CHWY 10-K & 10-Q changes, risk factors and insider trading

•Our continued success is largelyin part dependent on positive perceptions of the Company.

•Risks associated with our suppliers and our outsourcing partners, manysome of which are located outside of the United States (“U.S.”), could materially and adversely affect our business, financial condition and results of operations.

Our ability to improve margins and maintain profitability will also depend on the factors described above. We cannot provide assurance that we will be able to successfully manage any of the foregoing challenges to our future growth. Any of these factors and others not listed could cause our net sales growth to remain flat or decline and may adversely affect our margins and profitability. We have also benefited from increasing pet ownership and discretionary spending on pets. To the extent these trends slow or reverse, our net sales, margins and profitability could be adversely affected. Failure to continue our net sales growth or improve margins could have a material adverse effect on our business, financial condition and results of operations. You should not rely on our historical rate of net sales growth as an indication of our future performance.

Our operations and supply chain could be disrupted by natural or man-made disasters including severe weather, hurricanes, earthquakes, floods, fires, power or water shortages, telecommunications failures, materials scarcity and price volatility, terrorism, civil unrest, conflicts or wars, government shutdowns, and health epidemics or pandemics.

We also use paid and non-paid advertising. Our paid advertising includes search engine marketing, direct mail, display, television, radio and magazine advertising, paid social media and product placement. Our non-paid advertising efforts include search engine optimization, non-paid social media and e-mail marketing. We have relied on and may continue relying on search engines to drive a significant amount of traffic to our websites. Search engines frequently update and change the logic that determines the placement and display of results of a user’s search, such that the purchased or algorithmic placement of links to our websites can be negatively affected. Moreover, a search engine could, for competitive or other purposes, alter its search algorithms or results, causing our websites to place lower in search query results. If there are changes in the usage and functioning of search engines or decreases in consumer use of search engines, for example, as a result of the continued development of AI technology,technologies, this could negatively impact our websites.

The growth of our business depends on our ability to accurately predict and timely respond to consumer trends, successfully introduce new products and services, improve existing products and services and expand into new offerings. Our growth also depends on our ability to meet the requirements of our customers and the needs of their petscustomers, by successfully introducing new products and services, improving and repositioning our existing products and services and expanding into new offerings. These factors contribute to our ability to predict and respond to evolving consumer trends, demands and preferences. The development and introduction of innovative new products and services and expansion into new offerings involves considerable costs. In addition, it may be difficult to establish new supplier or partner relationships and determine appropriate product selection when developing a new product, service or offering. Any new product, service or offering may not generate sufficient customer interest and sales to become profitable or to cover the costs of its development and promotion and may reduce our operating income. In addition, any such unsuccessful effort may adversely affect our brand and reputation. If we are unable to anticipate, identify, develop or market products, services or new offerings that respond to changes in consumer requirements and preferences, or if our new product or service introductions, repositioned products or services, or new offerings fail to gain consumer acceptance, we may be unable to grow our business as anticipated, our sales may decline and our margins and profitability may decline or not improve. As a result, our business, financial condition and results of operations may be materially and adversely affected.

Our continued success is largelyin part dependent on positive perceptions of the Company.

We believe that one of the reasons our customers prefer to shop at Chewy is the reputation we have built for providing an exceptional customer experience. To be successful in the future, we must continue to preserve, grow and leverage the value of our reputation and our brand. Reputational value is based in large part on perceptions of subjective qualities, and even isolated incidents may erode trust and confidence and have adverse effects on our business and financial results, particularly if they result in adverse publicity or widespread reaction on social media, governmental investigations, or litigation. Our brand could be adversely affected if our public image or reputation were to be tarnished by negative publicity. Failure to comply or accusations of failure to comply with ethical, social, product, labor, data privacy, and environmental standards could also jeopardize our reputation and potentially lead to various adverse consumer actions. Any of these events could adversely affect our business. Additionally, there is an increasing focus from some regulators, investors, and other stakeholders on environmental,corporate social,responsibility and governance (“ESG”)sustainability matters. To the extent our products and services create ESG-relatedconcerns concerns,related to these matters, our reputation may be harmed.

If we are unable to attract and retain suppliers, we may be unable to maintain and/or expand our supplier network, which would negatively impact our business.

If any of our significant pet product suppliers discontinue selling to us at any time or discontinue offering us any preferential pricing or exclusive incentives, we could experience a negative impact on our business, financial condition and results of operations. In addition, in our experience, it iscan be challenging to persuade pet food buyers to switch to a different product, which could make it difficult to retain certain customers if we lose a pet food supplier, thereby exacerbating the negative impact of such loss on our business, financial condition and results of operations.

Most of the premium pet food brands that we purchase are not widely carried in supermarkets, warehouse clubs or mass merchants. If any premium pet food manufacturers were to make premium pet food products more widely available in supermarkets or through mass merchants, or if the premium brands currently available to supermarkets and mass merchants were to increase their market share at the expense of the premium brands sold only through specialty pet food and supplies retailers, our ability to attract and retain customers and our competitive position may suffer. Furthermore, if supermarkets, warehouse clubs or mass merchants begin offering any of these premium pet food brands at lower prices, our sales and gross margin could be adversely affected.

