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Performance was driven by the durability of the recurring Autoship model, which reached 84.4% of total net sales and grew over 10% year-over-year.

Management attributed record profitability to structural drivers including sponsored ads expansion, favorable product mix into health, and supply chain efficiencies from automation.

A weakening consumer environment in the latter part of Q1 led to modest pressure on premiumization and product attach rates, particularly in discretionary categories.

The company is successfully gaining market share as consumers prioritize value and reliability, with Chewy's absolute clicks increasing mid-single-digits despite broader industry impression declines.

Strategic positioning in pet health was bolstered by the acquisition of Modern Animal, aiming to capture a larger share of the $54 billion pet health TAM.

Operational leverage is being realized through AI integration across customer service, pharmacy, and fulfillment, targeting low tens of millions in savings for fiscal 2026.

Full-year net sales guidance was revised to $13.40 billion–$13.55 billion to reflect a more conservative view of the consumer environment and muted impact from growth initiatives.

Active customer additions are now expected to trend toward the lower end of the 150,000 to 250,000 range per quarter due to challenged new customer acquisition trends.

Management maintains its 10% long-term adjusted EBITDA margin target, supported by structural margin expansion that does not rely on outsized industry growth or pricing inflation.

The company expects to operate approximately 60 vet clinics by the end of fiscal 2026, with steady-state revenue contribution approaching $290 million.

A $600 million Term Loan B transaction was launched to evolve the capital structure, providing flexibility for M&A and shareholder returns while targeting net leverage below 2x.

The acquisition of Modern Animal adds 29 clinics and is expected to be adjusted EBITDA dollar neutral in 2026, though it will act as a modest margin rate drag.

Q2 gross margin is expected to contract modestly year-over-year due to difficult comparisons against nonrecurring MAP pricing benefits realized in fiscal 2025.

Elevated fuel surcharges passed on by carrier partners are expected to represent a mid-single-digit million dollar headwind in the second quarter.

Management flagged a short-term NSPAC headwind as consumers become more discerning and deliberate in discretionary spending decisions.

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Management clarified that Q2 margin compression is primarily a phasing issue related to lapping unusual gross margin gains from the prior year.

Structural SG&A leverage from fulfillment and corporate payroll discipline is expected to remain consistent throughout the year.

Sumit Singh emphasized that Chewy is gaining share, citing mid-single-digit growth in clicks while industry-level impressions declined year-over-year.

Internal data shows healthy reactivation rates and lower churn, suggesting the pressure is macro-related rather than a dilution of Chewy's value proposition.

The immediate focus is integrating Modern Animal into Chewy's technology stack while continuing the organic plan to open 10 to 12 new clinics in 2026.

Clinics are serving as high-efficiency acquisition engines, with 40% of clinic customers being net new to the Chewy ecosystem.

Management stated they see no meaningful change in the competitive environment and are focused on innovating in specialized categories like health and equine.

The promotional environment remains rational and consistent with historical trends despite broader retail activity.