Chewy Posts Wider-Than-Expected Q3 Loss; Shares Fall

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Shares of Chewy, Inc. (CHWY) fell 6.3% closing at $56.30 on December 9, and further fell 8.1% during the extended trading session, after the company reported wider-than-expected losses.

Based in Florida, Chewy is an online retailer of pet food and other pet-related products. Its shares have lost 27.9% over the past year.

Weak Results

Chewy posted a quarterly loss of 8 cents per share, the same as Q3FY20, but 4 cents wider than the analysts’ estimated loss of 4 cents per share.

Meanwhile, net sales came in line with analysts’ estimates at $2.21 billion, growing 24.1% compared to the prior-year quarter.

At quarter-end, Chewy had 20.4 million customers, a 15% year-over-year growth.

Management Comments

Chewy CEO, Sumit Singh said, “Our sustained growth this year shows the soundness of our growth strategy, the uniqueness of Chewy’s value proposition, and the durability of the pet category. At the same time, our third-quarter profitability reflects the impact of ongoing supply chain disruptions, labor shortages, and higher inflation.”

Singh concluded, “As we work through these macro uncertainties, we remain squarely focused on the long term and on building an enduring franchise to serve millions of loyal pets, pet parents, and partners.”

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The company is positive about the overall growth of the pet industry based on factors such as favorable trends in pet ownership, higher spending per pet, and the shifting consumer preference to online shopping.

However, the company also notes ongoing supply chain and labor constraints, and inflation as temporary headwinds.

Based on the above, Chewy forecasts fourth-quarter net sales between $2.4 billion and $2.44 billion, against the consensus estimate of $2.43 billion.

Additionally, full-year fiscal 2021 net sales are projected to be between $8.9 billion and $8.94 billion, reflecting a 25% year-over-year growth.

Wall Street View

The Wall Street community has a Moderate Buy consensus rating on CHWY with 3 Buys and 4 Holds. The average Chewy price target of $91.17 implies 61.9% upside potential to current levels.

Website Traffic

TipRanks’ Website Traffic tool, which uses data from SEMrush Holdings (SEMR), the world’s biggest website usage monitoring service, offers insight into Chewy’s performance.

In November, Chewy website traffic recorded a 5.65% year-over-year decrease in monthly visits. However, year-to-date website traffic growth increased by 23.49% compared to the same period last year.

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