Chewy stock drops 10% after Q2 results due to disappointing customer numbers

The shares of Chewy Inc. fell more than 10% in after-hours trading Wednesday after the specialty retailer posted a larger-than-expected loss for the second quarter and had slightly less active customers than Wall Street had expected.

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-0.78%
said it lost $17 million, or 4 cents a share, in the quarter, compared to a loss of $33 million or 8 cents a share in the same quarter a year ago. The FactSet consensus called for a quarterly loss of 2 cents a share.

Revenue rose 27% to $2.16 billion from $1.70 billion a year ago, in line with the company’s expectations and guidance.

Chewy, which sells a variety of pet products, said it closed the quarter with 20.1 million active customers, up 21% year over year. Analysts surveyed by FactSet expected the company to close the quarter with 20.4 million active customers.

The company has added more customers than before the pandemic, “but below the record levels we saw last year during the peak of pandemic-driven lockdowns,” Chewy said.

“Our business remains healthy, customer engagement continues to grow, and we are confident that we can build on the strong results we achieved last year, while coping with the uncertain market conditions resulting from the evolving COVID-19 pandemic,” the company said. in a letter to shareholders.

Chewy made a surprising quarterly profit in June, but warned it was due to labor shortages and supply issues that are running out of some items.

The company continued to experience problems with out-of-stock items, but the situation has improved “modestly,” the company said.

“This is a result of improving supply chain conditions in some areas as certain suppliers are reducing backlogs,” Chewy said. “However, other areas, such as wet dog food, are still affected by production capacity constraints across the industry.”

Chewy had third quarter sales of between $2.20 billion and $2.22 billion. For fiscal 2021, the company kept its sales forecast between $8.9 billion and $9 billion. Conditions surrounding the pandemic remain “unpredictable,” it said.

Chewy shares are down more than 2% so far this year, as opposed to gains of about 21% for the S&P 500 index SPX,
+0.03%.

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