We have relied on and, will continue to rely on, third-party national, regional and local logistics providers to ship and deliver our products. If we are not able to negotiate acceptable pricing and other terms with these providers, or if these providers experience performance problems or other difficulties in processing our orders or delivering our products to customers, it could negatively impact our results of operations and our customers’ experience. In addition, our ability to receive inbound inventory efficiently and ship merchandise to customers may be negatively affected by factors beyond our and these providers’ control, including inclement weather, fire, flood, power loss, earthquakes, acts of war or terrorism or other events, such as labor disputes, financial difficulties, volatility in the prices of fuel, gasoline and commodities such as paper and packing supplies, system failures and other disruptions to the operations of the shipping companies on which we rely. We are also subject to risks of damage or loss during delivery by our shipping vendors. If the products ordered by our customers are not delivered in a timely fashion or are damaged or lost during the delivery process, our customers could become dissatisfied and cease buying our products, which would adversely affect our business, financial condition and results of operations. Further, due to conditions beyond our control, we have experienced, and may continue to experience, disruptions and delays in national, regional and local shipping, which may negatively impact our customers’ experience and our results of operations. These conditions may disrupt our suppliers and logistics providers and other third-party delivery agents, as their workers may be unable to report to work and transporting products within regions or countries may be limited due to extended holidays, factory closures, port closuresclosures, labor disputes, and increased border controls and closures, among other things. We have incurred and may continue to incur higher shipping costs due to various surcharges by third-party delivery agents. If we are unable to recover these additional costs, our margins and profitability may be adversely affected.

If we do not optimize and operate our fulfillment centers successfully and efficiently, it could result in excess or insufficient fulfillment capacity, an increase in costs or impairment charges or harm to our business in other ways. In addition, if we do not have sufficient fulfillment capacity or experience problems fulfilling orders in a timely manner, including as a result of unforeseen disruptions, our customers may experience delays in receiving their purchases, which could harm our reputation, our relationship with our customers and our results of operations. In addition, we have had to, and may again have to, pause operations at a fulfillment center, which resulted in, and could again result in, delayed or canceled orders. These actions or other actions that we may take in response to unforeseen circumstances that have the effect of delaying or canceling orders could negatively impact our customers’ experience and our ability to maintain, protect or enhance our brand. We have also experienced, and may continue to experience, disruptions to our supply chain operations and labor workforce availability due to factors beyond our control. If we are unable to successfully optimize our fulfillment centers or manage inventory effectively, it could increase costs and adversely affect our business.

We have added and may continue to add additional fulfillment center capacity as our business continues to grow and our offerings expand. We cannot assure you that we will be able to locate suitable facilities on commercially acceptable terms, nor can we assure you that we will be able to recruit qualified managerial and operational personnel to support our expansion plans. If we are unable to secure new facilities for the expansion of our fulfillment operations, recruit qualified personnel to support any such facilities, or effectively control expansion-related expenses, our business, financial condition and results of operations could be materially and adversely affected. There is no guarantee that any new fulfillment center will achieve our desired level of efficiency in a reasonable amount of time, or at all. If we grow faster than we anticipate, we may exceed our fulfillment center capacity sooner than we anticipate, we may experience problems fulfilling orders in a timely manner or our customers may experience delays in receiving their purchases, which could harm our reputation and our relationship with our customers, and we would need to increase our capital expenditures more than anticipated and in a shorter time frame than we currently anticipate.

We expect AI technologies to become increasingly important to e-commerce businesses. As our competitors develop and expand their strategic use of AI, our operations and profitability could be adversely impacted if we fail to utilize those technologies. We continually consider whether to upgrade existing technologies (including AI) and business applications and we may be required to implement new technologies such as those related to artificial intelligence (“AI”) in the future. The implementation of upgrades and changes may require significant investments. Our results of operations may be affected by the timing, effectiveness and costs associated with the implementation of any upgrades or changes to our systems and infrastructure. In the event that it is more difficult for our customers to buy products from us on their mobile devices, or if our customers choose not to buy products from us on their mobile devices or to use mobile products that do not offer access to our websites, we could lose customers and fail to attract new customers. As a result, our customer growth could be harmed and our business, financial condition and results of operations may be materially and adversely affected.

We currently accept payments using a variety of methods, including credit card, debit card, PayPal, Apple Pay, BNPL, and gift cards and may offer new payment options over time. These payment options subject us to additional regulations and compliance requirements and may also increase our exposure to fraud, criminal activity and other risks. For certain payment methods, we pay interchange and other fees, which may increase over time and raise our operating costs and lower profitability. We are also subject to payment card association operating rules and certification requirements, including the Payment Card Industry Data Security Standard (“PCI DSS”) and rules governing electronic funds transfers, which could change or be reinterpreted to make it difficult or impossible for us to comply. Failure to comply with PCI DSS or to meet other payment card standards may result in the imposition of financial penalties or the allocation by the card brands of the costs of fraudulent charges to us.

Furthermore, as our business changes, we may be subject to different rules under existing standards, which may require new assessments that involve additional costs for compliance. In the future, as we offer new payment options to consumers, including by way of integrating emerging mobile and other payment methods, we may be subject to additional regulations, compliance requirements and the potential for fraud. If we fail to comply with the rules or requirements of any provider of a payment method we accept, if the volume of fraud in our transactions limits or terminates our rights to use payment methods we currently accept, or if a data breach occurs relating to our payment systems, we may, among other things, be subject to fines or higher transaction fees and may lose, or face restrictions placed upon, our ability to accept credit card payments from consumers or facilitate other types of online payments. If any of these events were to occur, our business, financial condition and results of operations could be materially and adversely affected. In addition, the laws relating to gift card breakage and unclaimed property are complex and vary by state. If one or more states change their laws or successfully challenge our interpretation or application of these laws to our gift cards, or if our assumptions regarding breakage or unclaimed property obligations prove incorrect, our liabilities associated with unredeemed gift cards could increase, which could adversely affect our financial condition and results of operations.

