Chewy Shares Drop 10% on Lowered Guidance, Analysts Cut Numbers
2022.08.31 16:10
Chewy (CHWY) Shares Drop 10% on Lowered Guidance, Analysts Cut Numbers
By Senad Karaahmetovic
Shares of Chewy (NYSE:CHWY) are down over 10% in pre-open Wednesday after the company reported mixed results and slashed its full-year guidance.
Chewy reported revenue of $2.43 billion (up 12.8% year-over-year) and EPS of $0.05. This compares to the consensus of $2.45 billion in revenue and EPS of -$0.12.
“We are proud of our second quarter 2022 performance and ability to deliver double-digit topline growth and margin expansion in a rapidly evolving macro environment,” said Sumit Singh, CEO of Chewy.
For this quarter, the company sees net sales between $2.44 billion and $2.46 billion, lower than the estimate of $2.63 billion. Chewy also cut its full-year sales forecast to the range of $9.9 billion to $10 billion from the prior $10.2 billion to $10.4 billion. Analysts were looking for the guidance of $10.35 billion in full-year revenue.
“We believe that we will continue to see differences in demand patterns between discretionary and non-discretionary categories throughout the balance of the year. As such, we are revising our full-year top line expectations. At the same time, we are also raising our profitability outlook,” the company added.
A JPMorgan analyst cut the price target by $1 to $55 on “mixed” results.
“We recognize N-T concerns around Active Customers & overall Revenue growth into 2023, but we believe CHWY’s strength in non-discretionary (food & healthcare) position the company to continue to take share in a tough operating environment,” the analyst wrote in a client note.
An RBC analyst said the Q2 results prove Chewy is “not totally immune from consumer weakness.” The analyst also cut the price target as he went to $56 from the prior $59.
“We think results were good enough and the after-hours move is likely overdone (keeping in mind that shares have outperformed the market by ~32% since 1Q reporting). We lower our FY’22 net customer adds estimate to +0.2M and our net sales growth estimate to +11.4%, though we raise our EBITDA margin estimate to 1.9%,” the RBC analyst said in the note.
