Minus 1.6 Percent, Then 21.3 Million

On March 20, 2024, Chewy filed a letter to shareholders carrying a minus sign in the one place an autoship retailer cannot afford one. Active customers: 20.1 million, down 1.6 percent year over year. Every other headline number in that document pointed the other way - fiscal 2023 net sales of $11.15 billion, an increase of 10.2 percent; adjusted EBITDA of $368.1 million; Autoship sales at 76.2 percent of net sales, three hundred basis points better than the year before.

The company was selling more, to fewer people.

Fewer Customers, Worth More Each

Sumit Singh, chief executive officer of Chewy since March 2018, had spent six years building a business whose case rested on people who reorder without thinking about it. The letter reported that each of those people was now worth $555 a year, up 11.9 percent, and that the pharmacy and veterinary arm the company calls Chewy Health had passed $3 billion. It also reported that there were fewer of them than a year earlier.

A retailer facing that split has two levers and they pull against each other. Singh did not go back for the count with price. The catalogue went the other way instead: in the December 2025 results release Chewy described itself as partnering with approximately 3,200 brands and offering approximately 130,000 products and services. By the March 2026 release those figures read approximately 4,000 and approximately 190,000.

Trained In Other People'S Warehouses

The operating grammar came from somewhere specific. Before Chewy, Singh held senior management positions at Dell Technologies, then spent four years at Amazon: general manager of the North American merchant fulfillment and third-party businesses from 2013 to 2015, then worldwide director of the consumables businesses - fresh and pantry - from 2015 to 2017. He joined Chewy as chief operating officer in September 2017, took the chief executive's seat six months later, and joined the board in April 2019, two months before the company went public. He holds a Bachelor of Technology from Punjab Technical University and a master's in engineering from the University of Texas at Austin, which inducted him into its Academy of Distinguished Alumni in 2019. Bloomberg put him on its list of fifty in 2020. He has sat on the board of Booking Holdings since April 2022.

None of that was the hardest part of the job.

The Owner Proposed A Merger

In October 2020, Chewy's then-controlling stockholder, BC Partners, proposed a downstream merger to the board: Argos, the holding company through which BC Partners controlled both PetSmart and Chewy, would sell PetSmart, incur the tax liabilities of that sale, and then merge into a new Chewy subsidiary - leaving Chewy holding certain of those liabilities. The board formed a special committee of two directors to negotiate. It concluded in April 2021 without an agreement.

A second committee was formed in August 2021 and hired Cleary Gottlieb, LionTree and PricewaterhouseCoopers. It took until October 2023. The terms it brought back included indemnities from BC Partners for taxes and other liabilities Chewy would absorb, governance changes including a five-year sunset of Chewy's Class B common stock, and the transfer of a PetSmart pharmacy entity and its licences to Chewy. The board approved the merger on October 30, 2023. In parallel, BC Partners closed its sale of PetSmart.

Thirteen months later, the transaction came back as a lawsuit.

A Committee Of One, Then Two

In November 2024 a stockholder filed a verified derivative complaint in the Delaware Court of Chancery. It named the BC Partners entities as controlling stockholders and ten individuals as directors, Singh among them, alleging they had breached their fiduciary duties by negotiating and approving a transaction that was not entirely fair to Chewy. The relief sought was damages.

The board's response is a matter of record and of dates. On February 21, 2025 it expanded from twelve directors to thirteen and appointed Deborah Ellinger. On March 21 it established a special litigation committee consisting of Ellinger alone. On April 24 it went to fourteen and added Nat Goldhaber; on April 30 it put him on the committee too. The committee hired Wilson Sonsini, FTI Consulting and a tax professor, and stayed the case while it worked.

It worked from March to December 2025. Targeted searches ran across approximately 1,400,000 documents collected from more than 20 custodians. Twenty-two formal interviews were conducted, including every individual defendant. A settlement in principle was reached on February 27, 2026, and the stipulation was signed on April 6 and filed with the SEC on April 28. The defendants, or their insurers, agreed to pay $29,500,000 in cash - to Chewy. The document is explicit that nothing in it is an admission: the defendants deny the allegations and maintain their conduct was "at all times proper, in the best interests of Chewy and its stockholders".

The Count Turned

The operating record over the same stretch reads like a separate document. Fiscal 2024 closed at $11.86 billion of net sales, $392.7 million of net income and $570.5 million of adjusted EBITDA, a performance Singh attributed to "strong active customer growth, and compelling Autoship customer loyalty". Fiscal 2025 closed at $12.60 billion, and his own summary of it was arithmetic: "$719 million of adjusted EBITDA or 26% growth, record free cash flow of $562 million, and 21.3 million active customers". A quarter earlier he had described the shape of it more plainly - "profits once again growing faster than sales".

Then the first quarter of fiscal 2026, ended May 3: net sales of $3.36 billion, up 7.7 percent; adjusted EBITDA of $253.1 million, up $60.4 million; and, in his words, "nearly 200,000 net customer additions, and record profitability in the quarter", delivered "despite a more dynamic consumer backdrop".

The balance sheet moved with it. On April 7, 2026 the board added $500 million to a repurchase programme that had roughly $119.4 million of authority left. On June 23 the company signed a new senior secured term loan and pushed the maturity of its asset-based facility out to June 23, 2031.

The controlling stock has a sunset date. The lawsuit has a release. And the number that went backwards in March 2024 has a plus sign in front of it again - roughly 200,000 of one, in a single quarter. The next count is due with the second quarter.