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Chewy (CHWY) Q1 Earnings & Sales Beat Estimates, Rise Y/Y

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Chewy, Inc. (CHWY - Free Report) reported better-than-expected results in first-quarter fiscal 2021. Both the metrics also compared favorably with the year-ago quarter's respective tallies. Quarterly Results gained from growth in the company’s active customers. Sales to autoship customers were also robust.

Over the past three months, shares of Chewy have gained 14.1% compared with the industry’s rally of 25.7%.

Q1 Highlights

The company’s adjusted earnings were 15 cents per share. The Zacks Consensus Estimate was of a loss of 2 cents. In the year-ago quarter, the company reported a loss of 12 cents a share.

Net sales amounted to $2,135.2 million, which came above the Zacks Consensus Estimate of $2,124 million. Moreover, the top line surged 31.7% year over year on strength in purchasing behavior and active customer base. The company witnessed a 31.6% rise in active customers and an 8.7% increase in net sales per active customer. Active customers at the end of the quarter reached 19.8 million. However, growth was somewhat offset by elevated out-of-stock levels, which lowered sales by an estimated $40 million in the quarter.

Chewy Inc. Price, Consensus and EPS Surprise

Chewy Inc. Price, Consensus and EPS Surprise

Chewy Inc. price-consensus-eps-surprise-chart | Chewy Inc. Quote

Autoship customer sales for the quarter amounted to $1.48 billion, up 34.4% year over year. Autoship customer sales accounted for 69.3% of the company’s top line.

Moving on, gross profit increased 55.7% to $589.8 million in the reported quarter. Gross margin expanded 420 bps to 27.6% on the back of higher sales and an improved customer engagement as well as growth in hard goods, proprietary brands, specialty and health care verticals.

Selling, general & administrative expenses jumped about 27% year over year to $406.2 million while advertising and marketing expenses rose 36.1% to reach $144.4 million. Consequently, total operating expenses increased 29.2% to $550.7 million.

Further, adjusted EBITDA amounted to $77.4 million, improving significantly from $3.4 million recorded in the prior-year fiscal’s quarter. Also, adjusted EBITDA margin increased 340 bps to 3.6%.

Financial Details

Chewy ended the quarter with cash and cash equivalents of $637.5 million, accounts receivable of $117.6 million and inventories worth $490.9 million. As of May 2, 2021, total stockholders’ equity deficit was $69 million.

In the fiscal first quarter, net cash provided by operating activities was $98.4 million compared with $20.7 million of net cash provided by operating activities at the end of the year-ago fiscal’s quarter. This presently Zacks Rank #3 (Hold) company’s free cash flow stood at $59.5 million at the end of the quarter. Capital expenditures during the quarter were $38.9 million.


Management expects net sales for the fiscal second quarter in the range of $2.15-$2.17 billion, which indicates growth of 26-28% from the prior-year fiscal’s quarterly reported figure.

However, elevated out-of-stock levels remain a headwind in fiscal 2021. Nonetheless, the company raised net sales between $8.9 billion and $9 billion for the current fiscal year, suggesting an increase of 25-26% from the prior-year fiscal’s quarterly reported number. Further, adjusted EBITDA margin is likely to expand between 80 and 120 bps for the ongoing fiscal year from last fiscal year’s quarterly reported figure.

Hot Stocks to Consider

Albertsons Companies (ACI - Free Report) has an expected long-term earnings growth rate of 12% and a Zacks Rank #2 (Buy), currently. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Newell Brands (NWL - Free Report) has a trailing four-quarter earnings surprise of 72.1% and a Zacks Rank of 2, presently.

Hain Celestial (HAIN - Free Report) , currently a Zacks #2 Ranked player, has a trailing four-quarter earnings surprise of 26.4%, on average.

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