Chewy shares fell as much as 10% after the pet retailer forecast a sequential decline in third-quarter gross margin, and Diana Rosero Pena said the quarter's strong headline numbers were mostly timing and acquisitions underneath.
The pet trade is still read as a pandemic story about more households acquiring animals. Rosero Pena said the pet population has stopped growing, the industry as a whole is not growing either, and the money now sits in what each owner spends on the animal they already have.
"They think that the industry is not necessarily growing. They are growing at a higher pace than the overall industry, and they are taking share."
Rosero Pena is the consumer staples analyst who covers the sector for Bloomberg Intelligence, and she published the firm's ten-year deep dive on the global pet industry the same morning Chewy reported.
I listened to the full episode so you can skip it. 16 minutes of audio, 12 minutes of reading.
Here are the 10 insights that matter.
👤 Guest: Diana Rosero Pena, Consumer Staples Analyst at Bloomberg Intelligence, who covers packaged food and the pet sector
🎙️ Hosts: Scarlet Fu and Paul Sweeney, who present Bloomberg Intelligence's weekday markets program
👥 Also on: Michael Halen, the Bloomberg Intelligence analyst who covers restaurants, and Randall Williams, who covers the business of sports
📰 Published: 9 September 2026 on the Bloomberg Intelligence podcast feed
🟣 Apple Podcasts | 🔗 Episode page | ⏱️ 16 min
Key Takeaways
Chewy's strong headline quarter came mostly from timing shifts and acquisitions rather than underlying demand
Shares fell as much as 10%, the most since 2025, on a forecast sequential decline in third-quarter gross margin
The pet industry is not growing, and Chewy is growing by taking share out of it
A pressured owner keeps the brand of the main meal and trades down on everything else
Treats and discretionary items are where the cutting happens, and Rosero Pena expects that to continue for the rest of the year
Growth has moved from more pets to more spending per pet, with the US population now stabilized
Surrenders and adoptions are back near historical averages
Cats are outgrowing dogs, and cost about two thirds as much to keep
Chewy is answering the pet-care opportunity with physical vet clinics rather than insurance, aiming for about 60 by the end of the year
Bloomberg Intelligence's new deep dive puts the global pet industry at $645 billion by 2035
Jersey Mike's guided above consensus in its first quarter as a public company, and Michael Halen thinks management is sandbagging
The chain is 99% franchised, so franchisees rather than the company absorb higher food and labor costs
The NFL cannot add an 18th game until the players' union is willing to reopen the labor agreement early
LIV Golf's survival past 2027 is in doubt after its Saudi backer stopped funding it
1. Strong Headlines, Timing
Scarlet Fu opened on the stock: "Shares, they fell as much as 10 percent, the most since 2025 after the pet supply company forecast a sequential decline in gross margin for the third quarter due to a timing shift."
Rosero Pena said the reported quarter looked better than the business underneath it. The headline numbers were strong: "But if you look under the hood, a lot of it was timing and, you know, acquisitions that fed into the growth"
The industry itself is flat, and Chewy's growth is coming out of competitors' share. "They think that the industry is not necessarily growing. They are growing at a higher pace than the overall industry, and they are taking share"
What changed the tone was management's language about the customer. "But it seems that they were a little bit downbeat from the call, particularly with consumer, how restrained they are, which is, you know, something that we have seen"
2. What Owners Cut First
Fu asked what a constrained pet owner actually does — whether they trade down from a brand to a store label the way a constrained shopper does for themselves.
Rosero Pena said the main meal is protected and everything around it is not. "For the main course, if you want to say that, or the main meal, they tend to stick to the same brand, which is why packaged food companies invest heavily on becoming the main meal for the pets and get them early." Then: "But everything else is up for debate"
The cutting shows up in treats and discretionary items, which Rosero Pena called "up for play"
This is not a new development and she does not expect it to end soon: "And that has been something that we have seen in the past year. And we think this is going to probably continue for the remainder of the year"
3. Clinics, Not Insurance
Asked whether Chewy sells pet insurance, Rosero Pena said it does, but that the company's stronger position is in veterinary care delivered in person.
