Key TakeawaysA firm affiliated with Chewy's biggest shareholder is selling off $500 million in stock.The company said it would also buy $50 million worth of those shares, and cancel and retire them.The $50 million purchase is being executed separately from its current share repurchase program begun in May. Online pet supplies retailer Chewy (CHWY) announced that a firm connected to its biggest shareholder was selling off half a billion dollars in stock. The company said that Buddy Chester Sub LLC, an entity ...

I recently joined The REIT Forum and if you are looking for more investment ideas like this one, get them exclusively at The REIT Forum with access to our subscriber only portfolios.I last wrote on Chewy (NYSE: CHWY ) in October, where I had upgraded the stock from a "sell" to a "buy" as I believed its fundamentals were improving from rigorous cost management and targeted investments. However, I decided to remainAmrita runs a boutique family office fund in beautiful Vancouver, where she leads the investment ...

Chewy (CHWY -7.17%) stock took another hit on Thursday, a day after getting dinged by investors reacting to the company's third-quarter earnings report. While there was no direct news of note from the company, one analyst tracking its shares downgraded his recommendation. The result was that Chewy's share price fell by 6% across the trading session, a notably steeper decline than the S&P 500 index's 0.2% drop.Rover has not earned a treatWell before market open that day, Exane BNP Paribas' Chris Bottiglieri ...

Key TakeawaysChewy posted worse-than-expected profit as the online pet supplies retailer lost active customers and its costs increased.The company reported adjusted EPS of $0.20, below consensus expectations of analysts polled by Visible Alpha.Revenue rose 4.8% year-over-year to $2.88 billion, slightly more than projected. Chewy (CHWY) shares dipped 2.5% Wednesday when the online pet supplies retailer missed profit forecasts as the number of active customers fell and costs rose. The company reported third-q ...

Financial Data and Key Metrics Changes - Q3 net sales increased by approximately 5% to $2.88 billion, exceeding the high end of the guidance range [10][26] - Adjusted EBITDA was $138 million, representing a 4.8% margin and approximately 180 basis points of margin expansion year-over-year [16][33] - Free cash flow for Q3 was $151.8 million, reflecting strong cash generation capabilities [34][36] Business Line Data and Key Metrics Changes - Autoship customer sales reached $2.3 billion in Q3, representing 80% of total net sales and a year-over-year increase of approximately 9% [11][28] - Nondiscretionary categories, including consumables and healthcare products, accounted for 85% of Q3 net sales [12] - Net sales per active customer (NSPAC) reached $567, indicating growth in customer wallet share [29] Market Data and Key Metrics Changes - Active customers increased to approximately 20.2 million, up 160,000 sequentially [15][27] - The Canadian business showed improvement across key metrics, including Autoship penetration and net sales growth [22] Company Strategy and Development Direction - The company is focused on enhancing customer experiences through mobile app improvements and expanding product assortments [13][21] - Chewy Vet Care clinics are being expanded, with six clinics opened and plans to reach the high end of the target range of four to eight openings in 2024 [19][20] - The company aims to leverage its growing sponsored ads business, targeting 1% to 3% of net sales in fiscal 2024 [17] Management's Comments on Operating Environment and Future Outlook - Management noted a return to positive net adoptions in the pet industry, with year-over-year adoption growth in the high single-digit to low double-digit ranges [45][46] - The company expects to end fiscal 2024 with modest year-over-year active customer growth, driven by internal initiatives [15][106] - Management remains optimistic about the fourth quarter and the holiday season, with strong customer engagement observed [133] Other Important Information - Chewy was recently included in the S&P 400 Index, viewed as an endorsement of its performance and growth opportunities [24] - The company has repurchased approximately 10.2 million shares for $300 million, reducing the ownership position of its largest shareholder [35][36] Q&A Session Summary Question: Can you elaborate on overall pet ownership trends and customer growth expectations for 2025? - Management noted signs of industry normalization, with stable pricing and improved adoption trends, contributing to customer growth [44][46] Question: Can you discuss the increase in advertising and marketing spend for Q4? - Management explained that the increase is due to the holiday season and the need to invest in marketing to capture growth opportunities [56][58] Question: What are the trends observed in vet clinics and automation? - Management reported positive metrics from vet clinics, with high customer engagement and plans for further expansion [72][75] - Automation is trending upwards, with less than half of volume shipping through automated fulfillment centers [77][78] Question: How is the app performing and its impact on the P&L? - Management indicated that the app is a priority, with higher engagement rates and potential for increased revenue and profitability [86][88] Question: What is the competitive landscape like? - Management described the competitive intensity as moderate, with a rational pricing environment and ongoing differentiation efforts [118][123]

