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Chewy (CHWY) Q3 Loss Narrower, Sales Up 24% on Higher Demand
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Chewy, Inc. (CHWY - Free Report) reported narrower-than-expected loss per share for third-quarter fiscal 2021. Although net sales matched the Zacks Consensus Estimate, the metric increased year over year on higher demand and robust consumer engagement. Results gained from growth in CHWY’s active customers. Sales to autoship customers were also robust.
In the quarter, management witnessed the impacts of supply-chain disruptions, labor shortages and inflation. This presently Zacks Rank #5 (Strong Sell) stock has decreased 23.5% over the past three months, wider than the industry’s 5.3% dip.
Q3 Highlights
Chewy reported a loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents. The bottom-line figure was in line with the year-ago quarter’s loss per share.
Net sales amounted to $2,212.2 million, which came in line with the Zacks Consensus Estimate. The top line increased 24.1% year over year on strength in the pet category as well as gains from strategic efforts and business model. Also, demand and customer engagement like site traffic, customer acquisition, order volume, size, purchase frequency and net sales per active customer were solid throughout the quarter.
Autoship customer sales as a rate of sales expanded 140 basis points (bps) to 70.6%. CHWY ended the reported quarter with 20.4 million customers, which mirrors year-over-year growth of 15%.
Gross profit increased 28.6% to $584.8 million in the reported quarter. Gross margin expanded 90 bps to 26.4% on the back of higher sales.
Adjusted EBITDA amounted to $6 million, improving 9.9% from the comparable quarter’s level in the prior fiscal year. Also, adjusted EBITDA margin came in at 0.3%, flat on a year-over-year basis.
Financial Details
Chewy ended the quarter with cash and cash equivalents of $726.9 million, accounts receivable of $128.7 million and inventories worth $606.6 million. As of Oct 31, 2021, total stockholders’ equity deficit was $66 million.
In the fiscal third quarter, CHWY’s free cash flow stood at $2.3 million and capital expenditures were $72 million.
During the nine months of fiscal 2021, net cash provided by operating activities was $257.8 million compared with $55.3 million of net cash provided by operating activities at the end of the year-ago fiscal’s period.
Guidance
Management expects net sales for the fiscal fourth quarter in the range of $2.40-$2.44 billion, which indicates growth of 17-19% from the prior-year fiscal’s quarterly figure.
For fiscal 2021, net sales are likely to fall in the band of $8.90-$8.94 billion, mirroring an increase of 25% from the last fiscal level.
MGP Ingredients, the producer and supplier of distilled spirits, and specialty wheat proteins and starch food ingredients, currently sports a Zacks Rank #1 (Strong Buy). Shares of MGPI have increased 34.8% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS suggests growth of 55.5% and 61.4%, respectively, from the corresponding year-ago period’s reported figures. MGPI has a trailing four-quarter earnings surprise of 117.6%, on average.
The Hain Celestial, which provides various natural and organic foods as well as personal care products in North America and Europe, carries a Zacks Rank #2 (Buy) at present. Shares of HAIN have moved up 5.9% in the past three months.
The Zacks Consensus Estimate for The Hain Celestial’s current financial-year EPS suggests growth of 14.5% from the year-ago period’s reported number. HAIN has a trailing four-quarter earnings surprise of 9.7%, on average.
The J. M. Smucker, a renowned marketer and manufacturer of consumer food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 10.8%, on average. The stock has gained 6.4% in the past three months.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year sales suggests growth of 0.1% from the year-ago period’s reported figure. SJM has an expected EPS growth rate of 1.2% for three-five years.
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Chewy (CHWY) Q3 Loss Narrower, Sales Up 24% on Higher Demand
Chewy, Inc. (CHWY - Free Report) reported narrower-than-expected loss per share for third-quarter fiscal 2021. Although net sales matched the Zacks Consensus Estimate, the metric increased year over year on higher demand and robust consumer engagement. Results gained from growth in CHWY’s active customers. Sales to autoship customers were also robust.
In the quarter, management witnessed the impacts of supply-chain disruptions, labor shortages and inflation. This presently Zacks Rank #5 (Strong Sell) stock has decreased 23.5% over the past three months, wider than the industry’s 5.3% dip.
Q3 Highlights
Chewy reported a loss of 8 cents per share, narrower than the Zacks Consensus Estimate of a loss of 10 cents. The bottom-line figure was in line with the year-ago quarter’s loss per share.
Net sales amounted to $2,212.2 million, which came in line with the Zacks Consensus Estimate. The top line increased 24.1% year over year on strength in the pet category as well as gains from strategic efforts and business model. Also, demand and customer engagement like site traffic, customer acquisition, order volume, size, purchase frequency and net sales per active customer were solid throughout the quarter.
Autoship customer sales as a rate of sales expanded 140 basis points (bps) to 70.6%. CHWY ended the reported quarter with 20.4 million customers, which mirrors year-over-year growth of 15%.
Gross profit increased 28.6% to $584.8 million in the reported quarter. Gross margin expanded 90 bps to 26.4% on the back of higher sales.
Adjusted EBITDA amounted to $6 million, improving 9.9% from the comparable quarter’s level in the prior fiscal year. Also, adjusted EBITDA margin came in at 0.3%, flat on a year-over-year basis.
Financial Details
Chewy ended the quarter with cash and cash equivalents of $726.9 million, accounts receivable of $128.7 million and inventories worth $606.6 million. As of Oct 31, 2021, total stockholders’ equity deficit was $66 million.
In the fiscal third quarter, CHWY’s free cash flow stood at $2.3 million and capital expenditures were $72 million.
During the nine months of fiscal 2021, net cash provided by operating activities was $257.8 million compared with $55.3 million of net cash provided by operating activities at the end of the year-ago fiscal’s period.
Guidance
Management expects net sales for the fiscal fourth quarter in the range of $2.40-$2.44 billion, which indicates growth of 17-19% from the prior-year fiscal’s quarterly figure.
For fiscal 2021, net sales are likely to fall in the band of $8.90-$8.94 billion, mirroring an increase of 25% from the last fiscal level.
Hot Stocks to Consider
Some better-ranked stocks are MGP Ingredients (MGPI - Free Report) , The Hain Celestial Group (HAIN - Free Report) and The J. M. Smucker Co. (SJM - Free Report) .
MGP Ingredients, the producer and supplier of distilled spirits, and specialty wheat proteins and starch food ingredients, currently sports a Zacks Rank #1 (Strong Buy). Shares of MGPI have increased 34.8% in the past three months. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS suggests growth of 55.5% and 61.4%, respectively, from the corresponding year-ago period’s reported figures. MGPI has a trailing four-quarter earnings surprise of 117.6%, on average.
The Hain Celestial, which provides various natural and organic foods as well as personal care products in North America and Europe, carries a Zacks Rank #2 (Buy) at present. Shares of HAIN have moved up 5.9% in the past three months.
The Zacks Consensus Estimate for The Hain Celestial’s current financial-year EPS suggests growth of 14.5% from the year-ago period’s reported number. HAIN has a trailing four-quarter earnings surprise of 9.7%, on average.
The J. M. Smucker, a renowned marketer and manufacturer of consumer food and beverage products, currently carries a Zacks Rank of 2. SJM has a trailing four-quarter earnings surprise of 10.8%, on average. The stock has gained 6.4% in the past three months.
The Zacks Consensus Estimate for The J. M. Smucker’s current financial-year sales suggests growth of 0.1% from the year-ago period’s reported figure. SJM has an expected EPS growth rate of 1.2% for three-five years.