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Earnings preview: How will Q2 turn out for Chewy?

Chewy Inc. (NYSE: CHWY) is scheduled to report second quarter 2019 earnings results on Tuesday, September 17, after the market closes. Analysts expect the company to report a loss of $0.11 per share on revenue of $1.14 billion.

The company’s topline numbers have benefitted from growth in pet food sales as well as supplies, medicines, vet care, pet services and sale of pets. This trend is expected to continue in the second quarter helped by the opportunities in the pet health and wellness space.

Chewy posts wider-than-expected Q1 loss

Chewy’s customer base has continued to increase and this momentum is likely to continue in the to-be-reported quarter. The company has also witnessed an increase in spending among customers. Chewy is also making efforts to expand its sales and margins by growing private brands, leveraging operational efficiencies and exploring broader platform opportunities.

Chewy faces stiff competition from companies like General Mills (NYSE: GIS), Walmart (NYSE: WMT) and Amazon (NASDAQ: AMZN) who are established players. Despite this, Chewy is expected to deliver strong results for Q2.  

In the first quarter of 2019, Chewy missed earnings expectations but sales were in line with estimates. Net sales jumped 45% to $1.11 billion. Net loss narrowed to $29.55 million, or $0.08 per share, from $59.82 million, or $0.15 per share in the previous year quarter, helped by higher sales, gross margin expansion and lower costs.

Also read: Pet supplies retailer Chewy surges 70% on Wall Street debut

Active customers increased by 44.6% year-over-year to 11.3 million and net sales per active customer rose by 9.2% to $343. Autoship customer sales, customers for whom an order is shipped through its Autoship subscription program, surged by 55.8% to $743.85 million from the prior-year quarter.

For the second quarter, Chewy has guided for sales growth of 39-42% year-over-year to a range of $1.12 billion to $1.14 billion. For fiscal year 2019, net sales are anticipated to increase by 32-34% year-over-year to a range of $4.67 billion to $4.75 billion.

Chewy’s shares have fallen over 9% in the past one month. The majority of analysts have rated the stock as Hold and it has an average 12-month price target of $37.10.

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