For the quarter ended October 2024, Chewy (CHWY) reported revenue of $2.88 billion, up 5.1% over the same period last year. EPS came in at $0.20, compared to $0.15 in the year-ago quarter.The reported revenue represents a surprise of +0.60% over the Zacks Consensus Estimate of $2.86 billion. With the consensus EPS estimate being $0.23, the EPS surprise was -13.04%.While investors closely watch year-over-year changes in headline numbers -- revenue and earnings -- and how they compare to Wall Street expectati ...

Chewy (CHWY) came out with quarterly earnings of $0.20 per share, missing the Zacks Consensus Estimate of $0.23 per share. This compares to earnings of $0.15 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of -13.04%. A quarter ago, it was expected that this online pet store would post earnings of $0.22 per share when it actually produced earnings of $0.24, delivering a surprise of 9.09%.Over the last four quarters, the company h ...

Financial Highlights - Chewy reported 160K sequential net active customer additions[3] - Net sales per active customer reached $567[3] - Autoship customer sales accounted for 80% of net sales[3] - Q3 2024 Adjusted EBITDA was $138 million, representing a 4.8% margin[3] Revenue Performance - Net sales for the full year 2021 were $8.967 billion, with a YoY growth of 25.5%[4] - Net sales for the full year 2022 were $10.119 billion, with a YoY growth of 12.8%[4] - Net sales for the full year 2023 were $11.148 billion, with a YoY growth of 10.2%[4] - Last Twelve Months (LTM) net sales reached $11.440 billion, showing a 3.7% YoY growth[4] - Q3 2024 net sales were $2.878 billion, a 4.8% YoY growth[4] Autoship Program - Autoship customer sales for the full year 2021 were $6.324 billion, with a YoY growth of 29.3%[5] - Autoship customer sales for the full year 2022 were $7.408 billion, with a YoY growth of 17.1%[5] - Autoship customer sales for the full year 2023 were $8.493 billion, with a YoY growth of 14.7%[5] - LTM Autoship customer sales reached $8.935 billion, a 7.2% YoY growth[5] - Q3 2024 Autoship customer sales were $2.301 billion, an 8.7% YoY growth[5] Profitability and Cash Flow - Gross margin for LTM was 29.2%[7] - LTM Adjusted EBITDA reached $532 million, with a 4.7% margin[8] - Free cash flow for LTM was $343 million[9] - The company's cash balance for FY24 is $508 million[9] Guidance - Fiscal Fourth Quarter 2024 Net Sales are projected to be between $3.18 billion and $3.20 billion, representing approximately 13% YoY growth[10] - Fiscal Year 2024 Net Sales are projected to be between $11.79 billion and $11.81 billion, representing approximately 6% YoY growth[10] - Fiscal Year 2024 Adjusted EBITDA Margin is expected to be between 4.6% and 4.8%[10]

