Chewy said Wednesday the AI it is running inside customer service, pharmacy, fulfillment, and marketing workflows is now producing savings it sizes in the low tens of millions of dollars this fiscal year, on track for $50 million-plus annually from fiscal 2027.
How they built it: Chewy sequenced the rollout. CEO Sumit Singh said the company spent "the last several quarters" building "the foundational infrastructure required to deploy AI broadly across the enterprise," and is now embedding it across the four workflow areas.
The same playbook extends to its vet clinics, where Singh credits "technology-enabled workflows and AI-assisted tools" for vet productivity and retention gains.
The receipts: The savings are showing up in the P&L, not just the roadmap. First-quarter SG&A came in at $593 million, or 17.7% of net sales, roughly 90 basis points leaner year over year.
CFO Chris Deppe attributed the leverage to fulfillment productivity (fewer labor-hours per order) and "early benefits from technology and AI-enabled efficiencies." Chewy first quantified the AI savings last quarter and confirmed both numbers this call.
The base layer: The software gains sit on top of physical automation. When Chewy last detailed its automated fulfillment centers in late 2022, they filled orders 18% to 20% cheaper than legacy sites; it gave no updated automation metrics this call.
Few operators put numbers on the AI layer at all: General Mills credits AI logistics optimization for $20 million-plus in savings, while C.H. Robinson cites AI-driven productivity gains without naming a figure.
Why it matters now: Chewy cut its fiscal 2026 sales outlook on a softer consumer but held its 6.6% to 6.8% adjusted EBITDA margin target, with Deppe saying Chewy was "able to act on certain efficiency gains that we originally had slated for the back half of 2026 earlier in the year." The ramp Singh calls "more meaningful" arrives in 2027.
