Chewy reports better than expected earnings for the first quarter

By: Ajay Pal Singh
Ajay Pal Singh
Ajay worked at Tata Motors in project planning before discovering his passion for stocks. Today, he lives in Canada and enjoys… read more.
on Jun 11, 2021
  • Chewy reported net sales of $2.14 billion, ahead of the consensus estimate of $2.13 billion.
  • Net income was $38.7 million or 9 cents/share, above the consensus estimate of a loss of 3 cents/share.
  • The company raised its full year guidance for fiscal year 2021.

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.

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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:

“2021 is already turning out to be an exciting and busy year for Chewy. We continue to execute against our growth roadmap, expand our customer base, increase share of wallet, and grow our addressable market-expanding verticals.”

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