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%2E%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201%2E%20Financial%20Statements%20%28Unaudited%29) Unaudited Q3 2024 financial statements reflect a shift to net income, with slight asset decrease and liability increase, driven by Chewy Pharmacy KY operations [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) Total assets decreased to **$2.96 billion** by October 27, 2024, while liabilities increased, and equity declined due to share repurchases Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | Oct 27, 2024 (Unaudited) | Jan 28, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $506,634 | $602,232 | | Marketable securities | $885 | $531,785 | | Inventories | $858,551 | $719,273 | | Total current assets | $1,615,725 | $2,104,348 | | **Total assets** | **$2,957,897** | **$3,186,851** | | **Liabilities & Equity** | | | | Trade accounts payable | $1,229,132 | $1,104,940 | | Total current liabilities | $2,179,225 | $2,110,877 | | **Total liabilities** | **$2,734,475** | **$2,676,607** | | **Total stockholders' equity** | **$223,422** | **$510,244** | [Condensed Consolidated Statements of Operations and Comprehensive Income (Loss)](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Income%20%28Loss%29) Q3 2024 net sales grew **4.8%** to **$2.88 billion**, achieving a **$3.9 million** net income, a significant turnaround from prior year's loss Statement of Operations Summary (in thousands, except per share data) | Metric | 13 Weeks Ended Oct 27, 2024 | 13 Weeks Ended Oct 29, 2023 | 39 Weeks Ended Oct 27, 2024 | 39 Weeks Ended Oct 29, 2023 | | :--- | :--- | :--- | :--- | :--- | | Net sales | $2,877,635 | $2,745,875 | $8,613,949 | $8,321,816 | | Gross profit | $843,873 | $781,856 | $2,541,701 | $2,363,433 | | Income (loss) from operations | $25,632 | $(9,719) | $122,299 | $(1,644) | | Net income (loss) | $3,932 | $(35,372) | $369,946 | $7,694 | | Diluted EPS | $0.01 | $(0.08) | $0.85 | $0.02 | [Condensed Consolidated Statements of Cash Flows](index=9&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow was **$388.8 million**, investing cash flow reversed to **$445.5 million** provided, while financing activities used **$929.7 million** due to share repurchases Cash Flow Summary (in thousands) | Cash Flow Activity | 39 Weeks Ended Oct 27, 2024 | 39 Weeks Ended Oct 29, 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $388,809 | $386,664 | | Net cash provided by (used in) investing activities | $445,482 | $(237,458) | | Net cash used in financing activities | $(929,741) | $(10,938) | | **Net (decrease) increase in cash** | **$(95,598)** | **$138,268** | [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail **$875.2 million** in share repurchases, a **$275.7 million** deferred tax asset valuation allowance release, and an undrawn **$800 million** ABL credit facility - On May 24, 2024, the Board authorized a **$500 million** share repurchase program, with **$875.2 million** of common stock repurchased during the thirty-nine weeks ended October 27, 2024[44](index=44&type=chunk)[50](index=50&type=chunk) - The company released the valuation allowance on its U.S. federal and other state deferred tax assets, resulting in a benefit of **$275.7 million** during the thirty-nine weeks ended October 27, 2024[104](index=104&type=chunk) - As of October 27, 2024, the company had **$777.6 million** of borrowing capacity under its ABL Credit Facility, with no outstanding borrowings[83](index=83&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202%2E%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Q3 2024 net sales grew **4.8%** with gross margin expansion, leading to **$3.9 million** net income and **$138.2 million** Adjusted EBITDA, despite cash reduction from share repurchases [Key Financial and Operating Data](index=26&type=section&id=Key%20Financial%20and%20Operating%20Data) Q3 2024 net sales grew **4.8%** to **$2.9 billion**, Adjusted EBITDA increased **67.4%**, and net sales per active customer rose **4.2%** Key Financial and Operating Metrics (13 Weeks Ended) | Metric | Oct 27, 2024 | Oct 29, 2023 | % Change | | :--- | :--- | :--- | :--- | | Net sales | $2,877,635 | $2,745,875 | 4.8% | | Net income (loss) | $3,932 | $(35,372) | 111.1% | | Adjusted EBITDA | $138,245 | $82,581 | 67.4% | | Adjusted EBITDA margin | 4.8% | 3.0% | N/A | | Active customers (thousands) | 20,160 | 20,266 | (0.5)% | | Net sales per active customer | $567 | $544 | 4.2% | | Autoship customer sales | $2,300,928 | $2,116,458 | 8.7% | [Results of Consolidated Operations](index=36&type=section&id=Results%20of%20Consolidated%20Operations) Q3 2024 net sales increased **4.8%** driven by customer