Chewy Reports Better-Than-Expected Q1 Results; Shares Slip

Chewy, Inc. (CHWY), an online retailer of pet foods and related products, reported solid first-quarter results driven by an increase in active customers, although supply disruptions and labor shortages continued to restrain the company’s top-line. Shares were down 1.4% in pre-market trading at the time of writing.

Earnings for the quarter stood at $0.09 per share, compared to a loss of $0.12 per share reported in the prior-year period. The Street had estimated a loss of $0.03 per share.

Net sales climbed 31.7% year-over-year to $2.14 billion, marginally beating the Street’s estimate of $2.13 billion.

At quarter-end, the company had 19.8 million active customers, an increase of 31.6% year-over-year. (See Chewy stock analysis on TipRanks)

CEO Sumit Singh 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.”

For the second quarter, the company forecasts net sales to be in the range of $2.15 – $2.17 billion compared to the Street’s estimate of $2.13 billion.

For the full Fiscal year 2022, the company now projects net sales to be in the range of $8.9 – $9.0 billion while analyst estimates are pegged at $8.95 billion.

Anticipating a strong quarterly performance, Jefferies analyst Stephanie Wissink recently assigned a Buy rating to the stock with a price target of $105, implying 32.3% upside potential to current levels.

Wissink said, “Q1 beat appears known; guide will be the focus… With impressive growth and a business model that is levered to industry tailwinds, we believe CHWY can continue to achieve strong sales growth.”

The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating based on 10 Buys and 4 Holds. The CHWY average analyst price target of $104.55 implies 31.8% upside potential to current levels. Shares have lost 10.7% year to date.

According to TipRanks’ Smart Score system, Chewy gets a 7 out of 10, which indicates that the stock is likely to perform in line with market averages.