The occurrence of a natural disaster, power loss, telecommunications failure, data loss, computer virus, ransomware attack, an act of terrorism, cyberattack, vandalism or sabotage, act of war or any similar event, or a decision to close our third-party data centers on which we normally operate or the facilities of any other third-party provider without adequate notice or other unanticipated problems at these facilities could result in lengthy interruptions in the availability of our websites and mobile applications. Cloud computing, in particular, is dependent upon having access to an Internet connection in order to retrieve data. If a natural disaster, pandemic, blackout or other unforeseen event were to occur that disrupted the ability to obtain an Internet connection, we may experience a slowdown or delay in our operations. While we have some limited business continuity arrangements in place, our preparations may not be adequate to account for disasters or similar events that may occur in the future and may not effectively permit us to continue operating in the event of any problems with respect to our systems or those of our third-party data centers or any other third-party facilities. Our business continuity and data redundancy plans may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur. If any such event were to occur to our business, our operations could be impaired and our business, financial condition and results of operations may be materially and adversely affected.

As a result of our services being primarily web-based, we collect, process, transmit and store large amounts of data about our customers, employees, suppliers and others, including credit card information (which we don’t store) and personally identifiable information, as well as other confidential and proprietary information. We also employ third-party service providers for a variety of reasons, including storing, processing and transmitting proprietary, personal and confidential information on our behalf. While we rely on tokenization solutions licensed from third-parties in an effort to securely transmit confidential and sensitive information, including credit card numbers, advances in computer capabilities, new technological discoveries or other developments may result in the whole or partial failure of these solutions to protect confidential and sensitive information from being breached or compromised. Similarly, our security measures and those of our third-party service providers may not detect or prevent all attempts to hack our systems or those of our third-party service providers. DDoS attacks, viruses, malicious software, break-ins, phishing attacks, ransomware, social engineering, cyber-attacks, security breaches or other cybersecurity incidents and similar disruptions that may jeopardize the security of information stored in or transmitted by our websites, networks and systems or that we or our third-party service providers otherwise maintain, including payment card systems, may subject us to fines or higher transaction fees or limit or terminate our access to certain payment methods. The integration of AI technologies into our operations could also increase cybersecurity and privacy risks and could lead to potential unauthorized access, misuse, acquisition, release, disclosure, alteration or destruction of company or customer data or other confidential or proprietary information. Further, threat actors may leverage AI technologytechnologies to launch more sophisticated, automated, targeted and coordinated attacks that are more difficult to detect. We and our service providers may not anticipate or prevent all types of attacks until after they have already been launched, and techniques used to obtain unauthorized access to or sabotage systems change frequently and may not be known until launched against us or our third-party service providers. In addition, cybersecurity incidents can also occur as a result of non-technical issues, including intentional or inadvertent breaches by our employees or by persons with whom we have commercial relationships.

Breaches of our security measures or those of our third-party service providers or any cybersecurity incident could result in unauthorized access to our websites, networks and systems; unauthorized access to and misappropriation of consumer and/or employee information, including personally identifiable information, or other sensitive, confidential or proprietary information of ourselves or third parties; viruses, worms, spyware or other malware being served from our websites, networks or systems; deletion or modification of content or the display of unauthorized content on our websites; interruption, disruption or malfunction of operations; costs relating to cybersecurity incident remediation, deployment of additional personnel and protection technologies, response to governmental investigations and media inquiries and coverage; engagement of third party experts and consultants; litigation, regulatory action and other potential liabilities. If any of these cybersecurity incidents occur, or there is a public perception that we, or our third-party service providers, have suffered such a breach, our reputation and brand could also be damaged and we could be required to expend significant capital and other resources to alleviate problems caused by such cybersecurity incidents. As a consequence, our business could be materially and adversely affected and we could also be exposed to litigation and regulatory action and possible liability. In addition, any party who is able to illicitly obtain a customer’s password could access the customer’s transaction data or personal information. Any compromise or breach of our security measures, or those of our third-party service providers, could violate applicable privacy, data security and other laws, and cause significant legal and financial exposure, adverse publicity and a loss of confidence in our security measures, which could have a material adverse effect on our business, financial condition and results of operations. ThisThese isrisks have become more sopronounced since governmental authorities throughout the U.S. and around the world are devoting more attention to data privacy and security issues.

In addition, continued and ongoing international conflictconflicts hashave led to disruption, instability and volatility in the global markets and industries that could negatively impact our operations. For example, while we do not have direct operations within Russia or Ukraine, the conflict involving these nations could adversely affect our business, supply chain and partners. Similarly, while we also do not have direct operations in the Middle East, the escalating tensions in the region may disrupt global markets and impact our business, supply chain and customers. The impact of these global events on our longer-term operational and financial performance will depend on future developments, our response and governmental response to inflation and the duration and severity of such conflicts.

