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 has demonstrated strong performance with a stock price increase of over 120% in the past year, driven by revenue growth and improved gross margins [1][4]. Revenue Growth - Chewy's revenue for fiscal Q4 2024 reached $3.25 billion, a nearly 15% year-over-year increase, surpassing the company's forecast [4]. - The company experienced a significant improvement in sales growth, with Q4 growth being notably higher than the 3% and 5% growth in previous quarters [4]. - Autoship sales increased by over 21% year-over-year to $2.6 billion, accounting for 80.6% of total revenue [5]. - Net sales per active customer rose by 4% to $578, and Chewy added 400,000 active customers in fiscal 2024 [5]. Gross Margin and Profitability - Gross margin increased by 30 basis points to 28.5%, attributed to a shift towards higher-gross-margin businesses [6]. - Adjusted earnings per share (EPS) jumped 56% to $0.28, while adjusted EBITDA climbed 44% year-over-year to $124.5 million [7]. - Free cash flow was reported at $452.5 million, with the company buying back $942.8 million in stock during the year [7]. Future Guidance - For fiscal Q1, Chewy forecasts revenue growth of 6% to 7%, estimating revenue between $3.06 billion and $3.09 billion [8]. - The company anticipates full-year revenue growth of 6% to 7%, projecting total revenue between $12.3 billion and $12.45 billion [9]. - Chewy's revenue growth for fiscal 2024 was 6.4%, which included a 53rd week; without this, growth would have been around 4.4% [9]. Market Position and Valuation - Chewy is positioned as a defensive stock, benefiting from stable pet ownership and a recession-resistant business model [10][12]. - The stock trades at a forward price-to-earnings (P/E) ratio of approximately 27, which is competitive among recession-resistant retailers [13]. - Chewy has a price/earnings-to-growth (PEG) ratio of 0.7, indicating it may be undervalued compared to its expected earnings growth [13]. Investment Appeal - Despite significant price appreciation, Chewy remains an attractive investment due to its strong growth potential and defensive qualities in an uncertain market [15].

Chewy's (NYSE: CHWY ) earnings for the fourth fiscal quarter were better-than-expected on Wednesday, as the pet store retailer continued to make progress in boosting its customer monetization. Chewy also improved its free cash flow and EBITDA Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha a ...

Core Insights - The stock market has recently experienced a decline, with the S&P 500 index down 3.3% over the last month, and growth stocks losing 4.5% during the same period [1] - Chewy's share price has fallen more than 3.7% over the last month, but the company's long-term prospects remain positive [2] Industry Growth - The U.S. pet market has seen sales increase by approximately 5% in 2024, reaching $151 billion, with projections of 4% annual growth through 2028 [5] - Online sales in the pet market have grown significantly, capturing a 37% market share in 2023, up from 20% in 2018 [5] Company Performance - Chewy has experienced a notable increase in sales growth, with a 14.9% rise to $3.2 billion in its fiscal fourth quarter [7] - The number of active customers for Chewy reached 20.5 million, reflecting over a 2% increase year-over-year, and sales per active customer rose from $555 to $578 [7] - Sales to Autoship customers increased over 21% to $2.6 billion, contributing to a gross margin expansion of 0.3 percentage points to 28.5% in the fourth quarter [8] Growth Opportunities - Chewy's management is actively pursuing growth by increasing advertising and marketing spending by over 8% last year and enhancing the site and app experience [9] - The company has launched in-person veterinary clinics, which represent a natural extension of its existing business [9] Valuation - The recent drop in Chewy's stock price has resulted in a more attractive valuation, with a price-to-earnings (P/E) ratio of 37, down from over 42 at the beginning of February [10] - Despite the lower P/E ratio, Chewy's growth prospects justify a higher valuation compared to the overall market P/E of 29 [11] Long-term Outlook - Although Chewy's stock has experienced volatility since the pandemic, the company is now on a stronger footing with growth opportunities ahead, making it an appealing option for long-term investors [12]

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]

Financial Data and Key Metrics Changes - Q4 net sales increased approximately 15% year over year to $3,250,000,000, resulting in full year 2024 net sales of $11,860,000,000, representing 6% year over year growth [8][16] - Adjusted EBITDA margin for fiscal year 2024 reached 4.8%, reflecting year over year expansion of approximately 150 basis points [9][20] - Free cash flow for fiscal year 2024 was a record $452,500,000, converting approximately 80% of adjusted EBITDA into free cash flow [10][21] Business Line Data and Key Metrics Changes - Autoship customer sales increased by 21% in Q4 and nearly 11% for the full year 2024, representing 80.6% of Q4 net sales [8][18] - The sponsored ads business reached approximately 1% of net sales for full year 2024, contributing significantly to gross margin improvement [10][44] - Chewy Vet Care Clinics opened eight locations in 2024, with plans to open eight to ten new clinics in fiscal year 2025 [11] Market Data and Key Metrics Changes - Active customers reached 20,500,000, marking the first year over year growth in eight quarters, with a 2.1% increase year over year [9][17] - Net sales per active customer (NESPAK) reached $578, representing a 4.1% year over year increase [18] - The overall pet industry is expected to continue normalizing, with Chewy anticipating to gain market share in 2025 [65][66] Company Strategy and Development Direction - The company aims to achieve a long-term adjusted EBITDA margin target of 10%, with expectations for further margin expansion in 2025 [13][26] - Chewy is focused on enhancing customer engagement through improved marketing strategies and app experiences, which are expected to drive active customer growth [32][58] - The company plans to leverage its first-party software for sponsored ads to enhance media content and expand its advertising capabilities [44][48] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to deliver active customer growth in 2025, driven by strategic initiatives and improved marketing [9][34] - The management noted that the promotional environment remained stable, with minimal inflationary pressure expected in 2025 [70][71] - The company is optimistic about its growth prospects, expecting to continue gaining market share despite a normalizing pet industry [66][70] Other Important Information - The company repurchased approximately 32,800,000 shares in 2024, reducing BC Partners' ownership by approximately 16% [22][23] - Chewy ended the year with approximately $597,000,000 in cash and cash equivalents, remaining debt-free [24] Q&A Session Summary Question: Can you unpack what's driving the change in active customers? - Management noted that the momentum from Q3 continued into Q4, resulting in year over year active customer growth for the first time in eight quarters, driven by improved marketing strategies and customer engagement [30][34] Question: Can you help us understand the momentum on the gross margin side? - Management indicated that the fourth quarter gross margin was as expected, with EBITDA margin expansion driven by improvements in gross margin and operating efficiencies [35][36] Question: Can you talk about automation and the path to 70% to 80%? - Management confirmed that over 40% of volume is currently automated, with plans to ramp up automation in the Houston facility to achieve higher efficiency [41][42] Question: How do you see the landscape for net new customer growth versus reactivations? - Management highlighted that new investments, particularly in Chewy Vet Care Clinics, are driving new customer growth, while existing programs like Chewy Plus are stimulating reactivations [54][56] Question: What are you seeing from a promotional perspective in the pet landscape? - Management reported a stable promotional environment with a significant portion of the portfolio being price protected, leading to minimal inflationary pressure [68][70]

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]