Chewy First Quarter Sales Rise 14%, Net Income Falls 52%

Anand Sheth
01 Jun, 2022
New York City

Chewy, the online pet care store, reported rising sales as consumers ordered healthcare and consumable items and avoided non-discretionary purchases. 

Chewy, Inc said sales in the first quarter 2022 rose 13.7% to $2.43 billion and net income fell 52.3% to $18.5 million. 

Net income included stock-based compensation and related tax expense of $27.2 million compared to $24.8 million a year ago.

Diluted earnings per share declined to 4 cents from 9 cents a year ago. 

Despite the supply chain disruptions and higher freight costs gross margin fell only slightly lower by 10 basis points to 27.5% but 210 basis points higher sequentially compared to the fourth quarter 2021. 

During the quarter, auto shipments rose to 72.2% of total sales, a new record high for the online retailer.   

New and existing customers bought more items from the retailer and net sales per active customer rose 15% to $446, an increase of $86 or 24% in two years since the onset of the pandemic. 

Active customer base also increased 4.2% to 20.6 million as many customers looked for alternative to other large online stores that ran out of products.  

Net cash provided by operating activities was $82.4 million compared to $98.4 million in the first quarter of 2021. 

Free cash flow declined to s $6.4 million compared to $59.5 million a year ago. 

Inventories at the end of the quarter rose nearly 8% to $598.2 million from a year ago as the company focused on ordering more items in bulk. 

Net income margin declined 100 basis points to 0.8% from a year ago. 

Guidance and Outlook 

The company reiterated its second quarter sales to increase between 13% to 14% to $2.43 billion and $2.46 billion. 

Fiscal 2022 sales are estimated to increase between $10.2 billion and $10.4 billion, an increase between 15% and 17%. 

The company also estimated adjusted EBIDA margin between breakeven and 1% increase in the fiscal 2022. 

Company and Stock 

Chewy, Inc is headquartered in Dania Beach, Florida and the company is active in pet care industry that generated about $117 billion in 2021. 

Chewy closed down 5.3% to $23.49 in regular trading hours and jumped 18.8% to $27.90 in the after-hours trading. 

Chewy stock has fallen 59.1% in the year so far.