Moreover, there is uncertainty regarding the future of international trade agreements and the U.S.’ position on international trade. For example, the current U.S. administration has announced, and may in the future announce, plans to implement or increase tariffs on imports from China, Mexico, Canada, and other countries. The U.S. federal government may also withdraw from or materially modify international trade agreements. While we are unable to predict the extent of changes the current administration may bring to the U.S. government’s trade policy, such changes may cause us to amend our supply chain strategies or adversely impact our own costs.

Governmental authorities continue to evaluate the privacy implications inherent in the use of third-party “cookies” and other methods of online tracking for behavioral advertising and other purposes. The U.S. government and various state governments have enacted, have considered or are considering enacting, legislation or regulations that could significantly restrict the ability of companies and individuals to engage in these activities, such as by regulating the level of consumer notice and consent required before a company can employ cookies or other electronic tracking tools or the use of data gathered with such tools. Additionally, some providers of consumer devices and web browsers have implemented, or announced plans to implement, means to make it easier for Internet users to prevent the placement of cookies or to block other tracking technologies, which could result in the use of third-party cookies and other methods of online tracking becoming significantly less effective. The regulation of the use of these cookies and other current online tracking and advertising practices or a loss in our ability to make effective use of services that employ such technologies could increase our costs of operations and limit our ability to acquire new customers on cost-effective terms and consequently, materially and adversely affect our business, financial condition and results of operations.

Our ability to maintain our competitive position is largely dependent on the services of our senior management and other key personnel. In addition, our future success depends on our continuing ability to attract, develop, motivate and retain highly-qualified and skilled employees. The market for such positions has been and may continue to be highly competitive and we may incur significant costs to attract and retain qualified individuals. In addition, the loss of any of our senior management or other key employees or our inability to recruit and develop mid-level managers could materially and adversely affect our ability to execute our business plan and we may be unable to find adequate replacements. OtherAll thanof our Chiefemployees, Executiveincluding Officer, Chief Financial Officer and certain otherour senior executives, allmay ofchoose our employees are at-will employees, meaning that they mayto terminate their employment relationship with us at any time, and their knowledge of our business and industry would be difficult to replace. If we fail to retain talented senior management and other key personnel, or if we do not succeed in attracting highly-qualified employees or motivating and retaining existing employees, our business, financial condition and results of operations may be materially and adversely affected.

We compete with other companies for employees, some of whom are larger than us and have access to greater capital resources than we do. In addition, these efforts may be made more difficult by legal and regulatory developments in the U.S. relating to immigration. If we are unable to successfully recruit and retain personnel, we may face labor shortages or be forced to increase wages and enhance benefits for such personnel, which may have an adverse effect on our results of operations.

Our results of operations are sensitive to changes in certain macroeconomic conditions that impact the pet market, which could adversely impact our business, financial condition and results of operations. Factors such as inflationinflation, tariffs and rising interest rates have affected us and can adversely affect us by increasing costs of materials and labor. In a highly inflationary environment, we may be unable to raise the price of our products and services at or above the rate of inflation, which could reduce our profitability. In addition, our costs of capital, labor and materials can materially increase, which could have an adverse impact on our business, financial condition and results of operations. Deflation could cause an overall decrease in spending and borrowing capacity, which could lead to deterioration in economic conditions and employment levels. Deflation could also cause the value of our inventories to decline. Other uncertainties in economic conditions that impact the pet products market and its participants, such as our vendors, suppliers, and investors, may also adversely affect our business, financial condition and results of operations.

We have expanded our business into new markets and into new product and service categories and we may continue such expansion. As a new entrant, we expect to face many competitive challenges including competing successfully with incumbent providers who may have longer operating histories, large customer bases, high brand recognition and greater financial, technical, marketing and other resources than we do. To compete effectively, we have invested and may need to invest significantadditional resources to create brand awareness and build our reputation in these markets and categories, and our efforts at building, maintaining and enhancing our reputation could fail. There can be no assurance that we will be able to maintain or enhance our reputation, and failure to do so could materially adversely affect our business, financial condition and results of operations. If we are unable to maintain or enhance consumer awareness of our brand cost-effectively, our business, financial condition and results of operations could be materially adversely affected.

Our strategy may include the continued expansion of our operations to international markets. Although some of our executive officers have experience in international business from prior positions, we have minimal experience with operations outside the U.S. and Canada. Our ability to successfully execute this strategy is affected by many of the same operational risks we face in expanding our operations. In addition, our international expansion may be adversely affected by: our ability to identify and gain access to local suppliers; our ability to staff, develop, and manage foreign operations as a result of distance, language, and cultural differences; our ability to obtain and protect relevant trademarks, domain names, and other intellectual property; and local laws and customs, legal and regulatory constraints, political and economic conditions and currency regulations of the countries or regions in which we operate or intend to operate in the future, including limitations on the repatriation and investment of funds and foreign currency exchange restrictions. Risks inherent in expanding our operations internationally also include, among others, the costs and difficulties of managing international operations, adverse tax consequences, domestic and international tariffs and other barriers to trade. Further, the extent and impact of any sanctions imposed in connection with the escalationongoing of hostilitiesconflicts between Russia and Ukraine and in the Middle East, or other geopolitical events, may cause additional financial market volatility and impact the global economy and also impact our strategy of expansion into international markets.

