Chewy, Inc. (CHWY) shares tumbled 5.44% in pre-market trading on Wednesday following the release of its first-quarter 2025 financial results. Despite reporting revenue growth and improved profitability metrics, the market reaction suggests investors may have higher expectations or concerns about the company's future outlook.

The online pet products retailer reported Q1 net sales of $3.12 billion, representing an 8.3% increase year-over-year. Chewy's CEO Sumit Singh stated, "Fiscal year 2025 is off to a strong start as the momentum at Chewy continues. We delivered topline growth exceeding the high-end of our net sales guidance range, year-over-year growth in active customers, and compelling profitability and free cash flow generation."

However, the company's gross margin slightly decreased to 29.6%, down 10 basis points from the previous year. On the positive side, Chewy reported a net income of $62.4 million and an adjusted EBITDA margin of 6.2%, which increased by 50 basis points year-over-year. The company's earnings per share (EPS) came in at $0.15, meeting analysts' expectations. Despite these seemingly positive results, the sharp stock decline indicates that investors may be concerned about the company's ability to maintain its growth trajectory in an increasingly competitive pet products market or potential challenges in the broader economic environment.