TH the state n and in 5 and and the ... while r and e the and the the first the p d 1969 8 # 75.85 T Colonial HD E t H the state the first the first 4000 t sitox Investment Thesis Chewy, Inc. (NYSE:CHWY) continues to prove doubters wrong (yes, me too). Not only is the business resolutely shaking off its post-Covid blues, but more importantly, it appears that starting in Q4 2024, the business will be back to growth mode. And yet, the stock is already priced at 19x forward EBITDA. This means despite all of ma ...

Financial Data and Key Metrics - Q2 net sales grew by 3% to $2.86 billion, at the high end of guidance [5][14] - Autoship customer sales grew 6% to $2.2 billion, representing 78.4% of total net sales, up 230 basis points YoY [5][15] - Net sales per active customer (NSPAC) reached a record $565, growing 6.2% YoY [6][15] - Gross margin expanded 120 basis points YoY to 29.5%, slightly ahead of expectations [8][16] - Adjusted EBITDA margin expanded 190 basis points YoY to 5.1%, with $145 million in adjusted EBITDA [8][18] - Free cash flow was $91.5 million, with $695 million in cash and marketable securities at quarter-end [10][18] Business Line Performance - Autoship program continues to drive engagement, with 78% of net sales coming from Autoship customers [5][15] - Chewy Vet Care clinics expanded to six locations, with early indicators showing strong customer acquisition and cross-category shopping behavior [10][11] - Sponsored Ads business is on track to reach the low end of the long-term target of 1%-3% of net sales by the end of 2024 [12] - Mobile app orders increased 15% YoY, with unique customers placing orders through the app up 13% YoY [6][7] Market Performance - Active customers grew modestly to 20 million, with net ads growing sequentially for the first time since Q1 2023 [7][14] - Canada market is performing as expected, with mid-to-high teens traffic coming from Ontario and strong customer engagement through the app [29] - Pet adoptions remained up in the low-teens YoY, while relinquishments were down low to mid-single digits YoY, indicating improving trends in pet household formation [25] Strategic Initiatives and Industry Competition - Chewy Vet Care is serving as an acquisition funnel, with net new customers acquired through clinics exceeding expectations [11] - Sponsored Ads are benefiting from inventory expansion, advertiser demand growth, and improved customer relevancy [12] - The company is focusing on mobile app improvements, with less than 20% of orders currently transacting through the app, compared to a target of over 60% [40][41] - Competitive trends remain stable, with Chewy effectively competing in consumables and health categories, while hard goods have stabilized [60][61] Management Commentary on Operating Environment and Outlook - Management highlighted the predictability and durability of the business model, even in a normalizing market [14] - The company expects gross margin to continue expanding as higher-margin businesses become a larger portion of total sales [8] - Full-year 2024 guidance includes net sales of $11.6-$11.8 billion (4%-6% YoY growth) and adjusted EBITDA margin of 4.5%-4.7%, up from previous guidance [20][21] - Management remains optimistic about returning to active customer growth in fiscal 2025 [26] Other Important Information - The company repurchased 17.6 million shares for $500 million from BC Partners and 1.3 million shares under its $500 million share repurchase program [19] - SG&A expenses improved by 100 basis points YoY to 18.8% of net sales, driven by fulfillment center automation and operational efficiencies [16] - Adjusted net income was $104.8 million, up 62% YoY, excluding a one-time tax benefit of $276 million [17] Q&A Summary Question: Trends in pet adoptions and expectations for active customer growth in fiscal 2025 [24] - Pet adoptions remained up in the low-teens YoY, while relinquishments were down low to mid-single digits YoY, indicating improving trends in pet household formation [25] - Management expects to return to active customer growth in fiscal 2025, driven by the value proposition of new products and services [26] Question: SG&A trends and international market performance, particularly in Canada [27] - SG&A expenses improved by 100 basis points YoY, with expectations for relatively flat SG&A going forward [28] - Canada is performing as expected, with strong app engagement and mid-to-high teens traffic from Ontario [29] Question: Changes in the consumer journey and competitive environment [32] - The secular trend towards e-commerce continues, with Chewy well-positioned to capture market share [34] - Competitive trends remain stable, with Chewy effectively competing in consumables and health categories, while hard goods have stabilized [36][60] Question: Mobile app improvements and future investments [39] - Mobile app orders increased 15% YoY, with unique customers placing orders through the app up 13% YoY [6][7] - The company aims to increase app order penetration from less than 20% to over 60% over time [40][41] Question: Monthly trends and hard goods performance [43] - Monthly trends were in line with expectations, driven by the predictability of Autoship and consumables [43] - Hard goods have stabilized, with sequential improvement in active customers and pet household formation [44] Question: Contribution of Canada to net ads and mobile app order trends [45] - Canada remains immaterial to overall customer base growth, with net ads driven by new customer acquisition and reactivation efforts in the U.S. [45] - Mobile app order trends are improving, with the company focusing on funneling mobile web users to the app [47] Question: Margin trends and marketing spend as active customer growth returns [49] - The company is acquiring higher-quality customers, with strong NSPAC curves and improved conversion rates [50] - Margin expansion is driven by Sponsored Ads, healthcare mix, and fulfillment center efficiencies [52] Question: Net ads trends and gross margin drivers [54] - Net ads are expected to be flat to slightly up in the second half of 2024, consistent with previous guidance [55] - Gross margin expansion is driven by Sponsored Ads, healthcare mix, and fulfillment center efficiencies [56] Question: Competitive trends and vet recruitment for Chewy Vet Care [60] - Competitive trends remain stable, with Chewy effectively competing in consumables and health categories, while hard goods have stabilized [60] - Vet recruitment is driven by the Chewy brand, career growth opportunities, and technology that reduces back-office work [62][63]

