Chewy Reports Revenue Growth and AI Cost Savings Following Modern Animal Integration

CHICAGO (AP) — Chewy, Inc. management on Wednesday announced financial results for the fiscal period ending in September 2026, highlighting sustained revenue growth and significant cost-saving projections driven by artificial intelligence initiatives. The online pet retailer also provided updates on the integration of its recent acquisition of Modern Animal, a specialty veterinary telehealth company, as part of its broader strategy to expand direct-to-consumer healthcare services.

The company reported that total revenue increased year-over-year, driven by higher average order values and expanded membership subscriptions. Chewy executives attributed a portion of this growth to the successful onboarding of Modern Animal's customer base into the Chewy ecosystem. The acquisition, finalized earlier in the year, was designed to deepen Chewy's foothold in the veterinary care sector, offering pet owners seamless access to telehealth consultations alongside traditional product sales.

A central component of the update focused on the deployment of AI technologies across operations and customer service channels. Management projected that these automated systems would generate substantial cost savings over the next two fiscal years by optimizing inventory management, reducing logistics expenses, and streamlining customer support interactions. The company stated that initial pilot programs have already demonstrated efficiency gains without compromising service quality, positioning AI as a key lever for margin improvement in a competitive retail landscape.

Strategic updates also included details on program redesigns aimed at enhancing the user experience on the Chewy platform. These changes involve a restructured loyalty program and new personalized recommendation engines intended to increase customer retention rates. Executives noted that early data suggests these modifications are resonating with consumers, particularly among younger demographics seeking integrated pet care solutions.

Despite the positive outlook, the company acknowledged challenges in scaling the integration of Modern Animal's proprietary software with Chewy's existing infrastructure. Management indicated that while the merger is proceeding according to plan, full operational synergy may take longer than initially anticipated due to technical complexities and regulatory compliance requirements specific to veterinary telehealth services.

Looking ahead, Chewy provided updated forward guidance, projecting continued double-digit revenue growth for the remainder of the fiscal year. The company reiterated its commitment to investing in technology and strategic acquisitions to maintain its market leadership position. However, investors remain focused on whether the projected AI cost savings will materialize as quickly as anticipated and how the company will navigate potential regulatory scrutiny regarding the expansion of telehealth services.

The financial results were released ahead of a scheduled earnings call with analysts, where management is expected to address questions regarding capital allocation and the long-term profitability of the Modern Animal integration. As Chewy continues to evolve its business model, the success of these strategic initiatives will be critical in determining its trajectory in the evolving pet care industry.