Chewy (CHWY) Stock Slides as Revised Sales Forecast Overshadows Solid Q1 Results

Key Takeaways

• Full-year revenue projection reduced to $13.4B–$13.55B from previous range of $13.6B–$13.75B
• First-quarter adjusted earnings per share hit 43 cents, matching analyst consensus; revenue climbed 7.7% to $3.36B
• Second-quarter EPS outlook of ~36 cents falls short of 40-cent Wall Street estimate
• Customer base expanded 3.6% to 21.5 million users; average revenue per customer increased 2.4% to $597
• Shares surged to $22.28 in early premarket trading before reversing to $20.38

Shares of Chewy experienced volatile premarket movement Wednesday following the release of its first fiscal quarter earnings and a reduction in annual revenue projections.

Chewy, Inc., CHWY

The online pet supply retailer’s shares touched $22.28 during early premarket hours before retracing to $20.38, representing a roughly 2.5% decline as market participants absorbed the mixed results.

First-quarter revenue totaled $3.36 billion, marking a 7.7% year-over-year increase and narrowly surpassing the Wall Street consensus of $3.35 billion. The company’s adjusted earnings per share of 43 cents aligned precisely with analyst projections.

The quarter delivered net income of $94.8 million, translating to 23 cents per share, representing a significant improvement over the year-ago period’s $62.4 million, or 15 cents per share.

The platform’s active user count expanded 3.6% to reach 21.5 million. Average spending per active customer climbed 2.4% to $597.

Chief Executive Officer Sumit Singh emphasized that Chewy is continuing to capture additional market share and attract fresh customers even as the operating environment becomes more demanding. He reinforced the company’s commitment to enhancing profitability metrics.

Forward Guidance Shows Across-the-Board Reductions

While the first quarter exceeded minimal expectations, the company’s forward-looking projections painted a more subdued picture. Chewy lowered its annual net sales projection to a range of $13.4B–$13.55B, down from its earlier forecast of $13.6B–$13.75B. Wall Street analysts had anticipated $13.65B.

For the upcoming second quarter, the company projected adjusted earnings per share of approximately 36 cents on revenue between $3.3B and $3.33B. Analyst expectations called for 40 cents in earnings per share and $3.36B in revenue — representing shortfalls on both metrics.

The company did maintain its projected adjusted EBITDA margin range of 6.6% to 6.8% for the complete fiscal year.

The revised outlook came as little shock to market observers. In the weeks preceding the earnings announcement, Singh had already indicated that consumers were experiencing heightened financial strain compared to early-year conditions.

Broader Pet Industry Challenges Already Evident

These pressures had been manifesting throughout the pet industry. Zoetis, a prominent animal health enterprise, recently disclosed disappointing quarterly results and lowered its own projections, driving its shares to multi-year lows.

This industry context had created cautious sentiment among investors ahead of Chewy’s quarterly report. While the first-quarter performance wasn’t particularly strong, it at least managed to exceed the modest expectations the market had established.

Chewy reaffirmed its full-year adjusted EBITDA margin target of 6.6% to 6.8%.

The post Chewy (CHWY) Stock Slides as Revised Sales Forecast Overshadows Solid Q1 Results appeared first on Blockonomi.