For Immediate ReleasesChicago, IL – April 16, 2025 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include Sprouts Farmers Market, Inc. (SFM) , BJ's Wholesale Club Holdings, Inc. (BJ) , Chewy, Inc. (CHWY) and The Kroger Co. (KR) .Here are highlights from Wednesday’s Analyst Blog:Consumer Sentiment Dips: 4 Prominent Stocks to B ...

The Retail-Wholesale group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Chewy (CHWY) one of those stocks right now? A quick glance at the company's year-to-date performance in comparison to the rest of the Retail-Wholesale sector should help us answer this question.Chewy is one of 210 individual stocks in the Retail-Wholesale sector. Collectively, these companies sit at #13 in the Zacks Sector Rank. The Zacks Sector Rank gauges the s ...

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Core Insights - The core viewpoint is that Chewy has successfully capitalized on the trend of treating pets as family members, establishing itself as the leading seller of pet food and accessories [1] Revenue Growth - Chewy has more than doubled its revenue over the past five years, reaching $11.9 billion in sales for the latest fiscal year [2] - The company's revenue from customers participating in the Autoship program amounted to $9.4 billion, representing 79.2% of total revenue [5] Autoship Program - The Autoship program is a key component of Chewy's business model, allowing customers to schedule regular deliveries of frequently purchased items like pet food, medications, and kitty litter [3][4] - Autoship sales have consistently outpaced overall revenue growth, increasing from around 70% of sales in fiscal 2021 to just under 80% today [5] - In Q4, Autoship represented 80.6% of net sales, providing predictable revenue streams and enhancing customer loyalty [6] Competitive Advantage - Chewy's Autoship program creates a loyal customer base, offering predictable sales and higher spending per customer, which few other retailers can match [6][7] - The program allows Chewy to better manage rising costs and maintain profitability [6]

Core Viewpoint - Chewy has shown significant improvements in financial metrics, including sales per customer and profit margins, despite previous declines in customer count. The recent resurgence in customer growth presents a positive outlook for the company [1][6][10]. Financial Performance - In 2024, Chewy achieved net sales of $11.9 billion, with net sales per active customer rising to $578, up from $495 two years prior [2]. - The company's gross margin has improved by over 20% since the introduction of automated fulfillment centers in 2020, reaching an all-time high [3]. - Chewy generated positive free cash flow of $452 million in 2024, reflecting steady growth since 2021 [4]. Shareholder Actions - In 2024, Chewy initiated stock buybacks, spending over $900 million to enhance shareholder value [5]. Customer Growth - Chewy's active customer count peaked at 20.7 million at the end of 2021 but had been declining until a turnaround began in Q3 2024, with an addition of over 400,000 new customers in Q4 compared to the previous year [7][9]. - The potential for customer growth remains substantial, given that approximately 90 million U.S. households own pets, positioning Chewy as the leading e-commerce platform in this sector [7][10]. Valuation and Investment Outlook - Chewy maintains a strong balance sheet with no debt and nearly $600 million in cash and short-term investments [11]. - The stock trades at a reasonable valuation of 1 times sales, suggesting a compelling entry point if growth and profit margins continue to improve [12]. - The combination of improving financial metrics and a return to customer growth makes Chewy stock an attractive investment opportunity [13].

Company Overview - Chewy is an online retailer providing a wide range of pet products, including food, toys, prescription medicine, and insurance plans [3] - The company has achieved profitability and strong earnings growth, supported by a loyal customer base [3] Market Resilience - Chewy is expected to maintain revenue growth even in challenging economic conditions due to its focus on essential pet products, which are less sensitive to economic fluctuations compared to discretionary items [4] - The American Pet Products Association reported that pet spending in the U.S. reached nearly $152 billion last year and is projected to increase to $157 billion this year [4] Customer Engagement - Chewy's Autoship service, which automatically reorders products for customers, has been a significant driver of revenue, accounting for over 80% of total sales in the recent quarter [5] - Autoship customer sales grew by 21% year-over-year in the recent quarter and 11% for the full year [5] Expansion into New Markets - Chewy is entering the veterinary care market, valued at $25 billion, having opened eight veterinary clinics to date, which has enhanced customer engagement and attracted new customers [6] Growth Indicators - The company reported its first year-over-year growth in active customers in eight quarters, with strong performance in the last two quarters [7] - Chewy's adjusted EBITDA margin reached 4.8%, with 80% of adjusted EBITDA converted into free cash flow, totaling over $452 million [8] Valuation and Future Outlook - Chewy's stock is currently trading at 25 times forward earnings estimates, following a 10% decline over the past month, presenting a potential buying opportunity [10] - The company is expected to stand out in the growth stock sector as it continues to demonstrate profitability and customer growth, with predictions of significant stock performance in 2025 [11]

