Core Insights - Chewy, Inc. is a leading online retailer in the pet products industry, offering a variety of items and subscription services like Chewy+ to enhance customer convenience and savings [1] Financial Performance - Goldman Sachs set a price target of $52 for Chewy, indicating a potential increase of approximately 46.77% from its current price of $35.43, reflecting an optimistic outlook based on strong fiscal performance [2][6] - Chewy's third-quarter earnings report showed earnings of 32 cents per share, surpassing the expected 30 cents, with an 8.3% year-over-year revenue increase to $3.12 billion, driven by unit volume growth rather than price increases [3][6] Customer Metrics - The number of active customers rose to 21.2 million, marking a nearly 5% increase year-over-year, attributed to improved marketing efficiency and higher conversion rates [3] - Autoship sales, crucial for predictability and cost efficiency, grew by 13.6% year-over-year to $2.61 billion, indicating strong demand and customer loyalty [5][6] Market Dynamics - Despite initial market volatility due to fourth-quarter adjusted earnings guidance falling short of expectations, the stock stabilized after management clarified the inclusion of integration costs [4] - Net customer additions improved to 250,000 from 150,000 in the previous quarter, showcasing a positive shift in customer momentum [4]

Core Insights - Chewy Inc. is a leading online retailer in the pet supplies market, focusing on customer service and a user-friendly platform to differentiate itself from competitors like Amazon and Petco [1] Financial Performance - Chewy reported third-quarter revenue of $3.12 billion, representing an 8.1% year-over-year increase, driven by strong demand and a rise in unit volume [3][6] - The number of active customers grew to 21.2 million, reflecting a nearly 5% year-over-year increase, supported by improved marketing efficiency and higher conversion rates [3][6] Sales Growth - Autoship sales, crucial for predictability and cost efficiency, increased by 13.6% year-over-year to $2.61 billion, indicating strong customer retention [4][6] - The performance of Chewy's mobile app also showed significant growth, with app customers and orders rising by 15% year-over-year due to enhanced functionality and increased direct traffic [4] Market Position and Outlook - Barclays maintained an "Overweight" rating for Chewy, raising its price target from $47 to $52 following the company's impressive earnings report and optimistic guidance for the fourth quarter [2][6] - Despite challenging macroeconomic conditions, Chewy continues to demonstrate resilience and growth, with the stock currently priced at $35.43 and a market capitalization of approximately $14.69 billion [5]

Chewy Inc. (NYSE:CHWY) reported an EPS of $0.14, beating the estimated $0.12, and marking a trend of surpassing consensus EPS estimates.The company's revenue reached $3.12 billion, an 8.1% increase from the previous year, driven by a rise in unit volume and active customer growth to 21.2 million.Despite a disappointing outlook for the fiscal fourth quarter, Chewy's valuation metrics like a P/E ratio of 69.58 and a price-to-sales ratio of 1.14 reflect investor confidence in its future growth.Chewy Inc. (NYSE ...

Chewy (NYSE:CHWY) Q3 2026 Earnings Call December 10, 2025 08:00 AM ET Company ParticipantsSteven Zaccone - Director of Equity ResearchSumit Singh - CEONatalie Nowak - Director of Investor RelationsWill Billings - Chief Accounting Officer and Interim Principal Financial OfficerConference Call ParticipantsEric Sheridan - Senior Equity Research AnalystAnna Andreeva - Managing Director and Senior Research AnalystShweta Khajuria - Managing Director and Senior Equity Research AnalystDylan Carden - Senior Equity A ...

Chewy (NYSE:CHWY) Q3 2026 Earnings Call December 10, 2025 08:00 AM ET Company ParticipantsSteven Zaccone - Director of Equity ResearchSumit Singh - CEONatalie Nowak - Director of Investor RelationsWill Billings - Chief Accounting Officer and Interim Principal Financial OfficerConference Call ParticipantsEric Sheridan - Senior Equity Research AnalystAnna Andreeva - Managing Director and Senior Research AnalystShweta Khajuria - Managing Director and Senior Equity Research AnalystDylan Carden - Senior Equity A ...

Core Insights - Chewy, Inc.'s expansion into pet health services through the Chewy Vet Care (CVC) network is a strategic initiative aimed at high-value customer acquisition and ecosystem benefits [1][3] - CVC clinics are exceeding expectations in demand generation and value creation, with Vet Care customers showing the highest and fastest Net Sales Per Active Customer (NSPAC) growth [1][7] - The company plans to open 8 to 10 new Vet Care practices in fiscal 2025, aiming to reach a total of 20 locations, which is expected to enhance profitability and customer loyalty [3][7] Customer Dynamics - CVC customers are increasingly gravitating towards high-value verticals such as premium consumables and pharmacy offerings, which supports the company's Autoship-driven economics and higher gross profit per customer [2] - The strategic focus is on creating a comprehensive pet care ecosystem that connects food, supplies, and health services, fostering deeper customer relationships and ongoing engagement [2] Financial Performance - Chewy's shares have decreased by 2.1% year-to-date, contrasting with an 8.4% increase in the industry [4] - The company trades at a forward price-to-earnings ratio of 47.96, significantly higher than the industry average of 24.17 [5] - The Zacks Consensus Estimate indicates a year-over-year earnings growth of 22.1% for fiscal 2026 and 20.7% for fiscal 2027 [13]

