Question · Q2 2026
Dylan Cardin inquired about the improving quality of customer cohorts, asking if it's due to industry stabilization or Chewy's specific actions, and how long the outperformance in Autoship growth is expected to continue. He also asked if Chewy Plus would be margin accretive if it became the majority of the business.
Answer
CEO Sumit Singh attributed the improving cohort quality to Chewy's actions, including pushing customers into Autoship and Chewy Plus, and enhancing Autoship's gross subscription add rates and settlement rates, leading to better net retention. He noted Chewy Plus members engage with and add more categories, driving faster NESPAC consolidation for both low and high-spending cohorts. Singh confirmed Chewy Plus is expected to be margin accretive on a dollar and contribution profit basis, despite being gross margin rate dilutive initially due to free trials. He highlighted the program's high ROAS, accelerating NESPAC consolidation, and its potential to become a significant part of the business, similar to other major loyalty programs.