Chewy(US:CHWY)2025-12-10 12:30Business 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 [100]. - The company monitors macroeconomic conditions, including inflation and interest rates, which impact consumer behavior and business operations [101]. - Chewy's fiscal year 2025 ends on February 1, 2026, and is a 52-week year, while fiscal year 2024 was a 53-week year [103]. Customer Metrics - Active customers have increased over time, indicating growth in customer acquisition and retention [104]. - Active customers increased by 4.9% to 21.155 million compared to 20.160 million in the same quarter last year [125]. - Active customers grew by 4.9% to 21.2 million in the thirteen weeks ended November 2, 2025, contributing to higher net sales per active customer, which increased by $28 or 4.9% to $595 [132]. Sales and Revenue - Net sales for the 13 weeks ended November 2, 2025, reached $3,116.6 million, an increase of 8.3% compared to $2,877.6 million for the same period in 2024 [125]. - For the thirty-nine weeks ended November 2, 2025, net sales increased by $722.9 million, or 8.4%, to $9.3 billion compared to $8.6 billion in the prior year [133]. - Net sales for the thirteen weeks ended November 2, 2025 increased by $239.0 million, or 8.3%, to $3.1 billion compared to $2.9 billion for the same period in 2024, driven by a 13.6% increase in autoship customer sales to $2.6 billion [132]. Profitability - Adjusted EBITDA for the 13 weeks ended November 2, 2025, was $180.9 million, reflecting a 30.9% increase from $138.2 million in the prior year [127]. - Adjusted net income for the 13 weeks ended November 2, 2025, was $135.7 million, a 59.6% increase from $85.0 million in the same period of 2024 [128]. - Net income for the thirteen weeks ended November 2, 2025 was $59.2 million, compared to $3.9 million in the same period of 2024, indicating significant year-over-year growth [131]. - Net margin for the 13 weeks ended November 2, 2025, was 1.9%, up from 0.1% in the prior year [127]. Expenses - Cost of goods sold includes various expenses related to inventory and shipping, impacting overall profitability [111]. - Selling, general, and administrative expenses encompass fulfillment costs, payroll, and other corporate expenses, which are critical for operational efficiency [112]. - Selling, general and administrative expenses for the thirteen weeks ended November 2, 2025 increased by $38.6 million, or 6.2%, to $665.1 million, representing 21.3% of net sales, a decrease of 50 basis points from the previous year [138]. - Cost of goods sold for the thirteen weeks ended November 2, 2025 increased by $154.7 million, or 7.6%, to $2.2 billion, primarily due to higher sales and increased shipping costs [134]. Cash Flow and Investments - Free cash flow for the 13 weeks ended November 2, 2025, was $175.8 million, up 15.8% from $151.8 million in the previous year [129]. - Net cash provided by operating activities for the 39 weeks ended November 2, 2025, was $428.2 million, a 10.1% increase from $388.8 million in 2024 [129]. - Net cash used in investing activities was $127.9 million for the thirty-nine weeks ended November 2, 2025, primarily for capital expenditures related to expanding operations [156]. - Net cash used in financing activities was $221.0 million for the thirty-nine weeks ended November 2, 2025, primarily for repurchases of common stock [158]. Share Repurchase and Financing - The company authorized a share repurchase program of up to $500 million, with $304.9 million remaining available for repurchases as of November 2, 2025 [161][165]. - The ABL Credit Facility provides for non-amortizing revolving loans of up to $800 million, with a borrowing capacity of $783.1 million as of November 2, 2025 [160]. Tax and Adjustments - The effective tax rate for the thirty-nine weeks ended November 2, 2025 was lower than the U.S. federal statutory rate due to research and development credits and tax benefits from share-based compensation [147]. - The company incurred $355.2 million in non-cash adjustments, including share-based compensation and depreciation, for the thirty-nine weeks ended November 2, 2025 [153]. Technology and Operations - The company is modernizing its finance information technology architecture, aiming for completion by the end of fiscal year 2026, which will enhance data visibility and analytical capabilities without requiring significant capital investment [140].