The build-out is physical clinics, with a target for this year. "Right now they're focusing more on clinics and physical clinics. They're aiming for about 60 by the end of the year"
She said the clinic route has proved a better alternative for Chewy than the insurance product, and that "it seems to be working"
4. Spend Per Pet
Fu read Rosero Pena's own research note back to her — "Growth is increasingly a spend per pet story. Not a pet population story" — and asked whether that was a hangover from the pandemic surge in dog ownership.
Rosero Pena said yes, and tied the shift partly to housing costs. A harder economy and a challenged real estate market push people toward animals that suit smaller homes, and Chewy has pointed to the same trend: "So cats are better pets for smaller dwellings compared to dogs"
The number of animals has stopped rising. "Per Chewy, the population has stabilized." Chewy's own read is unchanged from the long-run pattern: "Surrendering and adoption seems to be levels close to historical averages, I will say"
What is left is spending per animal: "And also, we see greater spending on per pet rather than a growth in pet population"
5. Cats Outgrow Dogs
Fu asked how the revenue growth of cats compares with dogs — a question she said she could not believe she was asking.
The industry is still mostly dogs, but the growth rate has flipped to cats. Rosero Pena said anything cat-related, from treats to main food, is now showing faster growth than the dog equivalent
The driver is population, not price. "And it's because we're seeing a slight better population growth in cats, at least in the United States, compared to dogs"
The reason owners are choosing them is cost, and Rosero Pena confirmed the perception is accurate. A cat runs "I would say like, you know, about two thirds of what, you know, you spend on a dog," and cats also suit smaller houses. "And like I said, it's mainly because people tend to think that cats are less expensive to maintain"
6. A $645B Industry
Sweeney asked whether the pet industry has simply reset after the pandemic. Rosero Pena said Bloomberg Intelligence published its ten-year deep dive on the sector the same day Chewy reported.
The forecast is for the global market to grow by about two thirds over a decade. "And we think over the next 10 years, we will probably see the global pet industry growing to $645 billion by 2035. Globally, yeah, 67%. compared to 2025 levels"
The US is the largest single piece of it: "And U.S. spending would probably reach $250 billion by then"
Asked who else is a public play on that spending besides Chewy, Rosero Pena split the answer between food and retail. On the food side, General Mills, Smucker and Nestlé, plus the smaller pure play Freshpet in the US. On the retail side, Amazon as the big online player, Chewy itself, and Petco. PetSmart is private
7. Jersey Mike's Guidance
Sweeney turned to Jersey Mike's, which recently listed and has just reported for the first time as a public company. Michael Halen covers restaurants for Bloomberg Intelligence.
The first print beat expectations and the stock was up 6% to 7% when Halen last checked. "First of all, they guided higher than consensus. They're looking at 3% to 4% same-store sales in the second half driven mostly by transactions," which would be an acceleration on the second quarter
Marketing spending is going up, including in-game advertising with the NFL and digital marketing the chain had not done before. "This should attract Gen Z consumers into the brand"
A menu item is coming back for the same reason: "They're bringing back Mike's Hot Sub, which tends to help dinner business"
Catering is the larger long-term lever. "On average, they're doing about 3% of sales, but they have stores doing 10%, and they think 10% is achievable for the entire system"
The initiative Halen said investors were not expecting is late-night trading. Stores currently shut at nine, and the chain is sticking to roughly three limited-time offers a year, but "they said they could expand into late night" as digital orders grow — which Halen thinks could drive same-store sales growth in 2027 and beyond
8. The 99% Franchise Edge
Sweeney put the cost question to Halen: every restaurant company is dealing with rising food and labor costs, so what did Jersey Mike's say about them?
Halen said the franchise structure is why the cost problem lands somewhere else. "It's unique because it's fast casual, but they're 99% franchised, right?" The franchisees, not the company, pay the higher food and labor bills
He said that makes it his preferred way to own the sector. In his opinion, Jersey Mike's is the name clients should hold if they want restaurant exposure
Unit growth is running ahead of same-store sales. "They're seeing pretty solid growth, very strong net unit growth, more than 8%." On the guidance, "Same-store sales are going to accelerate back to 3% to 4%, and we think management is sandbagging a little bit"
The contrast is with the rest of the group: "All the other fast casual chains we cover... own their stores, operate their stores, and so they get hit with the higher food costs"
9. The NFL's 18th Game
On the opening day of the NFL season, Sweeney asked Randall Williams when the league adds an 18th regular-season game.