The BCP Stockholder Parties have previously sold and may continue to sell their shares of our common stock in a privately negotiated transaction or otherwise. The sale by the BCP Stockholder Parties of a substantial number of shares of our common stock, or the perception that such sales could occur, could significantly reduce the market price of our Class A common stock. If the BCP Stockholder Parties sell their significant equity interest in the Company, we may in the future become subject to the control of a presently unknown third party. Such third party may have conflicts of interest with those of our other stockholders. Further, if the BCP Stockholder Parties sell a controlling interest in the Company to a third party, any outstanding indebtedness may be subject to acceleration and our commercial agreementagreements and relationships could be impacted, all of which may adversely affect our ability to run our business and may have a material adverse effect on our business, financial condition and results of operations.

The stock market has recentlypreviously experienced and may again experience extreme price and volume fluctuations. The market prices of securities of companies have experienced fluctuations that often have been unrelated or disproportionate to their operating results. In the past, stockholders have sometimes instituted securities class action litigation against companies following periods of volatility in the market price of their securities. Any similar litigation against us could result in substantial costs, divert management’s attention and resources, and harm our business, financial condition and results of operations.

Since our dual class capital structure limits the voting power of our publicly held shares of Class A common stock, we are currently ineligible for inclusion in all FTSE Russell indices, such as the Russell 2000. As a result, mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not be investing in our stock. Furthermore, we cannot assure you that other stock indices will not take a similar approach as FTSE Russell in the future. Exclusion from indices could make our Class A common stock less attractive to investors and, as a result, the market price of our Class A common stock could be adversely affected.

We have a 52- or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Our 2025 fiscal year ended February 1, 2026 and included 52 weeks (“Fiscal Year 2025”). Our 2024 fiscal year ended February 2, 2025 and included 53 weeks (“Fiscal Year 2024”). Our 2023 fiscal year ended January 28, 2024 and included 52 weeks (“Fiscal Year 2023”). Our 2022 fiscal year ended January 29, 2023 and included 52 weeks (“Fiscal Year 2022”).

We derive net sales primarily from salesSales of both third-party brand and private brand pet food, pet products, pet medicationshealth and other pet healthspecialty products, and related shipping fees. Sales of third-party brand and private brand pet food, pet products and shipping revenues are recorded when products are shipped, net of promotional discounts and refunds and allowances. Taxes collected from customers are excluded from net sales. Net sales is primarily driven by growth of new customers and active customers, and the frequency with which customers purchase and subscribe to our Autoship subscription program.

Interest and Other Income (Expense), net

We generate interest income from our cash and cash equivalents and marketable securities. We incur interest expense in relation to our borrowing facilities, finance leases, and uncertainunrecognized tax positions.benefits.

Our other income (expense), net consists of changes in the fair value of equity warrants, equity investments, tax indemnification receivables, foreign currency transaction gains and losses, and allowances for credit losses.losses on marketable securities.

Net sales for Fiscal Year 20242025 increased by $713.6$740.2 million, or 6.4%,6.2%, to $11.9$12.6 billion compared to $11.1$11.9 billion for Fiscal Year 2023.2024. Excluding net sales of $226.6 million in the 53rd week,week for Fiscal Year 2024, net sales for Fiscal Year 20242025 increased by $487.0$966.8 million, or 4.4%,8.3%, to $11.6$12.6 billion compared to $11.1$11.6 billion for Fiscal Year 2023.2024. This increase was primarily driven by growth in autoship customer spending from new and existing customers, and the frequency withsales, which customersincreased purchaseby and subscribe11.8% to our$10.5 Autoshipbillion, subscriptionhigher program. Netnet sales per active customercustomer, which increased $23,$13 or 4.1%,2.2% to $578$591, and growth in active customers, which improved by 4.0% to 21.3 million in Fiscal Year 20242025, compared to Fiscal Year 2023,2024. drivenThis byincrease was attributable to growth across our healthcareconsumables, pet health and specialty products, and hardgoods businesses.

Cost of goods sold for Fiscal Year 20242025 increased by $407.4$454.0 million, or 5.1%,5.4%, to $8.4$8.8 billion compared to $8.0$8.4 billion in Fiscal Year 2023.2024. This increase was primarily due to anhigher increasesales incoupled associatedwith product,increased outbound freight,freight and shipping supply costs. The increase in cost of goods sold was lower than the increase in net sales on a percentage basis, reflecting supply chain efficiency gains across our fulfillment network.

Gross profit for Fiscal Year 20242025 increased by $306.2$286.2 million, or 9.7%,8.3%, to $3.5$3.8 billion compared to $3.2$3.5 billion in Fiscal Year 2023.2024. This increase was primarily due to the year-over-year increase in net sales as described above. Gross profit as a percentage of net salesmargin for Fiscal Year 20242025 increasedwas by29.8%, approximatelyan 80increase of 60 basis points compared to 29.2% in Fiscal Year 2023,2024, primarilyand dueis todriven supplyby chaingrowth efficiencyin gainssponsored acrossads our network as well asand margin expansiongrowth across our consumables and healthcare businesses.business.

We have recently undertakencommenced a project thatin willFiscal Year 2024 to modernize our finance information technology architecture. At the conclusion of this project, which we believe will occur towards the end of our 2025 fiscal year, we aim to have, among other things, (i) the ability to produce financial information across different segments of the Company, which supports scalability for future growth, (ii) expanded visibility and analytical capabilities with respect to our data, and (iii) an infrastructure that enables the use of artificial intelligence and other system advancements that will create further efficiencies for our team members. While we have made progress on this project, we also identified additional system automations that expanded our original scope. As a result, we expect that this project will go live towards the end of Fiscal Year 2026. The project will not require meaningful capital investment.

