Chewy reports better than expected earnings for the first quarter

Chewy Inc. (NYSE: CHWY) reported the financial results for fiscal first quarter ending on May 2, 2021 after the market close on Thursday.

Shares of Chewy are down 1.8% in the morning trading even after beating Wall Street expectations for the quarter, possibly on concerns of supply chain issues and labor shortages. The stock is also down 11% year-to-date but up around 61% for the trailing one-year period.

According to 17 analysts tracking the stock, the average price target on the stock is $98.52, implying an upside of approximately 26% from the current stock price of around $78.

Snapshot of the financial results

Chewy reported net sales of $2.14 billion, increasing 31.7% over the same quarter last year and ahead of the consensus estimate of $2.13 billion.

The online retailer of pet food and other products generated a net income of $38.7 million or 9 cents per share, above the consensus estimate of a loss of 3 cents per share. The company reported adjusted EBITDA (Earnings before interest, taxes, depreciation and amortization) of $77.3 million, higher than the $3.4 million reported for Q1 2020.

Chewy has 19.8 million active customers as of the end of fiscal first quarter, representing a strong increase of 31.6% from the end of the same quarter last year.

Guidance for next quarter and fiscal year 2021

The Florida-headquartered company expects to generate revenues of $2.15 billion - $2.17 billion for the fiscal second quarter, which would be an increase of 26% to 28% year-over-year growth.

The company raised its full-year guidance compared to the figures announced in March. Now, it expects to have net sales of $8.9 billion - $9.0 billion, which would imply an increase of 25% to 26% year-over-year growth.

The company said elevated out-of-stock levels reduced the fiscal first-quarter net sales by around $40 million and expects these industry-wide headwinds to abate in the second half of the year.

CEO’s take on the financial results

In a press release announcing the results, Sumit Singh, chief executive officer of Chewy, said: