Chewy, Inc. (NYSE:CHWY) saw its shares sink more than 7% on Wednesday after reporting second-quarter earnings that came in line with Wall Street forecasts and a modest revenue beat, but failed to deliver the upside investors had been hoping for.
The online pet retailer reported adjusted EPS of $0.33, matching analyst estimates, while revenue reached $3.1 billion, slightly above the consensus of $3.08 billion and up 8.6% year over year.
Despite improvements in profitability, investors were underwhelmed. Gross margin expanded to 30.4%, up 90 basis points from last year, while adjusted EBITDA climbed to $183.3 million, an increase of $38.4 million. Adjusted EBITDA margin improved to 5.9%, an 80 basis point gain.
“Q2 net sales exceeded the high end of our guidance range, growing nearly 9% year over year to $3.1 billion, with Autoship customer net sales increasing by 15% and representing 83% of total net sales for the quarter,” said Sumit Singh, CEO of Chewy.
Looking ahead, Chewy guided Q3 net sales between $3.07 billion and $3.10 billion, or 7% to 8% YoY growth. The company reaffirmed its full-year outlook of $12.5 billion to $12.6 billion in net sales and an adjusted EBITDA margin of 5.4% to 5.7%.
Chewy also noted growth in its customer base, with active customers rising 4.5% YoY to nearly 21 million, while net sales per active customer (NSPAC) rose 4.5% to $591, underscoring its ability to both attract new buyers and deepen spending among existing ones.
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