Chewy Q2 Earnings Beat Estimates, FY25 Sales Outlook Raised

Core Insights - Chewy, Inc. reported strong second-quarter fiscal 2025 results, with both revenue and earnings exceeding expectations and showing year-over-year growth. The company raised its fiscal 2025 net sales outlook to $12.5 billion to $12.6 billion, up from the previous range of $12.3 billion to $12.5 billion [1][10][12] Financial Performance - Adjusted earnings per share were 33 cents, surpassing the Zacks Consensus Estimate of 14 cents, marking a 37.5% increase from the prior year [2] - Net sales reached $3,104.2 million, exceeding the Zacks Consensus Estimate of $3,082 million, and reflecting an 8.6% increase from $2,858.6 million in the same quarter last year [3] - Autoship program sales grew nearly 14.9% year over year to a record $2.58 billion, accounting for 83% of total quarterly net sales [3] - Hardgoods sales increased 15.2% year over year to $346.1 million, while consumable sales grew 6.6% to $2.15 billion [4] Customer Metrics - The company ended the quarter with 20.9 million active customers, a 4.5% increase year over year, with net sales per active customer reaching $591, reflecting a 4.6% year-over-year increase [5] Margin and Cost Analysis - Gross profit increased 11.7% year over year to $942.2 million, with gross margin expanding 90 basis points to 30.4% [6] - SG&A expenses rose 8.2% year over year to $671.9 million, but as a percentage of net sales, they decreased to 21.6% [7] - Adjusted EBITDA was $183.3 million, a 26.5% increase from $144.9 million in the prior year, with an adjusted EBITDA margin of 5.9% [7] Financial Health - The company ended the quarter with $591.8 million in cash and cash equivalents, remaining debt-free, and reported total liquidity of approximately $1.4 billion [8] - Free cash flow for the quarter was $105.9 million, with $133.9 million in net cash provided by operating activities [8] - Chewy repurchased approximately 3 million shares for a total of $125 million, with $359.8 million remaining under the current repurchase authorization [9] Future Outlook - For the third quarter of fiscal 2025, Chewy expects net sales between $3.07 billion and $3.10 billion, representing year-over-year growth of approximately 7% to 8% [11] - The company maintains its adjusted EBITDA margin guidance between 5.4% and 5.7%, with expected improvements in gross margin contributing to this expansion [13]