Advertising and marketing expenses for Fiscal Year 20242025 increased by $61.6$20.8 million, or 8.3%,2.6%, to $804.1$824.9 million compared to $742.5$804.1 million in Fiscal Year 2023.2024. Our marketing expenses increased due to additional investment in our lower and upper funnel marketing channels as well as expansion into Canada, contributing to new customer acquisition,acquisition and improved customer retention, and an increase in wallet share from our large and stable customer base.retention.

Interest and Other Income (Expense), net

Interest incomeincome, net for Fiscal Year 20242025 decreased by $23.4$19.9 million, to $35.1$15.2 million compared to interest income of $58.5$35.1 million in Fiscal Year 2023.2024. WhileThis decrease was primarily due to a decrease in interest income generated byfrom cash and cash equivalents,equivalents and marketable securities, primarily due to maturities of marketable securities exceeded interest expenses incurred induring Fiscal Year 2024, this decrease was due in large part to additional interest income generated by investment of proceeds from the parent reorganization transaction in Fiscal Year 2023.2024.

Other incomeexpense for Fiscal Year 20242025 decreasedincreased by $9.4$10.2 million, to $4.0$6.2 million compared to other income of $13.4$4.0 million.million in Fiscal Year 2024. This decreaseincrease was primarily due to smallerthe increasestermination of equity warrants and decreases in the fair value of equity warrants as well as foreign currency transaction losses,investments partially offset by increasesa decrease in theforeign faircurrency value of tax indemnification receivables and equity investments.losses.

We finance our operations and capital expenditures primarily through cash flows generated by operations. Our principal sources of liquidity are expected to be our cash and cash equivalents, marketable securities, and our revolving credit facility. Cash and cash equivalents consisted primarily of cash on deposit with banks. Cash and cash equivalents totaled $595.8$860.1 million as of February 2,1, 2025,2026, aan decreaseincrease of $6.5$264.3 million from JanuaryFebruary 28,2, 2024.2025. Marketable securities consisted primarily of corporate bonds and equity investments and U.S. Treasury securities and totaled $0.9$18.7 million as of February 2,1, 2025,2026, aan decreaseincrease of $530.9$17.8 million from JanuaryFebruary 28,2, 20242025 due to the maturities and salespurchases that occurred during Fiscal Year 2024.2025.

We believe that our cash and cash equivalents, marketable securities, and availability under our revolving credit facility will be sufficient to fund our working capital, capital expenditure requirements, and contractual obligations for at least the next twelve months. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures, share repurchases, or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in Item 1A of this 10-K Report. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Net cash provided by operating activities was $486.2$691.6 million for Fiscal Year 2023,2025, which primarily consisted of i) $39.6$222.8 million of net income, ii) non-cash adjustments of $377.1$503.9 millionmillion, including share-based compensation expense of $239.1$297.9 millionmillion, and depreciation and amortization expense of $109.7$129.3 million, as well as iii) ana increasedecrease of $105.7$4.2 million from working capital changes. This increasedecrease was primarily driven by an increase in receivables, inventories, and other current assets, partially offset by an increase in other current liabilities and payables, partially offset by an increase in other current assets, inventories, and receivables.payables.

Net cash used in financing activities was $996.7$276.0 million for Fiscal Year 2024,2025, primarily consisting of $942.8$262.5 million for repurchases of common stock, $51.9$9.2 million for income taxes paid for, net of proceeds from, the parent reorganization transaction, as well as payments for secondary offering costs, and principal repayments of finance lease obligations.

Net cash providedused byin financing activities was $71.6$996.7 million for Fiscal Year 2023,2024, and consisted of $60.6$942.8 million for repurchases of common stock, $51.9 million for income taxes paid for, net of proceeds from the parent reorganization transaction and $22.0 million of capital contributions fromfrom, the parent reorganization transaction, partiallyas offsetwell by $10.3 million ofas payments madefor pursuantsecondary tooffering thecosts, tax sharing agreement with related parties,and principal repayments of finance lease obligations, and payment of debt modification costs.obligations.

We have a senior secured asset-based credit facility (the “ABL Credit Facility”) which matures on AugustApril 27,1, 20262030 following an amendment entered into on April 1, 2025, and provides for non-amortizing revolving loans in the aggregate principal amount of up to $800 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities upof to(i) $250 million, (ii) the amount of permanent reductions of commitments thereunder and (iii) if greater than zero, the amount by which the borrowing base as of the date of incurrence exceeds the commitments thereunder, subject to customary conditions. Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to either a base rate or a term Secured Overnight Financing Rate (“SOFR”) (with no credit spread adjustment) at the Company’s option, plus a margin determined based on the Company's average excess availability, which is either (i) 0.25%, 0.50%, or 0.75% for borrowings at the base rate, or (ii) 1.25%, 1.50%, or 1.75% for SOFR borrowings. We are required to pay a 0.25% per annum commitment fee with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility. Based on our borrowing base as of February 2,1, 2025,2026, which is reduced by standby letters of credit, we had $782.6$783.1 million of borrowing capacity under the ABL Credit Facility. As of February 2,1, 2025,2026, we haddid nonot have any outstanding borrowings under the ABL Credit Facility.

