Core Insights - Chewy Inc. (CHWY) reported a strong performance in Q1 fiscal 2025, with net sales increasing by 8.3% year over year to $3.12 billion, surpassing guidance due to strong engagement in core categories [1][10] - The Autoship program was a significant growth driver, contributing $2.56 billion in sales, which is 82.2% of total net sales, and showing a year-over-year growth of 14.8% [2][10] - Chewy's active customer base grew to 20.8 million, reflecting a 3.8% increase, driven by effective customer acquisition strategies [2] Segment Performance - The hardgoods segment saw a year-over-year growth of 12.3%, supported by improved customer experience and faster SKU onboarding [1] - Chewy Vet Care expanded to 11 clinics across four states, with strong customer utilization, as about half of first-time customers ordered from Chewy.com within 30 days [3] - The Chewy+ membership program showed promising adoption, leading to a 3.7% increase in net sales per active customer to $583 [4] Financial Guidance and Valuation - Chewy maintained its fiscal 2025 revenue guidance of $12.3 billion to $12.45 billion, indicating a growth of 6-7% when adjusted for the previous year's extra week [5] - The company trades at a forward price-to-sales ratio of 1.17X, which is below the industry average of 2.17X, indicating potential undervaluation [11] - The Zacks Consensus Estimate for Chewy's fiscal 2025 and 2026 earnings suggests year-over-year growth of 23.1% and 19.5%, respectively, with recent upward revisions in estimates [12]

Core Insights - Chewy, Inc. (CHWY) and Central Garden & Pet Company (CENT) are key players in the pet care industry, each with unique operational models and growth strategies [1] - Chewy focuses on e-commerce and customer engagement, while Central Garden & Pet emphasizes a diversified portfolio and operational efficiency [1] Chewy, Inc. (CHWY) - Chewy reported net sales of $3.12 billion in fiscal Q1 2025, an 8.3% year-over-year increase, exceeding guidance [2] - The Autoship program generated $2.56 billion in sales, accounting for 82% of total net sales, with a 14.8% year-over-year growth [3] - Active customer base grew by 3.8% year-over-year to 20.8 million, with net sales per active customer rising 3.7% to $583 [4] - Chewy Vet Care operates 11 clinics and plans to open 8-10 more in fiscal 2025, while the Chewy+ membership program shows early success [5] - Adjusted EBITDA margin for Q1 was 6.2%, but management expects a decline due to seasonality and increased marketing investments [6] - Marketing expenses reached $193.8 million, or 6.2% of sales, projected to rise to 6.7-6.8% for the year [7] Central Garden & Pet Company (CENT) - CENT's adjusted gross margin improved by 200 basis points to 33.3% in Q2, reflecting strong cost management [9][13] - E-commerce accounted for 27% of Pet segment sales, driven by new products and digital strategies [14] - The company opened a 300,000-square-foot distribution center in New Jersey, enhancing fulfillment capabilities [12] - Financially, CENT ended Q2 with $517 million in cash and no borrowings, maintaining a net leverage ratio of 1.7X [15] - The consensus estimate for CENT's fiscal 2025 sales suggests a year-over-year decline of 1.7%, while EPS is expected to grow by 17.8% [20] Comparative Analysis - Chewy's shares gained 1% over the past three months, while CENT's stock rose 19.6%, driven by strong margin expansion and cost execution [21] - Chewy's forward price-to-sales (P/S) multiple is 1.20, while CENT's is 0.85, indicating a more attractive valuation for CENT [22][23] - Central Garden & Pet is viewed as a better investment due to disciplined cost management and consistent margin expansion, while Chewy faces near-term challenges [26][27]

Core Insights - Chewy (CHWY) is a prominent player in the pet care industry, leveraging its strong e-commerce platform to cater to a growing number of pet owners. The stock is currently trading at a forward 12-month price-to-sales (P/S) multiple of 1.38X, which is below the industry average of 2.02X, raising questions about whether it is a buy, hold, or sell opportunity [1][21] Valuation Comparison - Chewy's valuation is attractive compared to peers such as Central Garden & Pet Company (CENT) at a forward 12-month P/S of 0.75, Petco Health and Wellness Company, Inc. (WOOF) at 0.15, and BARK, Inc. (BARK) at 0.33 [2] Stock Performance - Chewy's stock price has increased by 24.3% over the past three months, closing at $41.86, outperforming the industry's rise of 18.2% and the Retail - Wholesale sector's growth of 11.5% [3][5] - The stock is currently trading above its 50-day and 200-day moving averages of $41.53 and $35.26, indicating strong upward momentum and market confidence [9] Financial Performance - For the first quarter of fiscal 2025, Chewy reported net sales of $3.12 billion, an 8.3% year-over-year increase, exceeding guidance expectations [10] - The Autoship program generated record sales of $2.56 billion, accounting for 82% of total net sales and growing 14.8% year-over-year [11][13] - Chewy's active customer base grew to 20.8 million, a 3.8% year-over-year increase, with net sales per active customer rising by 3.7% to $583 [14] Growth Initiatives - Chewy's Vet Care business is expanding, with 11 clinics currently operating and plans to open 8-10 additional clinics in fiscal 2025 [15] - The Chewy+ membership program has successfully transitioned out of beta, showing increased customer engagement and order frequency [15] Future Outlook - For fiscal 2025, Chewy anticipates net sales between $12.3 billion and $12.5 billion, reflecting 6-7% year-over-year growth, with an adjusted EBITDA margin guidance of 5.4% to 5.7% [16] - The Zacks Consensus Estimate for EPS has seen upward revisions, with current estimates at $1.28 for the current year and $1.53 for the next year [17] Market Position - Chewy has demonstrated resilience through steady revenue growth and customer retention strategies, positioning itself as a high-growth, digitally native pet care leader [21]