spending, gross profit margin improved **80 basis points**, and operating income reached **$25.6 million** - Net sales growth in Q3 was driven by increased customer spending, with net sales per active customer rising **4.2%** to **$567**, particularly from healthcare and specialty businesses[153](index=153&type=chunk) - Gross profit as a percentage of net sales increased by **80 basis points** year-over-year, attributed to supply chain efficiency gains and margin expansion[158](index=158&type=chunk) - Selling, general and administrative (SG&A) expenses increased by **2.3%**, primarily due to a **$14.6 million** rise in non-cash share-based compensation[160](index=160&type=chunk) - Advertising and marketing expenses rose **7.0%** to **$191.8 million** due to increased investment and expansion into Canada[163](index=163&type=chunk) [Liquidity and Capital Resources](index=39&type=section&id=Liquidity%20and%20Capital%20Resources) Liquidity is supported by **$506.6 million** cash and an undrawn **$800 million** ABL facility, despite **$875.2 million** in share repurchases - Cash and cash equivalents totaled **$506.6 million** as of October 27, 2024, a decrease of **$95.6 million** from January 28, 2024[171](index=171&type=chunk) - Net cash used in financing activities for the 39 weeks ended October 27, 2024 was **$929.7 million**, primarily consisting of **$875.2 million** for repurchases of common stock[179](index=179&type=chunk) - The company has an **$800 million** ABL Credit Facility maturing in 2026, with **$777.6 million** of borrowing capacity and no outstanding borrowings[181](index=181&type=chunk) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=42&type=section&id=Item%203%2E%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) No material changes to market risk disclosures were reported since the last annual report - There have been no material changes to the company's market risk disclosures since the last annual report[188](index=188&type=chunk) [Item 4. Controls and Procedures](index=42&type=section&id=Item%204%2E%20Controls%20and%20Procedures) Disclosure controls and procedures were effective as of October 27, 2024, with no material changes in internal control over financial reporting - Disclosure controls and procedures were effective as of October 27, 2024, as concluded by principal executive and financial officers[190](index=190&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter[191](index=191&type=chunk) [PART II. OTHER INFORMATION](index=44&type=section&id=PART%20II%2E%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=44&type=section&id=Item%201%2E%20Legal%20Proceedings) The company does not expect current legal proceedings to materially affect its financial condition or results - The company does not expect current legal proceedings to have a material adverse effect on its financial results[81](index=81&type=chunk)[195](index=195&type=chunk) [Item 1A. Risk Factors](index=44&type=section&id=Item%201A%2E%20Risk%20Factors) No material changes to risk factors were reported for the quarter - No material changes to risk factors were reported for the quarter[196](index=196&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=44&type=section&id=Item%202%2E%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q3 2024, Chewy repurchased **11.8 million** shares, with **$424.8 million** remaining for future repurchases under the program Share Repurchase Activity (13 Weeks Ended Oct 27, 2024) | Period | Total Shares Purchased | Average Price Paid Per Share | Shares Purchased as Part of Program | Remaining Program Value (in millions) | | :--- | :--- | :--- | :--- | :--- | | Jul 29 - Aug 25, 2024 | 774,185 | $24.37 | 774,185 | $448.4 | | Aug 26 - Sep 29, 2024 | 11,038,651 | $29.31 | 834,570 | $424.8 | | Sep 30 - Oct 27, 2024 | — | — | — | $424.8 | | **Total** | **11,812,836** | **N/A** | **1,608,755** | **$424.8** | [Item 5. Other Information](index=44&type=section&id=Item%205%2E%20Other%20Information) Several executives adopted Rule 10b5-1 trading plans for Class A common stock sales, including for tax obligations and financial planning - CEO Sumit Singh adopted a Rule 10b5-1 trading plan to sell up to **1,387,271** shares of Class A common stock, expiring December 31, 2025[202](index=202&type=chunk) - CFO David Reeder and Chief Accounting Officer William Billings adopted 'sell-to-cover' Rule 10b5-1 trading arrangements for tax withholding obligations from RSU vesting[198](index=198&type=chunk)[199](index=199&type=chunk) [Item 6. Exhibits](index=47&type=section&id=Item%206%2E%20Exhibits) This section lists exhibits filed with Form 10-Q, including stock compensation, repurchase agreements, and officer certifications