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended MayAugust 3,2, 2026 (“10-Q Report”) and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2026 (“10-K Report”). This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections herein and in our 10-K Report, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context requires otherwise, references in this 10-Q Report to “Chewy,” the “Company,” “we,” “our,” or “us” refer to Chewy, Inc. and its consolidated subsidiaries.

We generate interest income from our cash and cash equivalents and marketable securities. We incur interest expense primarily in relationconnection towith our borrowing facilities, including our term loan and asset-based revolving credit facilities, as well as finance leases,leases and unrecognized tax benefits.

Adjusted EBITDA excludes depreciation and amortization, share-based compensation and related taxes, income tax provision (benefit), interest income (expense), transaction-related costs, net legal settlement proceeds, changes in the fair value of equity warrants, severance and exit costs, and other items not considered indicative of our core operations. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of net sales.

Adjusted net income and Adjusted earnings per share exclude certain non-cash and non-recurring items, including share-based compensation and related taxes, releases of valuation allowances associated with deferred tax assets, transaction-related costs, net legal settlement proceeds, changes in the fair value of equity warrants, and severance and exit costs. Beginning in the first quarter of 2026, Adjusted net income excludes transaction-related costs prospectively.

Net sales for the thirteen weeks ended MayAugust 3,2, 2026 increased by $241.2$226.0 million, or 7.7%,7.3%, to $3.4$3.3 billion compared to $3.1 billion for the thirteen weeks ended MayAugust 4,3, 2025. Net sales growth was 5.7% for the thirteen weeks ended August 2, 2026, excluding contributions from SmartPak and Modern Animal. This increase was primarily driven by growth in active customers, which improvedincreased by 3.6%,3.8% to 21.521.7 million, andincluding higherapproximately net43 thousand customers attributable to SmartPak but no customers attributable to the Modern Animal acquisition. Net sales per active customer, whichcustomer increased $14,$11 to $597$602 in the thirteen weeks ended MayAugust 3,2, 2026 compared to the thirteen weeks ended MayAugust 4,3, 2025, driven by growth across our consumables, pet health and specialty products, and hardgoods businesses. On February 2, 2026, the Company completed the acquisition of SmartPak whose net sales were not material for the thirteen weeks ended May 3, 2026 and are included within pet health and specialty products.

Cost of goods sold for the thirteen weeks ended MayAugust 3,2, 2026 increased by $153.6$157.0 million, or 7.0%,7.3%, to $2.3 billion compared to $2.2 billion in the thirteen weeks ended MayAugust 4,3, 2025. This increase was primarily due to higher sales coupled with increased outbound freight and shipping supply costs.

GrossCost profitof goods sold for the thirteentwenty-six weeks ended MayAugust 3,2, 2026 increased by $87.6$310.6 million, or 9.5%,7.1%, to $1,011.4$4.7 millionbillion compared to $923.8$4.4 millionbillion in the thirteentwenty-six weeks ended MayAugust 4,3, 2025. This increase was primarily due to the year-over-year increase in nethigher sales ascoupled describedwith above.increased Grossoutbound margin for the thirteen weeks ended May 3, 2026 was 30.1%, an increase of 50 basis points compared to 29.6% for the thirteen weeks ended May 4, 2025,freight and isshipping drivensupply by growth in sponsored ads and margin growth across our consumables business.costs.

Selling, general and administrative expenses for the thirteen weeks ended MayAugust 3,2, 2026 increased by $23.7$32.5 million, or 3.6%,4.8%, to $676.8$704.4 million compared to $653.1$671.9 million in the thirteen weeks ended MayAugust 4,3, 2025. The majority of the increase is associated with network-wide fulfillment costs, which were collectively incurred to support the overall growth of the business, our pharmacy fulfillment network, and veterinary clinics. This also included an increase in other selling, general, and administrative expenses of $9.61$6.4 million primarily attributable to transaction-related costs with the SmartPakModern Animal acquisition, as well as a modest increase in expanded hosting and software infrastructure requirements.

Advertising and marketing expenses for the thirteen weeks ended MayAugust 3,2, 2026 increased by $12.3$14.2 million, or 6.3%,7.1%, to $206.1$214.8 million compared to $193.8$200.6 million in the thirteen weeks ended MayAugust 4,3, 2025. Our marketing expenses increased due to additional investment in our lower and upper funnel marketing channels contributing to new customer acquisition and improved customer retention.

InterestAdvertising incomeand marketing expenses for the thirteentwenty-six weeks ended MayAugust 3,2, 2026 decreasedincreased by $0.4$26.5 million, or 6.7%, to $2.8$420.9 million compared to interest income of $3.2$394.4 million in the thirteentwenty-six weeks ended MayAugust 4,3, 2025. ThisOur decreasemarketing wasexpenses increased due to aadditional decreaseinvestment in interestour incomelower generatedand fromupper marketablefunnel securities,marketing whichchannels maturedcontributing duringto thenew thirteencustomer weeksacquisition endedand Mayimproved 4,customer 2025.retention.

Our effective tax rate for the thirteen weeks ended MayAugust 3,2, 2026 was higher than the U.S. federal statutory rate, primarily due to state income taxes and shortfall from share-baseshare-based compensation partially offset by federal and state research and development credits.

Income tax provision for the thirteen weeks ended MayAugust 3,2, 2026 increased by $21.0$19.4 million, to $36.5$31.4 million compared to income tax provision of $15.5$12.0 million in the thirteen weeks ended MayAugust 4,3, 2025, driven primarily by higher pre-tax income.

