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Chewy (CHWY) Posts Q1 Earnings Beat & Higher Revenues Y/Y

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Chewy, Inc. (CHWY - Free Report) reported better-than-expected earnings per share for first-quarter fiscal 2022. However, net sales lagged the Zacks Consensus Estimate but increased from the last fiscal year’s quarterly reading on gains from strategic initiatives.

Over the past six months, the stock has decreased 32.6%, wider than the industry’s 19.6% decline.

Q1 Highlights

Chewy reported earnings of 4 cents per share. The Zacks Consensus Estimate was of a loss of 12 cents. However, the bottom line compared unfavorably with earnings of 15 cents a share recorded in the year-earlier quarter.

Chewy Price and EPS Surprise

Chewy Price and EPS Surprise

Chewy price-eps-surprise | Chewy Quote

Net sales amounted to $2,428.3 million, which came below the Zacks Consensus Estimate of $2,470 million. However, the top line increased 13.7% year over year on strength in the pet category as well as gains from its strategic efforts.

At the end of the fiscal first quarter, active customers were 20.6 million, up 4.2% year over year. Net sales per active customer were 446 compared with 388 at the end of the year-earlier quarter.

Autoship customer sales were $1,753.7 million, mirroring year-over-year growth of 18.5%. The metric as a rate of sales expanded 290 basis points (bps) to 72.2%.

Gross profit increased 13.2% to $667.8 million in the reported quarter. Gross margin contracted 10 bps to 27.5% due to cost inflation and elevated inbound freight costs.

Adjusted EBITDA tumbled 21.8% to $60.5 million, while adjusted EBITDA margin dropped 110 bps to 2.5%.

Financial Details

Chewy ended the quarter with cash and cash equivalents of $604.8 million, accounts receivable of $133.2 million and inventories worth $598.2 million. As of May 1, 2022, total stockholders’ equity was $58.6 million.

In the fiscal first quarter, this currently Zacks Rank #3 (Hold) player’s free cash flow stood at $6.4 million while capital expenditures were $76 million.

In first-quarter fiscal 2022, net cash used by operating activities was $82.4 million compared with $98.4 million of net cash used by operating activities at the end of the prior fiscal year’s corresponding period.

Hot Stocks to Consider

Some better-ranked stocks are Pilgrim’s Pride (PPC - Free Report) , Sysco (SYY - Free Report) and Medifast (MED - Free Report) .

Pilgrim’s Pride, which produces, processes, markets and distributes fresh, frozen and value-added chicken and pork products, sports a Zacks Rank #1 (Strong Buy) at present. PPC has a trailing four-quarter earnings surprise of 31.4%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Pilgrim’s Pride’s current financial- year earnings per share (EPS) suggests growth of 43% from the year-ago reported number.

Sysco, which engages in marketing and distributing various food and related products, sports a Zacks Rank of 1 at present. SYY has a trailing four-quarter earnings surprise of 9.1%, on average.

The Zacks Consensus Estimate for Sysco’s current financial-year sales and EPS suggests growth of 32.6% and 124.3%, respectively, from the corresponding year-ago reported numbers.

Medifast, which manufactures and distributes weight loss, weight management, healthy living products and other consumable health and nutritional products, currently carries a Zacks Rank #2 (Buy). MED has a trailing four-quarter earnings surprise of 12.9%, on average.

The Zacks Consensus Estimate for Medifast’s current financial-year sales and EPS suggests growth of almost 19% and 11.5%, respectively, from the corresponding year-ago reported figures.


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