Key Takeaways
- The company reduced its annual net sales projection to $13.4B–$13.55B from a previous range of $13.6B–$13.75B
- First-quarter adjusted EPS of 43 cents matched analyst expectations; revenue increased 7.7% to reach $3.36B
- Second-quarter EPS guidance of approximately 36 cents fell short of the 40-cent consensus estimate
- The customer base expanded 3.6% to 21.5 million; average customer spending increased 2.4% to $597
- Shares surged to $22.28 during early premarket trading before declining to $20.38
Shares of Chewy experienced volatility in Wednesday’s premarket session following the release of first-quarter financial results and a downward revision to the company’s annual sales expectations.
The stock reached an early peak of $22.28 during premarket hours but subsequently retreated to $20.38, representing approximately a 2.5% decline, as the broader market absorbed the earnings report.
First-quarter revenue totaled $3.36 billion, representing a 7.7% year-over-year increase and slightly exceeding the Wall Street consensus of $3.35 billion. The company’s adjusted earnings per share of 43 cents aligned precisely with analyst projections.
The online pet retailer reported net income of $94.8 million, or 23 cents per share, representing an improvement from $62.4 million, or 15 cents per share, during the comparable quarter a year earlier.
The platform’s active customer count climbed 3.6% to reach 21.5 million. Average spending per active customer rose 2.4% to $597.
Chief Executive Officer Sumit Singh emphasized that Chewy continues to capture additional market share and attract new customers despite operating in a more difficult environment. He also highlighted the company’s progress in expanding profitability margins.
Forward Guidance Reduced on Multiple Fronts
While the first-quarter performance exceeded expectations, the company’s forward-looking statements painted a more cautious picture. Chewy lowered its full-year revenue guidance to a range of $13.4B–$13.55B, down from its previous forecast of $13.6B–$13.75B. Wall Street analysts had been anticipating $13.65B.
For the second quarter, the company projected adjusted earnings per share of approximately 36 cents on revenue of $3.3B–$3.33B. Analyst expectations had called for 40 cents per share and $3.36B in revenue — representing shortfalls on both metrics.
The company maintained its full-year adjusted EBITDA margin guidance in the range of 6.6% to 6.8%.
The reduced outlook wasn’t entirely unexpected. In the weeks leading up to the earnings announcement, Singh had already warned that consumers were experiencing greater financial pressure compared to earlier in the year.
Challenges Already Evident Across Pet Industry
These concerns had been mounting throughout the pet care sector. Zoetis, a major animal health company, recently delivered disappointing quarterly results and lowered its own guidance, driving its stock to multi-year lows.
Kristin Peck, CEO of Zoetis, cited “increased price sensitivity” among pet owners — the same macroeconomic challenge that Singh subsequently referenced.
This industry-wide backdrop had already prompted investor caution ahead of Chewy’s earnings release. While the first-quarter numbers weren’t exceptional, they at least managed to surpass the modest expectations the market had established.
The company reaffirmed its adjusted EBITDA margin target of 6.6% to 6.8% for the complete fiscal year.