Chewy Today CHWY Chewy $29.15 +3.29 (+12.72%) 52-Week Range $14.69 ▼ $39.10 P/E Ratio 161.94 Price Target $27.57 Add to Watchlist Chewy's NYSE: CHWY stock price has struggled since the peaks set in 2020 because it could not sustain the wicked-hot growth pace driven by pandemic spending and stimulus measures. Today's takeaway is that the market for Chewy stock has normalized, and its business turned a corner in the first half of the year, setting it up to complete a technical reversal that will lead to a sus ...

For the quarter ended July 2024, Chewy (CHWY) reported revenue of $2.86 billion, up 2.9% over the same period last year. EPS came in at $0.24, compared to $0.15 in the year-ago quarter. The reported revenue compares to the Zacks Consensus Estimate of $2.86 billion, representing a surprise of -0.09%. The company delivered an EPS surprise of +9.09%, with the consensus EPS estimate being $0.22. While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they comp ...

Key Takeaways Chewy reported second-quarter earnings well above forecasts as its customers spent more on pet food and supplies. The retailer had a decline in total active customers, but the ones it did have spent a record amount. Chewy also posted an increase in revenue from those who had their orders shipped to them automatically. Chewy (CHWY) shares surged Wednesday as the online pet supplies retailer posted a much better-thanexpected profit as it set a record for customer spending. The company reported s ...

Chewy (CHWY) came out with quarterly earnings of $0.24 per share, beating the Zacks Consensus Estimate of $0.22 per share. This compares to earnings of $0.15 per share a year ago. These figures are adjusted for nonrecurring items. This quarterly report represents an earnings surprise of 9.09%. A quarter ago, it was expected that this online pet store would post earnings of $0.21 per share when it actually produced earnings of $0.31, delivering a surprise of 47.62%. Over the last four quarters, the company h ...