Core Insights - Chewy, Inc. (CHWY) and Central Garden & Pet Company (CENT) are significant players in the pet care industry, each with distinct strategies focusing on different aspects of the market [1][2] Chewy, Inc. (CHWY) - Chewy reported net sales of $3.10 billion for Q2 of fiscal 2025, an increase of 8.6% year-over-year, exceeding guidance [2][9] - The Autoship program was a key driver, generating record sales of $2.58 billion, accounting for 83% of total net sales, and showing a 14.9% year-over-year increase [3][9] - The active customer base grew by 4.5% year-over-year to 20.9 million, with net sales per active customer rising 4.6% to $591 [4] - Chewy Vet Care plans to open 8-10 additional clinics in fiscal 2025, and the Chewy+ membership program exceeded internal targets, contributing 3% to July sales [5] - Adjusted EBITDA was reported at $183.3 million, with a margin of 5.9%, reflecting an 80-basis-point year-over-year increase [6] - Marketing expenses were $200.6 million, or 6.5% of net sales, aligning with the full-year target of 6-7% [7] - Chewy raised its full-year net sales guidance to $12.5-$12.6 billion, indicating a 7-8% year-over-year growth [7] Central Garden & Pet Company (CENT) - CENT's gross margin increased by 280 basis points to 34.6%, despite a 4% decline in quarterly net sales to $961 million [9][12] - The Central-to-Home strategy led to consumables rising to 82% of total pet sales, up from 79% a year ago [10] - E-commerce contributed 27% to total pet sales, with double-digit growth in garden categories [11] - The total net sales decline of 4% year-over-year was attributed to softer consumer demand and strategic product exits [13] - The garden segment faced a 4% sales drop due to unfavorable weather conditions and loss of product lines [14] - Management anticipates $10 million in tariff impacts for fiscal 2025, primarily affecting the fourth quarter [15] Comparative Analysis - Chewy's shares have decreased by 3.3% over the past three months, while CENT's stock has declined by 18.5% [19] - Chewy is trading at a forward price-to-sales (P/S) multiple of 1.09, while CENT's forward P/S multiple is at 0.64 [21] - Chewy is viewed as the stronger investment option due to its recurring revenue model and growth strategies, while CENT faces challenges from declining sales and external pressures [23][24]

Core Insights - Chewy Inc. (CHWY) is a leading online pet retailer with a trailing 12-month price-to-sales (P/S) multiple of 1.33X, significantly lower than the industry average of 2.69X, raising questions about its investment potential [1] - The company has seen an 8.9% increase in stock price over the past month, outperforming the industry decline of 2.4% [2] - Chewy's Q2 net sales reached $3.1 billion, an 8.6% year-over-year growth, driven by strong performance in its Autoship program [7][8] Valuation and Performance - CHWY's trailing 12-month P/S ratio is favorable compared to competitors like Central Garden & Pet Company (0.61), Petco Health and Wellness Company (0.18), and BARK, Inc. (0.28) [1] - The company has outperformed its competitors, with Central Garden and BARK shares declining by 15.9% and 9.3%, respectively, while Petco Health gained 4.7% [3] Sales and Growth Drivers - Autoship sales hit a record $2.58 billion, accounting for 83% of total quarterly revenues, with a year-over-year growth of 14.9% [9] - The active customer base grew to 20.9 million, a 4.5% increase year-over-year, with net sales per active customer rising by 4.6% [10] - Chewy's gross margin improved by 90 basis points to 30.4%, and adjusted EBITDA grew by 34.8%, indicating effective cost management [10] Strategic Initiatives - The Chewy Vet Care network plans to open 8-10 practices in fiscal 2025, enhancing service offerings [11] - The Chewy+ membership program is contributing approximately 3% of monthly sales, indicating higher customer engagement [11] - The launch of the new private brand of fresh dog food, Get Real, has received positive customer feedback [12] Future Outlook - For fiscal 2025, Chewy raised its net sales outlook to $12.5-$12.6 billion, reflecting a 7-8% adjusted year-over-year growth [13] - The company anticipates a 5.4-5.7% adjusted EBITDA margin for the full year, with expected margin improvements driven by gross margin gains [14] - Chewy maintains a strong balance sheet and a debt-free position, positioning itself for sustainable long-term value [15] Earnings Estimates - The Zacks Consensus Estimate for EPS has seen upward revisions, with current estimates for the fiscal year increasing to $1.27 and $1.53 for the next fiscal year [17] Challenges and Competitive Landscape - Management expects margin expansion to moderate in the latter half of fiscal 2025 due to reinvestments in strategic programs [19] - Rising operating costs and fulfillment inefficiencies have constrained Chewy's leverage potential, with SG&A expenses rising to 19.1% of net sales [20] - Competitive intensity remains high, prompting Chewy to sustain advertising and marketing spend at $200.6 million, or 6.5% of sales [22]

