For the thirteen weeks ended May 5, 2019, the company expects net sales to be $1.1 billion compared to $763.5 million in the previous year period. Cost of goods sold is predicted to be $855 million compared to $613.5 million a year ago, due to the increase in orders shipped and associated product costs, outbound freight and shipping supply costs.
Chewy expects to increase selling, general and administrative expenses to $181.9 million for the 13 weeks ended May 5, 2019 from $123.2 million a year ago, due to the increase in fulfillment costs to support overall growth of business. Advertising and market expenses are anticipated to be $102.3 million, up from $86.7 million a year earlier, due to rise in advertising and marketing through existing channels, resulting in the growth of our customer base.
Analysts expect the company to report a loss of $0.06 per share on revenue of $1.11 billion for the first quarter. Investors expect the company to post upbeat results for the maiden first-quarter. From fiscal 2012 to fiscal 2018, Chewy’s net sales per active customer grew from $223 to $334 and its net sales grew from $26 million to $3.5 billion.
Also read: PetMed Express stock falls to a 4-year low
The pet industry is in the midst of a shift from in-store to online purchases, with e-commerce representing a 14% share of the food and supplies market segment in 2017, up from 4% in 2015, and projected to grow to about 25% by 2022. The pet industry is expected to grow from $48 billion in 2010 to an estimate of $75 billion in 2019, according to the data collected by the American Pet Products Association.
Chewy has been facing stiff competition from behemoths like General Mills (NYSE: GIS), Walmart (NYSE: WMT) and Amazon (NASDAQ: AMZN) that have firm footing in the market. For this, Chewy’s goal remains to attract and convert visitors into active customers and encourage repeat purchases, which accounts for about 90% of net sales.