Revenue and Sales Performance - Net sales for the 13 weeks ended July 28, 2024, increased by 2.6% to $2.858 billion compared to $2.785 billion in the same period last year[76] - Net sales for the thirteen weeks ended July 28, 2024 increased by $73.3 million, or 2.6%, to $2.9 billion compared to $2.8 billion for the thirteen weeks ended July 30, 2023[100] - Net sales per active customer increased by 6.2% to $565 for the 13 weeks ended July 28, 2024, compared to $532 in the same period last year[76] - Net sales per active customer increased $33, or 6.2%, in the thirteen weeks ended July 28, 2024 compared to the thirteen weeks ended July 30, 2023[100] - Autoship customer sales grew by 5.8% to $2.242 billion for the 13 weeks ended July 28, 2024, compared to $2.120 billion in the prior year period[76] Profitability and Margins - Net income for the 13 weeks ended July 28, 2024, surged to $299.117 million from $20.207 million in the prior year period, with net margin improving to 10.5% from 0.7%[76] - Net income for the 13 weeks ended July 28, 2024, was $299.12 million, compared to $20.21 million for the same period in 2023[84] - Adjusted EBITDA for the 13 weeks ended July 28, 2024, rose 64.3% to $144.835 million, with adjusted EBITDA margin increasing to 5.1% from 3.2%[76] - Gross profit for the thirteen weeks ended July 28, 2024 increased by $55.1 million, or 7.0%, to $843.8 million compared to $788.7 million in the thirteen weeks ended July 30, 2023[103] - Gross profit as a percentage of net sales for the thirteen weeks ended July 28, 2024 increased by 120 basis points compared to the thirteen weeks ended July 30, 2023[103] - Adjusted net income for the 13 weeks ended July 28, 2024, increased by 62.3% to $104.790 million compared to $64.577 million in the same period last year[76] - Adjusted net income for the 13 weeks ended July 28, 2024, was $104.79 million, compared to $64.58 million for the same period in 2023[84] - Adjusted earnings per share, diluted, rose by 60.0% to $0.24 for the 13 weeks ended July 28, 2024, compared to $0.15 in the prior year period[76] - Adjusted diluted earnings per share for the 13 weeks ended July 28, 2024, was $0.24, compared to $0.15 for the same period in 2023[84] Customer Metrics - Active customers decreased by 1.8% to 20.002 million as of July 28, 2024, compared to 20.367 million in the prior year period[76] Operating Expenses and Costs - Selling, general and administrative expenses for the thirteen weeks ended July 28, 2024 increased by $1.4 million, or 0.2%, to $621.3 million compared to $619.9 million in the thirteen weeks ended July 30, 2023[105] - Advertising and marketing expenses for the thirteen weeks ended July 28, 2024 increased by $5.0 million, or 2.7%, to $190.5 million compared to $185.5 million in the thirteen weeks ended July 30, 2023[107] - Share-based compensation expense and related taxes for the 13 weeks ended July 28, 2024, was $82.47 million, compared to $68.30 million for the same period in 2023[84] - Exit costs for the 13 weeks ended July 28, 2024, were $0, compared to $5.26 million for the same period in 2023[84] Cash Flow and Liquidity - Net cash provided by operating activities decreased by 22.2% to $123.410 million for the 13 weeks ended July 28, 2024, compared to $158.575 million in the same period last year[76] - Net cash provided by operating activities for the 13 weeks ended July 28, 2024, was $123.41 million, compared to $158.58 million for the same period in 2023[90] - Free cash flow declined by 9.4% to $91.484 million for the 13 weeks ended July 28, 2024, compared to $100.931 million in the prior year period[76] - Free cash flow for the 13 weeks ended July 28, 2024, was $91.48 million, compared to $100.93 million for the same period in 2023[90] - Net cash provided by operating activities for the twenty-six weeks ended July 28, 2024 was $205.3 million, primarily consisting of $366.0 million of net income, offset by $56.9 million of non-cash adjustments and a $90.0 million decrease in working capital[113] - Net cash provided by investing activities for the twenty-six weeks ended July 28, 2024 was $477.2 million, primarily from $538.4 million in maturities of marketable securities, offset by $61.2 million in capital expenditures[116] - Net cash used in financing activities for the twenty-six weeks ended July 28, 2024 was $590.1 million, primarily consisting of $532.0 million for repurchases of common stock[117] - Net cash provided by operating activities for the twenty-six weeks ended July 30, 2023 was $307.3 million, consisting of $43.1 million of net income, $173.9 million of non-cash adjustments, and a $102.5 million increase in working capital[115] - Net cash used in investing activities for the twenty-six weeks ended July 30, 2023 was $172.4 million, primarily consisting of $92.8 million for purchases of marketable securities and $79.2 million for capital expenditures[116] - Net cash used in financing activities for the twenty-six weeks ended July 30, 2023 was $8.1 million[117] Capital Expenditures and Investments - Capital expenditures for the 13 weeks ended July 28, 2024, were $31.93 million, compared to $57.64 million for the same period in 2023[90] Share Repurchases and Equity - The company repurchased and retired 17,550,000 shares of Class A common stock at $28.49 per share for a total of $500 million on June 26, 2024[120] - During the thirteen weeks ended July 28, 2024, the company repurchased and retired 1,321,502 shares of Class A common stock for $32.7 million and 17,550,000 shares for $500.0 million[121] - The remaining authorized value for share repurchases under the Program was $467.3 million as of July 28, 2024[121] Other Financial Metrics - Interest income for the thirteen weeks ended July 28, 2024 increased by $4.0 million, to $12.9 million compared to interest income of $8.9 million in the thirteen weeks ended July 30, 2023[108] - Other income for the thirteen weeks ended July 28, 2024 decreased by $27.7 million, to $1.5 million compared to other income of $29.2 million in the thirteen weeks ended July 30, 2023[110] - Cash and cash equivalents totaled $694.5 million as of July 28, 2024, an increase of $92.2 million from January 28, 2024[111] - The company had $760.2 million of borrowing capacity under the ABL Credit Facility as of July 28, 2024, with no outstanding borrowings[118] - Change in fair value of equity warrants for the 13 weeks ended July 28, 2024, was a loss of $1.13 million, compared to a loss of $29.19 million for the same period in 2023[84] - Deferred income tax benefit for the 13 weeks ended July 28, 2024, was $275.67 million, compared to $0 for the same period in 2023[84]

