Chewy (CHWY) FY Conference May 14, 2025 10:00 AM ET Speaker0 All right. We are going to go ahead and get started. I'm Doug Anmuth, JPMorgan's Internet analyst. We're pleased to have with us Chewy's CFO, David Reeder. Chewy is the largest pure play online pet retailer in The U. S. With more than 20,000,000 active customers. We estimate more than $1,200,000,000 in net sales in fiscal 'twenty five. More than 80% of revenue is generated by subscription based auto ship customers and about 85% comes from nondiscr ...

Core Points - The Pet Valu Walk for Dog Guides will take place on May 25, 2025, in 200 communities across Canada, aiming to raise $1.6 million for providing dog guides to Canadians with disabilities at no cost [3][4] - The event marks the 40th anniversary of the Walk, which started as a small community event and has grown significantly, now supporting seven different programs with over 800 working dog guides [4][5] - Each dog guide costs approximately $35,000 to breed, raise, train, and place, highlighting the financial need for fundraising events like the Pet Valu Walk [4] Company Overview - Pet Valu is Canada's leading retailer of pet food and supplies, with over 800 locations and a strong commitment to community involvement through sponsorship and participation in events like the Pet Valu Walk [8] - The company has been a national sponsor of the Walk since 2017 and has contributed significantly to the Dog Guides organization, including financial support for over 220 dog guide teams [6][8] - Pet Valu is also investing in a new $50 million training facility to enhance its support for Dog Guides and increase the number of teams graduated annually [5][6] Industry Impact - The Lions Foundation of Canada Dog Guides provides essential services to Canadians with disabilities, empowering them to live independently by offering dog guides at no cost [9] - The organization has evolved over the past four decades, expanding its programs and increasing its operational capacity, which is supported by community fundraising events like the Pet Valu Walk [4][5] - The collaboration between Pet Valu and Dog Guides exemplifies the positive impact of corporate sponsorship in the non-profit sector, enhancing the quality of life for individuals with disabilities [7][9]

Economic Overview - U.S. consumer confidence has declined for the fifth consecutive month in April, with the Consumer Confidence Index dropping to 86, a decrease of 7.9 points from the previous month, falling short of market expectations [1][2] - This is the weakest level recorded in almost five years, indicating growing unease among consumers due to economic pressures such as trade tensions, rising tariffs, and fears over job security [2] Consumer Spending Impact - The Federal Reserve and financial markets are closely monitoring the decline in consumer sentiment, as consumer spending accounts for approximately 70% of U.S. GDP, suggesting that changes in spending patterns could significantly impact future economic growth [3] Company Adaptation Strategies - Companies like Sprouts Farmers Market, The Gap, Chewy, and Stitch Fix are better positioned to navigate the current economic challenges due to their solid business models and focus on value and essentials [4] Sprouts Farmers Market - Sprouts Farmers Market is focusing on product innovation, targeted marketing, and competitive pricing to expand its customer base and meet evolving consumer preferences, particularly in the health food segment [8] - The Zacks Consensus Estimate indicates a growth of 12.3% in sales and 28.8% in earnings per share (EPS) for the current financial year compared to the previous year [9] The Gap - The Gap is leveraging its broad brand portfolio and enhancing operational efficiency while driving digital transformation and investing in product innovation to maintain competitiveness [10] - The Zacks Consensus Estimate suggests a growth of 1.5% in sales and 7.7% in EPS for the current financial year compared to the previous year [11] Chewy - Chewy is enhancing its position in the online pet retail market through innovation and customer loyalty initiatives, such as the Autoship program, which secures predictable revenues [12] - The Zacks Consensus Estimate indicates a growth of 4.5% in sales and 18.3% in EPS for the current financial year compared to the previous year [13] Stitch Fix - Stitch Fix is improving its inventory management and expanding private brand offerings to enhance profitability while focusing on personalized client experiences [14] - The Zacks Consensus Estimate suggests a growth of 64.7% in the bottom line for the current financial year compared to the previous year [15]

Core Insights - Petco Health and Wellness Company, Inc. (WOOF) reported fourth-quarter fiscal 2024 results with net sales and earnings declining year-over-year, meeting revenue estimates but lagging on earnings [1][2] Financial Performance - The company posted break-even earnings per share in Q4 fiscal 2024, down from adjusted earnings of 2 cents in the same quarter last year, and below the Zacks Consensus Estimate of adjusted earnings of 2 cents [2] - Net sales were $1,552.1 million, a decrease of 7.3% year-over-year, influenced by the absence of a 53rd week in fiscal 2023; comparable sales increased by 0.5%, slightly below the expected growth of 0.9% [3] Margins and Expenses - Gross profit fell by 2.8% year-over-year to $589.3 million, while gross margin improved by 180 basis points to 38% [4] - Selling, general and administrative expenses decreased by 5.7% to $571.8 million, with these expenses as a percentage of net sales decreasing by 60 basis points to 36.8% [4] - Adjusted EBITDA was $96.1 million, down from $105.3 million in the previous year, with the adjusted EBITDA margin contracting by 10 basis points to 6.2% [5] Cash Flow and Equity - At the end of the quarter, Petco had cash and cash equivalents of $165.8 million and total stockholders' equity of $1.11 billion; operating cash flow was $177.7 million, down from $215.7 million in the prior year [6] - Free cash flow totaled $49.7 million at the end of Q4 fiscal 2024 [6] Future Outlook - For fiscal 2025, net sales are expected to decline in the low-single-digit percentage range, with adjusted EBITDA projected between $375 million and $390 million; capital expenditure is anticipated to be between $130 million and $140 million [9][10] - The company expects to close 20-30 net real estate locations during the year [10] - For Q1 fiscal 2025, net sales are also projected to decline in the low-single-digit percentage range, with adjusted EBITDA expected between $82 million and $83 million [10]