分组1: Dollar Tree and Family Dollar - Dollar Tree is selling the Family Dollar chain for $1 billion, a significant drop from the $9 billion acquisition price in 2015 [3] - The sale may allow Dollar Tree to pay down debt and potentially improve its business performance [4] - Despite the economic environment favoring discount retailers, Dollar Tree reported a loss in 2023 and has negative net income for the trailing 12 months [6][9] 分组2: Chewy's Performance - Chewy added over 430,000 active net customers in the past year, with overall sales up about 15% and Autoship sales increasing by more than 21% [12][13] - Autoship now accounts for 80.6% of all sales, indicating deeper customer relationships [13] - Chewy's expansion into vet care clinics is seen as a potential catalyst for future growth [16][19] 分组3: Sezzle's Business Model - Sezzle operates as a buy now, pay later service, allowing customers to make purchases upfront and pay in four interest-free installments [22][23] - The company targets mid to low-income younger customers who prefer budgeting over credit card use [23] - Sezzle has introduced subscription models that allow customers to shop at a wider range of merchants, enhancing its appeal [28][34]

Core Viewpoint - Chewy's stock price is currently low, presenting a potential buying opportunity as signs of growth and traction increase despite mixed reactions to recent financial results and guidance [1][2] Financial Performance - Chewy's FQ4 2024 results showed nearly 15% revenue growth, exceeding MarketBeat's consensus by 150 basis points, driven by increased marketing efforts [2] - The company reported a 2.1% increase in active customers and a 4.1% increase in sales per customer, with autoship revenue growing by 21.2%, contributing to 80.6% of quarterly sales [3] - Free cash flow increased by 133%, indicating strong financial health and potential for debt reduction or dividends [5] Guidance and Forecast - For 2025, Chewy forecasts organic revenue growth near 7%, with adjusted EBITDA margin expected to widen by nearly 200 basis points [6] - The 12-month stock price forecast is set at $38.68, indicating an 18.39% upside potential based on 23 analyst ratings [4] Analyst Sentiment - Analyst sentiment is bullish, with a consensus rating of Moderate Buy and a rising price target, reflecting improved coverage and sentiment among analysts [7] - The price action post-results showed mixed reactions, but support levels indicate potential for a breakout to new highs [8]

Group 1 - The article highlights concerns about a potential U.S. recession, with many consumer-facing companies reporting weaker spending and sentiment among consumers [1] - Consumers are increasingly opting for cheaper alternatives, reducing expenditures on large purchases and dining out less frequently [1] - The thrift mentality among consumers is becoming more pronounced, impacting various sectors [1] Group 2 - The author, Gary Alexander, has extensive experience in technology and has been a contributor to Seeking Alpha since 2017, providing insights into industry trends [1]

Core Insights - Chewy, Inc. reported strong fourth-quarter fiscal 2024 results, with both revenue and earnings exceeding expectations and showing year-over-year growth [1][2][3] Financial Performance - Adjusted earnings were 28 cents per share, surpassing the Zacks Consensus Estimate of 21 cents, marking a 55.6% increase from the previous year [2] - Net sales reached $3,247.4 million, exceeding the Zacks Consensus Estimate of $3,196 million, and reflecting a 14.9% increase from $2,825.9 million in the prior year [3] - Gross profit increased by 16% year over year to $926 million, with gross margin expanding by 30 basis points to 28.5% compared to 28.2% in the same quarter of fiscal 2023 [3] Expense Management - SG&A expenses rose 11.9% year over year to $700.7 million, but as a percentage of net sales, they decreased by 60 basis points to 21.6% [4] - Adjusted EBITDA was $124.5 million, up from $86.5 million in the year-ago quarter, with an adjusted EBITDA margin increase of 70 basis points to 3.8% [4] Financial Health - At the end of the quarter, Chewy had cash and cash equivalents of $595.8 million and total shareholders' equity of $261.5 million [5] - Net cash provided by operating activities was $207.5 million, with free cash flow reported at $156.6 million [5] Future Outlook - For Q1 fiscal 2025, management projects net sales between $3.06 billion and $3.09 billion, indicating 6-7% growth year over year, with adjusted earnings expected between 30 cents and 35 cents per share [6] - For fiscal 2025, Chewy anticipates net sales between $12.30 billion and $12.45 billion, also reflecting a 6-7% year-over-year increase, and expects an adjusted EBITDA margin of 5.4-5.7%, up from 4.8% in fiscal 2024 [6] Stock Performance - Chewy's stock has gained 12.2% over the past six months, outperforming the industry growth of 10.1% [7]