Chewy(US:CHWY)2025-09-10 11:29Company Overview - Chewy is the largest pet e-tailer in the U.S., offering approximately 130,000 products and partnering with around 3,200 trusted brands in the pet industry[90]. Customer Growth and Retention - Active customers have been growing over time, indicating successful customer acquisition and retention strategies[94]. - Net sales are primarily driven by the growth of new customers and active customers, as well as the frequency of purchases through the Autoship subscription program[99]. - Autoship customer sales are a key driver of recurring net sales, reflecting customer retention and purchasing behavior[97]. - Active customers increased by 4.5% to 20.906 million compared to 20.002 million in the prior year[114]. - Autoship customer sales increased by 14.9% to $2,576.9 million for the 13 weeks ended August 3, 2025, compared to $2,242.2 million in the prior year[114]. Financial Performance - Net sales for the 13 weeks ended August 3, 2025, reached $3,104.2 million, an increase of 8.6% compared to $2,858.6 million for the same period in 2024[114]. - Net income decreased by 79.3% to $62.0 million for the 13 weeks ended August 3, 2025, down from $299.1 million in the prior year[114]. - Adjusted EBITDA for the 13 weeks ended August 3, 2025, was $183.3 million, reflecting a 26.5% increase from $144.9 million in the same period last year[115]. - Adjusted net income for the 13 weeks ended August 3, 2025, was $141.1 million, a 34.8% increase from $104.7 million in the prior year[117]. - Earnings per share (diluted) decreased by 79.4% to $0.14 for the 13 weeks ended August 3, 2025, compared to $0.68 in the same period last year[117]. - Net sales for the twenty-six weeks ended August 3, 2025 increased by $483.9 million, or 8.4%, to $6.2 billion compared to $5.7 billion for the same period in 2024, driven by a 14.8% growth in autoship customer sales to $5.1 billion[122]. - Gross profit for the thirteen weeks ended August 3, 2025 increased by $98.4 million, or 11.7%, to $942.2 million, with a gross margin of 30.4%, an increase of 90 basis points from 29.5% in the prior year[125]. - Gross margin for the twenty-six weeks ended August 3, 2025 was 30.0%, an increase of 40 basis points from 29.6% in the prior year, supported by growth in sponsored ads and autoship customer sales[126]. Expenses and Cash Flow - Selling, general, and administrative expenses encompass fulfillment costs, payroll, and other corporate expenses[102]. - Selling, general and administrative expenses for the thirteen weeks ended August 3, 2025 rose by $50.7 million, or 8.2%, to $671.9 million, primarily due to increased fulfillment costs and operational expansion[127]. - Advertising and marketing expenses for the thirteen weeks ended August 3, 2025 increased by $10.1 million, or 5.3%, to $200.6 million, reflecting investments in customer acquisition and retention[130]. - Free cash flow for the 13 weeks ended August 3, 2025, was $105.9 million, up 15.7% from $91.5 million in the same period in 2024[118]. - Net cash provided by operating activities was $133.9 million for the 13 weeks ended August 3, 2025, an increase of 8.5% from $123.4 million in the prior year[118]. - Net cash provided by operating activities was $220.3 million for the twenty-six weeks ended August 3, 2025, compared to $205.3 million for the same period in 2024, reflecting an increase of approximately 7.3%[139][140]. - Net cash used in investing activities was $70.9 million for the twenty-six weeks ended August 3, 2025, primarily for capital expenditures of $65.7 million related to expanding operations[142]. - Net cash used in financing activities was $154.0 million for the twenty-six weeks ended August 3, 2025, significantly lower than $590.0 million used in the same period in 2024[146][147]. Economic Conditions - Macroeconomic conditions, including inflation and high interest rates, are being closely monitored as they impact consumer shopping behavior[91]. Future Plans and Investments - The company plans to continue investing in its infrastructure, including veterinary clinics and pharmacy facilities, to support future growth[142]. - The company is modernizing its finance information technology architecture to enhance scalability, visibility, and analytical capabilities, with completion expected by the end of the 2025 fiscal year[129]. Shareholder Actions - The company authorized a share repurchase program of up to $500 million, with $359.8 million remaining available for repurchases as of August 3, 2025[149][152]. - During the twenty-six weeks ended August 3, 2025, the company repurchased 1,294,475 shares of Class A common stock for a total cost of $46.9 million[152]. Credit Facilities - The company has a senior secured asset-based credit facility with a borrowing capacity of $782.8 million as of August 3, 2025, with no outstanding borrowings[148]. Working Capital - The company experienced working capital changes of $121.6 million, primarily driven by increases in accounts receivable and inventories[140]. - The company has the option to raise additional funds through equity or debt financing arrangements as needed for working capital and strategic investments[138].