Core Viewpoint - Chewy (NYSE: CHWY) remains a strong investment opportunity despite its stock price doubling since 2024, primarily due to the potential for rising profit margins driven by strategic initiatives [1]. Profit Margins - Chewy has achieved consistent profitability and cash generation over the past two years, currently reporting a 2% net profit margin and a 4% free cash flow margin (1.2% when including stock-based compensation). There is potential for further margin improvement as management focuses on higher-margin growth areas [2]. Key Growth Areas - **Autoship**: Chewy's Autoship subscription plans constitute 83% of total sales, providing predictable and steady revenue that can be further streamlined [3]. - **Chewy Vet Care**: The company aims to operate 20 Chewy Vet Care clinics by year-end, which will enhance its physical presence and tap into the higher margins typical of veterinary services [5]. - **Get Real**: The launch of a private-label healthy and fresh dog food product, Get Real, is expected to offer higher margins and align well with the Autoship subscription model [8]. - **Advertising**: The sponsored ads business is a significant contributor to Chewy's profitability, with management projecting that it could grow to represent 1% to 3% of total revenue [9]. - **Chewy+**: The new $49 annual membership program, Chewy+, has received positive feedback and already accounts for 3% of June sales, with potential for generating substantial high-margin membership fees [10]. Valuation - Chewy is currently trading at 29 times forward earnings, but with anticipated earnings growth, it is considered a top stock to consider [10].

Financial Data and Key Metrics Changes - Q2 net sales grew by nearly 9% year over year to $3.1 billion, exceeding the high end of guidance [6][19] - Gross margin reached 30.4%, expanding by nearly 80 and 90 basis points sequentially and year-over-year, respectively [8][19] - Adjusted EBITDA was $183.3 million, representing a 5.9% margin and a year-over-year increase of over 80 basis points [9][21] - Free cash flow generated was nearly $106 million in the quarter [9][21] - Adjusted net income increased by 34.8% year over year to $141.1 million, with adjusted diluted earnings per share of $0.33 [21][25] Business Line Data and Key Metrics Changes - Autoship customer sales reached $2.58 billion, representing 83% of Q2 net sales and growing nearly 15% year over year [6][7] - Hardgoods business grew over 15% in Q2, driven by structural volume growth [7] - Chewy Plus program showed strong growth, with approximately 3% of total monthly sales attributed to members [11][12] Market Data and Key Metrics Changes - Active customers increased to 20.9 million, reflecting 4.5% year-over-year growth [8] - NESPAC (Net Effective Sales Per Active Customer) reached $591, representing 4.6% year-over-year growth [8] Company Strategy and Development Direction - Chewy is focused on expanding its Chewy Plus membership and private brands, with a new product line "Get Real" launched for fresh dog food [12][15] - The company aims to mitigate tariff-related costs and invest in growth initiatives while maintaining a strong customer experience [17] - Chewy plans to open 8 to 10 new veterinary practices in fiscal year 2025, enhancing its Chewy Vet Care network [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in Chewy's ability to gain market share despite a challenging retail environment [17] - The company anticipates continued growth in the second half of 2025, with net sales expected to be between $3.07 and $3.1 billion [23] - Management expects to maintain a full-year adjusted EBITDA margin outlook of 5.4% to 5.7% [24] Other Important Information - The company repurchased approximately 3 million shares for a total of approximately $125 million in Q2 [21][22] - Chewy ended the quarter with approximately $592 million in cash and cash equivalents, remaining debt-free [22][23] Q&A Session Summary Question: Investments required in the back half and increasing awareness of new offerings - Management indicated that they are focusing on existing members for Chewy Plus and have not spent additional marketing dollars externally [27][28] Question: SG&A deleverage and its components - Management expects SG&A leverage in 2025, with temporary costs attributed to the ramp-up of the Houston fulfillment center and higher inventory processing costs [36][42] Question: Q2 gross margin improvement and pricing investments - Management noted that gross margin drivers include product mix, increasing Autoship penetration, and a rational promotional environment [45][46] Question: Potential of the fresh and frozen segment - Management estimates the total addressable market for fresh and frozen pet food to be between $8 billion and $12 billion, with strong initial customer reception for the "Get Real" product line [55][56] Question: Advertising environment and macro expectations - Management reported stable pet household formation trends and competitive intensity in advertising, with expectations for continued customer growth [60][66] Question: Competitive advantages and share gains - Management emphasized Chewy's unique value proposition, combining e-commerce efficiency with personalized service, and highlighted growth opportunities in health and wellness segments [70][76] Question: Quality of customer cohorts and Autoship growth - Management noted improvements in customer retention and engagement through programs like Autoship and Chewy Plus, leading to higher NESPAC [79][82]