By Tomi Kilgore
Retention was stronger than expected, boosting key Autoship numbers, after the annual fee for Chewy+ subscription rose to $79 from $49
Chewy sees Autoship sales continuing to increase as a percentage of total sales, helped by growth in the Chewy+ subscription program.
Chewy on Wednesday reported fiscal third-quarter sales that rose above expectations, as more people than expected stayed with the online pet-products retailer’s Chewy+ subscription program despite a sharp price hike.
And that fueled continued growth in a key sales metric that the company values because it helps keep customers “pegged” to Chewy rather than moving to competitors.
The company (CHWY) reported fiscal third-quarter Autoship customer sales, which are set to automatically repeat, with a discount, that jumped 13.6% from a year ago to $2.64 billion, above the average analyst estimate compiled by FactSet of $2.59 billion.
And Autoship sales as a percentage of overall sales increased to 83.9% from 83% in the previous quarter and from 80% a year ago, to mark the seventh straight quarter-over-quarter increase.
Autoship sales are valued because they are “highly predictable” and allow for planning to cut costs and improve profitability, Chief Executive Sumit Singh explained on the post-earnings call with analysts, according to an AlphaSense transcript. The program also helps the company retain its more loyal customers.
“Autoship is a rinse and repeat product merchandise program that has high reliability and accuracy, both in terms of planning, in terms of delivery, and high satisfaction rating,” an executive said on the call.
With more than 80% of its members “now pegged” to the Autoship program, the company believes it will continue to scale and become more efficient.
Meanwhile, Chewy’s stock seesawed during the day but closed up 1.5%.
But perhaps better than the growth of Autoship sales, Singh said the Chewy+ membership program “continues to outperform expectations” and is driving higher order frequency, broader category engagement and higher adoption of the mobile app. It’s also helping boost Autoship participation.
The company launched Chewy+ at an introductory annual price of $49, with a 30-day free trial, then raised the price to $79 a year at the end of October. While some subscriber drop-off after the price increase was expected, Singh said early data shows “continued growth and strong conversion” from free to paid memberships at a rate that was higher than forecast.
Overall sales for the quarter, which ran through Nov. 2, increased 8.3% from last year to $3.12 billion, just above the FactSet consensus of $3.10 billion.
Net income rose to $59 million from $4.2 million, while earnings per share of 14 cents beat the FactSet consensus of 12 cents.
If there was a negative to the earnings report, the company said it expects revenue for the current fourth quarter of $3.24 billion to $3.26 billion, compared with analyst expectations of $3.261 billion.
The stock has gained 3.7% in 2025, while the S&P 500 index SPX has advanced 16.3%.
-Tomi Kilgore
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12-10-25 1924ET
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