Online pet food seller Chewy Inc.’s (NYSE: CHWY) bottom line beat the market’s estimates, while sales met the targets in the fourth quarter of 2019. The company posted a loss of $0.15 per share on revenue of $1.35 billion for the recently ended quarter. Analysts had projected the company to post a loss of $0.17 per share on revenue of $1.35 billion.
While Chewy gave guidance for the first quarter of 2020, it didn’t provide the fiscal year 2020 guidance amid the fluid situation around the COVID-19 outbreak. CHWY stock was down about 2% during the after-hours.
Active customers rose 27% in the three months ended February 2, 2020 period while net sales per active customer rose 10% to $360. Autoship customer (customers for whom an order has shipped through our Autoship subscription program during the preceding 364-day period) sales rose 41% excluding the impact of the extra week in Q4 2018.
For the first quarter of 2020, the Dania Beach, Florida-based firm expects sales to be between $1.50 billion and $1.52 billion, representing year-over-year growth of 35% to 37%.
Beginning in late February, sales accelerated as the disruption caused by the COVID-19 outbreak has altered consumer shopping behavior in recent weeks. Pet owners stocked up pet food and other essentials and they also shifted their shopping from offline to online channels in support of social distancing efforts.
However, the spread of COVID-19 has caused a global slowdown in economic activity and this is expected to disrupt logistics and various supply chain channels for a certain period of time. The company stated that the impact of COVID-19 on its business and future plans are uncertain. Chewy expects to provide more clarity on the expectations for the year when it reports the next earnings report in June.
Barring any disruptions related to a broadening of COVID-19, Chewy plans to open a facility in Salisbury, North Carolina in the second quarter. This facility will help the company to more quickly and efficiently reach the millions of pet parents across the mid-Atlantic and southeast regions.
The company also expects to open its first automated fulfillment center in Archibald, Pennsylvania later this year, barring any unforeseen delays or schedule changes caused by COVID-19 related government mandates.
Automating the Archibald center will enable Chewy to increase throughput capacity by 25% compared to similarly-sized facilities and increase labor productivity by more than 50%, allowing it to further reduce fixed and variable fulfillment costs per unit by 30%.
After plunging to a new yearly low ($20.62) on March 12, CHWY stock had bounced back and jumped about 70% from its 52-week low. With no “Sell” rating by analysts, the stock has gained 21% so far this year.
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