Chewy, Inc. Annual Report: A Year in Review

This guide breaks down Chewy’s performance for the fiscal year ending February 2, 2025, to help you understand the business behind the brand.

1. What does this company do?

Chewy is the "Amazon of the pet world," selling pet food, supplies, and medications online. Its secret weapon is the "Autoship" program. By automating recurring deliveries, Chewy builds deep customer loyalty and creates a predictable stream of revenue that is much more stable than a typical retail store.

2. How did they perform this year?

Chewy is growing and becoming more efficient. Here is the breakdown:

• Sales are up: Net sales reached $12.6 billion, a 6.2% increase from last year.
• Autoship is the engine: Subscriptions now account for 83.3% of all sales, up from 79.2% last year. This model is the core of the business.
• Profitability is mixed: While core operating profit jumped 26% to $719 million, actual profit landed at $222 million. This reflects the company's heavy investment in employee stock awards and the expansion of its warehouse network.
• Customer base: Chewy now has 21.3 million active customers, a 4% increase. Each customer spent an average of $591, a 12% jump, driven largely by pharmacy and health-related purchases.

3. Major wins: Moving beyond just shipping kibble

Chewy is expanding to own the entire "pet parent" experience:

• Healthcare: Chewy runs the #1 pet pharmacy in America. Its "PracticeHub" platform, which connects vets to Chewy’s supply chain, is now used by half of all U.S. veterinary clinics.
• Physical Clinics: The company is opening "Chewy Vet Care" clinics. These offer everything from routine checkups to surgeries, blending online shopping with physical care.
• Private Brands: Chewy is selling more of its own brands, like Vibeful and Frisco. These products are cheaper for Chewy to produce, which helps the company keep more profit from every sale.

4. Financial health & strategy

Chewy is focused on scaling efficiently. It uses AI and robots in its 17 fulfillment centers to lower shipping and packing costs.

A note on cash: Chewy does not pay dividends, choosing instead to reinvest its cash into new clinics and technology. The company generated $562 million in free cash—the money left over after running the business—up from $400 million last year. This allows them to fund their own growth without taking on expensive debt.

5. Key risks to watch

• Limited voting power: BC Partners holds over 80% of the voting power. This means they control major decisions, leaving retail investors with little say in corporate governance.
• Economic pressure: High prices and interest rates are forcing some shoppers to buy cheaper brands. This makes future demand and the cost of acquiring new customers harder to predict.
• Cybersecurity: As a massive online retailer, Chewy is a target for hackers. A data breach could hurt the company’s reputation and lead to significant regulatory fines.

6. The Bottom Line

Chewy is becoming a subscription-based powerhouse. With 83% of sales coming from recurring orders, the business is stable and predictable. They are successfully getting customers to spend more through pharmacy services and private brands.

Investor takeaway: If you are considering an investment, weigh the company's strong subscription model and expansion into high-margin healthcare against the concentration of voting power in the hands of BC Partners and the potential impact of a tighter consumer economy.