Investors took a dim view of Chewy Inc (NYSE:CHWY) down 5.3% in premarket at $25.89, after online pet products retailer warned of a drop in active customer numbers.
Chewy nevertheless posted a profit whilst Wall Street had expected to see a loss.
The company reported earnings of $0.04 per share, compared to $0.05 per share a year earlier and Street expectations of a $0.05 loss. Revenue was $2.78 billion, up 14.3% year-over-year, however, active customers declined 0.6% to 20.4 million.
The profit was especially surprising after last week’s earnings report from Petco, which reported a 9.4% decline in its supplies and companion animal segment due to consumers spending less money on pet supplies.
Chewy did acknowledge the economic squeeze its customers are under but touted itself as a preferred retailer.
“Coming out of the summer months, we are sensing a shift in consumer mindset toward being more discerning, and at the same time, with a higher willingness to consolidate their share of wallet to their trusted retailer of choice,” the company said in a shareholder letter.
“This behavior is driven by a more fluid macro environment, including high levels of inflation, which have been passed through the industry over the past 18 months,” the company added. “Our dialogue with our suppliers confirms that these trends are permeating throughout the pet industry.”
Looking ahead, Chewy projects third-quarter net sales of $2.74 billion to $2.76 billion, compared to Street expectations of $2.79 billion. For the full year, it maintained its guidance of $11.15 billion to $11.35 billion in sales, compared to expectations of $11.29 billion.
Chewy stock declined 1.8% in extended trading to $27.33.
Contact Andrew Kessel at andrew.kessel@proactiveinvestors.com
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