Williams said it is stalled on labor, not on appetite. The league started talking about it around 18 months ago: "And it was under the assumption that this was going to happen, in large part because former union executive director Lloyd Howell said, who doesn't love more football?"
Howell is gone. "Lloyd has since been dismissed for a bunch of different things, including strip club visits, as well as misuse of union funds." After an interim, J.C. Tretter now runs the union, and "J.C. is currently going on a tour around all 32 clubs to gather information as to how players feel about it"
Nothing can happen until the union agrees to reopen the labor agreement early. "But the union has been in no position to negotiate a CBA early, therefore being able to add an 18th game if the players want to at all"
Players already find the 17th game hard to recover from, Williams said, even though the extra inventory is valuable to the league's media rights. Sweeney noted the vote to add that game was tight and said of football, "This is one of the highest contact sports that isn't a combat sport"
The owners are betting the players take the money again. "And the interesting thing about this is that evidently the players chose money," Williams said of the last round, and "the owners are betting that they will" again
What the players might ask for in exchange, according to Williams: "I had a couple sources tell me that they could want additional roster spots, a higher increase in revenue share, another bye week, and not having as many mandatory off-season obligations that they have to show up for"
10. LIV Golf's Bankruptcy
Sweeney turned to LIV Golf's bankruptcy filing and asked whether the breakaway league quietly disappears.
Williams said its influence outlasts its balance sheet. "I think LIV Golf will be remembered as one of the biggest disruptors in sports history"
The funding stopped earlier than the league expected. "And evidently, they had the plug pulled early on what PIF was spending on them, which is in excess. Of $5 billion." Williams said the league was not expecting its backer "to stop fueling the rocket ship" and has had to go out and raise replacement money
Investors did not see enough return to keep funding it, he said, which is why the money had to come from elsewhere
A partner is lined up for a relaunch, and the survival question is a date. "But it really does remain to be seen if this league is going to live beyond 2027 when they will make their return in their new iterations"
Bonus Insights
Chewy is a US-only business with early groundwork in Canada. "They have started going into Canada," Rosero Pena said, but there has been no progress report since: "They haven't updated in a couple of quarters in terms of like the status of that"
Roger Goodell was renewed as NFL commissioner for another four years. Williams: "Probably a billionaire by the end of it"
The Super Bowl falls on President's Day weekend this season, which Williams said is not the normal pattern — "Next year in 2028, it'll go back to the regular schedule." Of the Monday after the game, he said: "It pretty much is an unofficial national holiday with a lot of people not showing up to work." Some school districts schedule a planning day around it
Sweeney complained that US Open tennis matches finish too late to watch: "I can't imagine anybody wants to be leaving Arthur Ashe at 3:30 in the morning." Williams agreed it is bad for the players as well as for the broadcasters, and said he attends the day session
Rosero Pena's bottom line is that the pet trade has stopped being a story about more animals and become one about how much each owner will spend on the animal they already have — and that with the consumer under pressure, everything except the main meal is what gets cut.
Products, Companies & Tools Mentioned
Chewy (Beat on the headline numbers but guided to a lower third-quarter gross margin; growth flattered by timing and acquisitions, and management sounded downbeat on how restrained the consumer is)
General Mills, J.M. Smucker and Nestlé (The large packaged-food companies Rosero Pena named as public ways to own pet spending, and the ones that spend to become a pet's main meal early)
Freshpet (The smaller US pure play in pet food)
Amazon, Petco and PetSmart (The retail side of the trade — Amazon as the big online player, Petco listed, PetSmart private)
Jersey Mike's (Guided above consensus in its first report as a public company; 99% franchised, more than 8% net unit growth, and catering and late-night trading as the long-term levers)
The NFL (An 18th regular-season game is blocked until the players' union reopens the labor agreement; Roger Goodell renewed for four years)
LIV Golf and Saudi Arabia's Public Investment Fund (The league filed for bankruptcy protection after its backer stopped funding it; a relaunch is planned but its life beyond 2027 is uncertain)
Books & Resources Mentioned
Bloomberg Intelligence's pet industry deep dive (Published the same day as Chewy's results; forecasts the global pet industry at $645 billion by 2035 and US spending at $250 billion)
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