Chewy Inc. (CHWY) shares fell as much as 7% on Wednesday and closed down 7.7%, despite second-quarter results that met Wall Street expectations and an increased fiscal 2026 revenue forecast. Net sales rose 7.3% to $3.33 billion for the fiscal quarter ended Aug. 2, 2026, slightly above the $3.32 billion FactSet consensus, while adjusted diluted earnings per share increased to $0.36 from $0.33. Gross margin remained unchanged at 30.4%, weighing on investor sentiment, although adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) rose 23.7% to $226.7 million and its margin expanded 90 basis points to 6.8%. Chewy raised its full-year net sales outlook to $13.46 billion-$13.57 billion and lifted the lower end of its adjusted EBITDA margin guidance to 6.7%, but executives said much of the quarter's margin outperformance came from timing-related and discrete benefits. Customer and recurring-revenue metrics remained strong: active customers increased 3.8% to 21.7 million, while Autoship customer sales rose 9.3% to $2.8 billion, or 84.6% of total sales. Health businesses, Modern Animal and SmartPak performed ahead of expectations, and artificial-intelligence initiatives are being deployed across customer service, pharmacy and veterinary operations. Chewy expects those initiatives to generate low tens of millions of dollars in fiscal 2026 savings and about $50 million annually in fiscal 2027, though management said the efficiencies would primarily offset cost pressures and support investment. The stock ended down approximately 35% year to date and nearly 50% over the past 12 months.