Financial Performance - Net sales for Q3 2024 reached $2.88 billion, a year-over-year increase of 4.8%[3] - Gross margin improved to 29.3%, up 80 basis points from the previous year[3] - Net income was $3.9 million, with a net margin of 0.1%, an increase of 140 basis points year-over-year[3] - Adjusted EBITDA rose to $138.2 million, reflecting a year-over-year increase of $55.7 million[3] - Adjusted net income increased to $84.9 million, up $21.5 million year-over-year[3] - Net income for the 39 weeks ended October 27, 2024, was $369,946, compared to a net income of $7,694 for the same period last year, marking a significant recovery[16] - Adjusted EBITDA for the 13 weeks ended October 27, 2024, was $138,245, a 67.4% increase from $82,581 in the prior year[21] - The company reported a net margin of 0.1% for the 13 weeks ended October 27, 2024, compared to a net margin of (1.3)% in the same period last year[21] - Adjusted net income for the 13 weeks ended October 27, 2024, was $84,922 thousand, compared to $63,449 thousand for the same period last year, representing a year-over-year increase of 33.5%[26] - Adjusted diluted earnings per share for the 39 weeks ended October 27, 2024, was $0.75, up from $0.50 for the same period last year, reflecting a 50% increase[26] - Adjusted basic earnings per share for the 39 weeks ended October 27, 2024, was $0.77, compared to $0.50 for the same period last year, reflecting a 54% increase[26] Cash Flow and Expenditures - The company reported robust free cash flow generation, underscoring the durability of its business model[3] - Net cash provided by operating activities was $388,809 for the 39 weeks ended October 27, 2024, compared to $386,664 in the same period last year, indicating stable cash flow[16] - Free cash flow increased by 218.2% to $151,767 for the 13 weeks ended October 27, 2024, compared to $47,692 in the prior year[16] - Free cash flow for the 13 weeks ended October 27, 2024, was $151,767 thousand, significantly higher than $47,692 thousand for the same period last year, indicating a growth of 217.5%[30] - Capital expenditures for the 39 weeks ended October 27, 2024, totaled $92,920 thousand, down from $110,902 thousand for the same period last year, a decrease of 16.2%[30] - The company emphasized the importance of free cash flow as a key indicator of liquidity, which is crucial for evaluating operational results[28] Customer Metrics - Active customers saw a sequential increase, contributing to the positive momentum observed in Q2[3] - Active customers remained stable at 20,160, a slight decrease of 0.5% from 20,266 in the previous year[16] - Autoship customer sales reached $2,300,928 for the 13 weeks ended October 27, 2024, an 8.7% increase from $2,116,458 in the same period last year[16] Shareholder Value - The company repurchased $875,197 of common stock during the current period, reflecting a strategic move to enhance shareholder value[16] Operational Focus - Chewy continues to focus on high-quality execution and operational discipline to drive growth[3] - The company partners with approximately 3,500 trusted brands and offers around 115,000 products and services[5] Earnings Per Share - Basic and diluted earnings per share were $0.01, an increase of $0.09 year-over-year[3] - The weighted-average common shares used in computing diluted earnings per share for the 13 weeks ended October 27, 2024, was 426,572 thousand, slightly down from 432,172 thousand for the same period last year[26] - Share-based compensation expense for the 13 weeks ended October 27, 2024, was $80,426 thousand, up from $65,799 thousand for the same period last year, an increase of 22.5%[26] Turnaround Performance - The company reported a net income of $3,932 thousand for the 13 weeks ended October 27, 2024, compared to a net loss of $35,372 thousand for the same period last year, marking a significant turnaround[26]