Why Chewy Stock Rallied Today

By Joe Tenebruso – Updated Mar 25, 2026 at 6:59PM ESTKey PointsCustomer wins are fueling Chewy's sales growth.Free cash flow is increasing at an even faster pace.Shares of Chewy (CHWY +13.30%) rose on Wednesday after the online pet products retailer issued an upbeat earnings forecast. Image source: Getty Images. Solid sales growth trends Chewy's adjusted net sales grew 8.1% year over year to $3.26 billion in its fiscal 2025 fourth quarter, which ended on Feb. 1. The pet food seller added 813,000 active customers during the year, bringing its total to 21.3 million. Existing customers also spent more on the e-commerce platform, with net sales per active customer rising to $591. That's up from $567 in fiscal 2024, $555 in 2023, and $496 in 2022. ExpandNYSE: CHWYChewyToday's Change(13.30%) $3.12Current Price$26.57Key Data PointsMarket Cap$9.7BDay's Range$25.00 - $27.4052wk Range$22.74 - $48.62Volume25MAvg Vol7.9MGross Margin28.58% Better still, Chewy's profit margins are improving as it scales its business. Its gross margin increased to 29.4% from 28.5% in the prior-year quarter. Chewy's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin also improved to 5% from 3.8%. All told, the pet services provider's free cash flow surged 48% to $232 million. Management is forecasting AI-fueled earnings growth Looking ahead, Chewy sees its net sales growing by roughly 9% to $13.7 billion in fiscal 2026. The company also expects its adjusted EBITDA margin to rise to about 6.7%, driven in part by artificial intelligence (AI)-powered productivity gains. Chewy projects tens of millions of dollars of AI-related cost efficiencies in 2026 and up to $50 million in annual savings over time. "[W]e believe Chewy remains well-positioned to compound growth, expand share, and drive sustained margin and free cash flow expansion in 2026 and beyond," CEO Sumit Singh said during a conference call with analysts.Read NextMar 24, 2026 •By Adria CiminoChewy Is Down 30% in 2026. Is This a Once-in-a-Lifetime Buying Opportunity?Mar 23, 2026 •By Leo SunShould You Buy Chewy Stock Before March 25?Mar 20, 2026 •By Matt DiLalloBest Up-and-Coming Companies to Invest in for 2026Mar 16, 2026 •By Jeremy BowmanBest Pet Food Stocks to Buy in 2026: Are They Right for Your Portfolio?Mar 16, 2026 •By Will HealyGot $2,000? 2 Top Growth Stocks to Buy That Could Double Your Money.Mar 16, 2026 •By Lawrence Rothman, CFAChewy Is Down 23% in 2026. Is This a Once-in-a-Lifetime Buying Opportunity?About the AuthorJoe Tenebruso is a contributing Motley Fool stock market analyst with more than 3,000 financial bylines to his name. Joe was an investment analyst for Stock Advisor, Income Investor, Crypto Society, and other top-rated investing services. He also managed Tier 1 Investments, a market-crushing real-money portfolio with 24.58% annualized returns. Joe graduated summa cum laude from Rutgers University with a Bachelor of Science in Finance.tmfguardianX@Tier1InvestorStocks MentionedChewyNYSE: CHWY$26.57(+13.30%)+$3.12*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.