Financial Performance - Net sales for Q2 2024 reached $2.86 billion, a year-over-year increase of 2.6%[2] - Net sales for the 13 weeks ended July 28, 2024, were $2,858,589, representing a 2.6% increase from $2,785,302 in the same period last year[13] - Net income was $299.1 million, with a net margin of 10.5%, an increase of 980 basis points year-over-year[2] - Net income for the 13 weeks ended July 28, 2024, was $299,117, compared to $20,207 in the prior year, indicating a significant improvement[13] - Adjusted net income increased to $104.8 million, up $40.2 million from the previous year[2] - Adjusted net income for the 13 weeks ended July 28, 2024, was $104,790 thousand, up from $64,577 thousand for the same period in 2023[21] - Basic earnings per share rose to $0.70, an increase of $0.65 year-over-year[2] - Basic earnings per share for the 13 weeks ended July 28, 2024, were $0.70, compared to $0.05 in the prior year[13] - Diluted earnings per share increased to $0.68, up $0.63 year-over-year[2] Profitability Metrics - Gross margin improved to 29.5%, up 120 basis points from the previous year[2] - Adjusted EBITDA for the quarter was $144.8 million, reflecting an increase of $56.7 million year-over-year[2] - Adjusted EBITDA for the 13 weeks ended July 28, 2024, was $144,835, a 64.3% increase from $88,147 in the same period last year[13] - The net margin for the 13 weeks ended July 28, 2024, was 10.5%, up from 0.7% in the same period last year[13] - Adjusted EBITDA for the 13 weeks ended July 28, 2024, was $144,835 thousand, compared to $88,147 thousand for the same period in 2023, reflecting a margin increase from 3.2% to 5.1%[17] Customer Metrics - Active customer count grew to 20 million, with net sales per active customer reaching a record $565[2] - Active customers decreased by 1.8% to 20,002 from 20,367 in the prior year[13] Cash Flow and Assets - Net cash provided by operating activities for the 26 weeks ended July 28, 2024, was $205,347, down 33.2% from $307,287 in the same period last year[13] - Cash and cash equivalents at the end of the period increased to $694,460 from $458,435 year-over-year[11] - Free cash flow for the 13 weeks ended July 28, 2024, was $91,484 thousand, down from $100,931 thousand for the same period in 2023[25] Balance Sheet - Total assets as of July 28, 2024, were $3.10 billion, a decrease from $3.19 billion at the end of January 2024[8] - Total liabilities decreased to $2.62 billion from $2.68 billion in January 2024[8] Other Financial Metrics - Share-based compensation expense for the 13 weeks ended July 28, 2024, was $82,467 thousand, an increase from $68,302 thousand in the same period of 2023[21] - Capital expenditures for the 13 weeks ended July 28, 2024, were $31,926 thousand, down from $57,644 thousand for the same period in 2023[25] - The company anticipates that free cash flow may be affected by the timing of capital investments and fluctuations in growth and working capital[25]

Chewy's profitability flipped from negative to positive over the last year, but the best may still be ahead. Up 75% from its 52-week lows, Chewy (CHWY -3.33%) may have investors feeling as though they've missed a golden opportunity. However, when we zoom out on the time horizon, it is abundantly clear that the best may be yet to come for the leading e-commerce pet specialty retailer. One Wall Street analyst who is echoing these beliefs is Anna Andreeva with Piper Sandler. Raising their outlook on the stock ...

Chewy (CHWY) has been one of the most searched-for stocks on Zacks.com lately. So, you might want to look at some of the facts that could shape the stock's performance in the near term. Shares of this online pet store have returned +4.1% over the past month versus the Zacks S&P 500 composite's +0.3% change. The Zacks Internet - Commerce industry, to which Chewy belongs, has lost 1.3% over this period. Now the key question is: Where could the stock be headed in the near term? While media releases or rumors a ...