Chewy CEO: Consumers are 'highly engaged' even as inflation squeezes budgets

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going towards supplies," Chewy (CHWY) CEO Sumit Singh told Yahoo Finance, noting that the fun part of the pet budget has essentially been cut in half.Despite this discretionary pullback, Singh claimed consumers are "highly engaged" and staying loyal to the brand. They've refrained from trading down — even as they buy fewer nonessential items.Investors appeared to buy into that resilience narrative on Wednesday. Chewy's slight earnings miss didn't keep its stock from surging over 12% following its fourth quarter report, bolstered by its upbeat fiscal 2026 outlook. The company forecasts sales to be between $13.6 billion and $13.75 billion, ahead of the $13.59 billion consensus estimate.During the period, the company posted $3.26 billion in revenue, up 0.5% year over year and meeting analyst expectations, per Bloomberg data. However, adjusted EPS came in at $0.27, missing the $0.28 expected.And Wall Street isn't entirely sold on this "loyalty" story.Evercore ISI analyst Mark Mahaney noted that the firm expects Chewy to have lost about 150,000 active customers during the fourth quarter, a metric that usually makes investors nervous.While Mahaney still likes the stock's long-term potential because of its subscription model, the drop in actual users suggests Chewy is fighting to keep what it has rather than finding new growth.Citi analyst Steven Zaccone also raised a red flag, noting that while the earnings were "solid," the amount each customer spent was slightly lower than expected. With 2026 expected to look eerily similar to 2025, the pressure is on Chewy to prove its new vet clinics and automated warehouses can make up for a pet industry that is no longer accelerating.Ellie the Havanese dog is seen outside the New York Stock Exchange (NYSE) ahead of the IPO for Chewy Inc. in New York City, U.S., June 14, 2019. REUTERS/Andrew Kelly · REUTERS / ReutersStill, Singh is optimistic a "flywheel" effect can help Chewy claw back market share.Beyond loyalty, the CEO said AI may be the pet giant's saving grace. Singh described the technology as a "force multiplier" that the company has been quietly developing while others rushed to make flashy announcements."We've been taking our time to really fundamentally build how you essentially deploy AI at scale inside an organization [of] our size," he said. 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