Chewy (NYSE:CHWY)
After the market opened on Friday, Chewy (NYSE:CHWY) reported profits for the third quarter, which were above consensus projections and caused the firm to increase its adjusted EBITDA goal for the entire year.
Revenue for the quarter was $2.53 billion, up 14.5% year-over-year and above the consensus forecast of $2.46B. The online pet supplies store revealed profits per share of $0.01, $0.10 higher than the expert estimate of a $0.09 loss per share.
The fact that we are simultaneously driving top-line growth and growing margins is another proof point of our ability to go large fast and get healthy fast, regardless of the macro climate, said Sumit Singh, the Chief Executive Officer of Chewy. “Chewy’s third-quarter results demonstrated rapid double-digit topline growth, consistent gross margin improvement, and excellent free cash flow generation,” Singh said.
Singh said that an optimistic outlook on the pet industry is reflected in the findings.
Chewy expects a higher adjusted EBITDA for the whole year. Full-year net sales are expected to range from $10.02B to $10.04B, and the company now expects an adjusted EBITDA margin of 2.3% to 2.4%.
Wolfe Research analyst Deepak Mathivanan said, “CHWY’s F3Q came ahead of forecasts, led by inflation pass-through, consistent demand, and robust execution. The firm is making significant headway on LT efforts. We retain our PP rating on valuation and MT growth concerns.”
“Better 3Q revenue and adj. EBITDA performance as expected with gross margin the highlight,” Morgan Stanley analysts said in a letter to investors. “Profitability remains bright as pricing, reduced fuel costs, and fulfillment/logistics efforts produced a 20% 3Q flow-through rate vs. 22% last quarter.” “4Q guidance sounds cautious on both the top and bottom line (10-11% rev growth and implied 1.2% margin”), the analysts added.
When pressed further, UBS analysts concluded that there was “not enough to chew on.”
“We feel CHWY’s 3Q results were better than many anticipated. Plus, it generates noteworthy efficiency gains led by its automated FCs. Though, we doubt the durability of its NSPAC growth as discretionary demand continues to drop and inflation moderates,” the analysts stated.
The chewy stock opened up Friday’s trading session up 5%.
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Author Shariq Khan 