We finance our operations and capital expenditures primarily through cash flows generated by operations. Our principal sources of liquidity are expected to be our cash and cash equivalents, marketable securities, and our revolving credit facility. Cash and cash equivalents consisted primarily of cash on deposit with banks. Cash and cash equivalents totaled $485.2$611.0 million as of MayAugust 3,2, 2026, a decrease of $374.9$249.1 million from February 1, 2026.

We believe that our cash and cash equivalents, marketable securities, and availability under our revolving credit facility will be sufficient to fund our working capital, capital expenditure requirements, anddebt-service obligations, contractual obligationsobligations, and strategic investments for at least the next twelve months. As of August 2, 2026, we had $783.1 million available under our asset-based revolving credit facility. This assessment reflects our current liquidity position and expected cash flows, including the impact of our recently incurred debt-service obligations. During the quarter, we drew and fully repaid $220 million under the facility. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures, share repurchases, or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in Item 1A of our 10-K Report for the fiscal year ended February 1, 2026. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Net cash provided by operating activities was $108.5$245.9 million for the thirteentwenty-six weeks ended MayAugust 3,2, 2026, which primarily consisted of $94.8$175.3 million of net income and $115.9$253.5 million of non-cash adjustments, including share-based compensation expense of $66.9$150.4 million and depreciation and amortization expense of $37.0$76.7 million. These amounts were partially offset by working capital changes of $92.8$170.4 million, which were primarily driven by a decrease in accrued expenses and other current liabilities, coupled with an increase in accounts receivablereceivable, inventories, and prepaid expenses and other current assets. These changes were partially offset by a decrease in inventories.

Net cash provided by operating activities was $86.4$220.3 million for the thirteentwenty-six weeks ended MayAugust 4,3, 2025, which primarily consisted of $62.4$124.4 million of net income,income $120.4and $235.5 million of non-cash adjustments, such asincluding share-based compensation expense of $74.5$150.4 million and depreciation and amortization expense of $30.0$62.1 million,million. These amounts were partially offset by aworking cashcapital decreasechanges of $88.8$121.6 millionmillion, from working capital. Cash decreases from working capitalwhich were primarily driven by an increase in accounts receivable, a decrease in otheraccrued current liabilities and an increase in inventories, receivables,expenses and other current assets,liabilities, as well as increases in inventories and prepaid expenses and other current assets. These changes were partially offset by an increase in payables.

Net cash used in investing activities was $228.6$620.6 million for the thirteentwenty-six weeks ended MayAugust 3,2, 2026, primarily consisting of $378.0 million for the acquisition of Modern Animal, $174.8 million for the acquisition of SmartPak,SmartPak and $37.7$85.6 million for capital expenditures related to expanding operations at our fulfillment centers, veterinary clinics, and future pharmacy facility capabilities.

Net cash used in investing activities was $41.2$70.9 million for the thirteentwenty-six weeks ended MayAugust 4,3, 2025, primarily consisting of $37.7$65.7 million for capital expenditures related to expanding operations at our Houston, Texas fulfillment center,centers, veterinary clinics, and future pharmacy facility capabilities.capabilities, and investments in our fresh and frozen private brand infrastructure.

Net cash usedprovided inby financing activities was $254.8$125.9 million for the thirteentwenty-six weeks ended MayAugust 3,2, 2026 primarily consisting of $200.0$591.7 million of term loan proceeds offset by $400.0 million for repurchases of common stock, and $53.3$68.7 million for tax withholdings related to vesting of share-based compensation awards.

Net cash used in financing activities was $25.0$154.0 million for the thirteentwenty-six weeks ended MayAugust 4,3, 2025, primarily consisting of $23.1$152.6 million for repurchases of common stock, as well as payments for secondary offering costs, andpartially principaloffset repaymentsby $2.3 million for proceeds from, net of financeincome leasetaxes obligations.paid for, the parent reorganization transactions.

We have a senior secured asset-based credit facility (the “ABL Credit Facility”), which matures on AprilJune 1,23, 20302031 following an amendment entered into on AprilJune 1,23, 2025,2026, and provides for non-amortizing revolving loans in the aggregate principal amount of up to $800 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). Based on our borrowing base as of MayAugust 3,2, 2026, which is reduced by standby letters of credit, we had $783.1 million of borrowing capacity under the ABL Credit Facility. As of MayAugust 3,2, 2026 and February 1, 2026, we did not have any outstanding borrowings under the ABL Credit Facility, respectively.Facility.

During the thirteen weeks ended MayAugust 3,2, 2026, 7,599,2269,886,243 shares of Class A common stock were repurchased and subsequently cancelled and retired pursuant to the Repurchase Program for a total cost of $200.0$199.9 million, excluding the cost of commissions and excise taxes. During the twenty-six weeks ended August 2, 2026, 17,485,469 shares of Class A common stock were repurchased and subsequently cancelled and retired pursuant to the Repurchase Program for a total cost of $400.0 million, excluding the cost of commissions and excise taxes. The authorized value of shares available to be repurchased under the Repurchase Program excludes the cost of commissions and excise taxes and as of MayAugust 3,2, 2026, the remaining value of shares of common stock that were authorized to be repurchased under the Repurchase Program was $550.0$350.1 million. As of MayAugust 3,2, 2026, the total unpaid cost of share repurchases was $1.4$1.5 million for excise taxes.