AI capabilities, contributed to enhanced sales performance and customer satisfaction. These strategic moves resulted in improved margins, with adjusted EBITDA growing to $124.5 million, a 44% increase year over year, and a 70 basis points improvement in EBITDA margin to 3.8%.

However, Chewy's net income fell to $22.8 million from $31.9 million a year prior, reflecting a decrease in bottom-line profitability. Despite the Q4 decline, full-year net income markedly increased to $392.7 million from $39.6 million in fiscal 2023, as the company enhanced operational performance throughout the year. The full-year adjusted net income of $446.8 million underscores Chewy's broad annual profitability improvements. Gross margins expanded slightly to 28.5% from 28.2%, further highlighting meaningful operational achievements even amidst challenges.

Chewy faced pressure to maintain and grow its active customer base, which expanded modestly by 2.1% reaching 20.5 million. It had declined in the previous quarter. The lackluster customer growth was counterbalanced by 4% higher net sales per active customer of $578 compared to Q4 2023. Despite solid engagement, slowing active customer growth signals the need for refined customer acquisition tactics. Additionally, declining net margins by 40 basis points to 0.7% and a year-over-year drop in basic earnings per share to $0.06 from $0.07 indicate cost pressures that may stem from enhanced marketing or inflationary trends.



Strategically, chewy made strides in technological and operational investments, such as in artificial intelligence and fulfillment network automation. These advancements aim to optimize logistics, reduce costs, and heighten customer satisfaction. These efforts align with Chewy’s long-term goal to support growth across e-commerce, healthcare, and international markets. Key announcements included plans to expand healthcare services and grow its international reach, especially in Canada, to mitigate domestic market saturation and diversify revenue sources.

Looking forward, Chewy management showed optimism and guided for fiscal 2025 first quarter sales of $3.06 billion to $3.09 billion, reflecting 6% to 7% year-over-year growth. Adjusted EPS is forecast to be $0.30-$0.35. For the full year 2025, management is forecasting net sales of $12.3 billion-$12.45 billion and adjusted EBITDA margin of 5.4%-5.7%. If full-year sales hit the high end of guidance, it would reflect 5% growth from fiscal 2023.

Elsewhere, management has indicated confidence in capitalizing on strategic initiatives to sustain growth. Management underscored expansion in healthcare services and external markets, being strategic priorities. Chewy’s forward-looking blueprint involves leveraging its strong foundation in technology to drive growth across e-commerce, healthcare, and international markets.

In conclusion, Chewy Inc. (CHWY) demonstrated strong revenue growth in Q4 2024, surpassing analyst expectations. However, the decline in EPS highlights the need for continued focus on cost management and profitability. As Chewy navigates these challenges, its strategic initiatives and operational efficiencies will be critical in sustaining its growth trajectory and maintaining its leadership in the petcare industry.

Ask Aime: What factors contributed to Chewy's impressive revenue growth in Q4 2024?