Chewy slips after its inaugural earnings report as investors wonder if the stock is too expensive

  • Chewy slipped by as much as 7.5% on Friday after the company reported quarterly earnings for the first time since its June initial public offering.
  • The online pet supply retailer announced $1.1 billion in net sales, a 45% improvement from the year-ago period. It also slashed its net loss in half, from $59.8 million to $29.6 million.
  • Still, the stock is up a whopping 49% from offer price through Thursday’s close.
  • The quarter ending May 5 also saw the launch of Chewy Pharmacy, an online business that will allow owners to set up recurring shipments for pet medications.
  • Watch Chewy trade live here.

Chewy shares fell as much as 7.5% Friday morning after the company reported its quarterly earnings for the first time since its June IPO.

This came amid largely positive results. The online pet-supply retailer announced results in-line with yearly guidance set forth in its prospectus. Chewy closed its loss to $29.6 million from $59.8 million the previous year and had about 11.3 million active customers in the quarter ending May 5.

Still, analysts expressed concerns over the company’s valuation – its stock was up 49% through Thursday’s close – in the context of future growth prospects.

Here are the key numbers:

  • Net sales: $1.1 billion, versus $763.5 million in the year-ago quarter
  • Net loss: $29.6 million, versus $59.8 million in the year-ago quarter
  • Gross margin: 22.9%, up 330 basis points year-over-year

The company’s first quarter since its IPO saw the growth of its private label brand and a launch for its online pharmacy business. Chewy Pharmacy will allow owners to set up recurring medicine shipments for their pets.

Chewy already allows a similar shipment feature for other refillable products like food. Auto-shipment sales rose approximately 56% from the last quarter, signaling the feature’s popularity with Chewy customers.

“We will continue to innovate with a keen focus on delivering the best customer experience as we execute on our mission to become the most trusted and convenient online destination for pet parents,” Chewy CEO Sumit Singh said.

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The company’s stock closed at $32.85 per share Thursday, roughly 4.4% lower than its IPO-day close on June 14. Shares were priced at $22 for the company’s initial public offering. Chewy’s market cap was about $13 billion as of Thursday’s close.

PetSmart aquired Chewy in 2017 for $3 billion. The retail chain is controlled by private equity firm BC Partners.

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Chewy chart

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