Please ensure Javascript is enabled for purposes of website accessibility

Chewy Sinks Its Teeth Into Better-Than-Expected Q2 Results

By Rhian Hunt – Sep 10, 2020 at 10:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Despite confidently positive guidance from the company, the stock fell after hours following initial gains.

Internet pet retailer Chewy, Inc. (CHWY 2.83%) reported its second-quarter results today after market close, beating analyst consensus predictions on both its revenues and earnings per share (EPS). Unlike many other companies operating during the ongoing COVID-19 pandemic, Chewy also provided an update to its previous guidance on the earnings conference call for both Q3 2020 and fiscal 2020, as a whole.

According to analyst consensus figures published by Seeking Alpha, Wall Street expected $1.64 billion in Q2 net sales. Actual net sales of $1.70 billion delivered a slender positive surprise of approximately 3.7%, though revenue jumped strongly year over year by 47%. In terms of GAAP EPS, analysts forecast a $0.17 loss per share, $0.09 greater than the actual loss per share of $0.08.

Various pet supplies, including a bowl filled with dry food, a brush, and a leash.

Image source: Getty Images.

During the follow-up conference call, Chewy executives said their outlook for Q3 anticipates 38% to 40% higher sales than during Q3 2019, amounting to $1.70 billion to $1.72 billion. The company also raised its full-year guidance for fiscal 2020, replacing its earlier sales prognosis of $6.55 billion to $6.65 billion with a higher estimate of $6.775 billion to $6.825 billion.

Other positive metrics included improved gross and net margin (rising by 190 basis points and 530 basis points, respectively), and an increase to 16.6 million active customers, or a 38% year-over-year jump. 

Chewy's shares rose 17% last month as e-commerce continued to mushroom during the coronavirus era. However, the latest report appeared to leave investors unimpressed, perhaps because sales per active customer slumped from $365 to $356, according to CNBC, a roughly 2.5% decline.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool recommends Chewy, Inc. The Motley Fool has a disclosure policy.

Stocks Mentioned

Chewy Stock Quote
Chewy
CHWY
$44.35 (2.83%) $1.22

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.