Categories AlphaGraphs, Earnings, Retail
Chewy (CHWY) earnings preview: Q3 might set the stage for turnaround
Chewy Inc. (NYSE: CHWY) has lost significant market value ever since the online pet food company made its stock market debut earlier this year, raising about $1 billion. There is apprehension about the stock’s future, while the company prepares for its third-quarter earnings release, which is scheduled for December 9 after the closing bell.
Chewy is expected to report a loss of $0.16 per share for the October-quarter, on revenues of $1.2 billion. The forecast is broadly in line with the management’s prediction for the period.
The market will be closely following the event, looking for updates on the prospects of the company turning profitable in the near term. Encouragingly, the management’s branding initiatives and efforts to ramp up the online platform seem to have positively influenced performance in the second half, and the trend is expected to continue in the coming months.
Growth Drivers
The roll-out of fulfillment centers and augmentation of delivery services should add to sales growth in the third quarter. Also, the market’s response to the recently launched Chewy Pharmacy has been positive. There is no doubt it is a promising venture, considering the growing awareness about pet-wellbeing.
Like in the case of all emerging start-ups, Chewy’s margins remain under pressure from high selling and administrative expenses, though its impact on the bottom line is expected to be lighter this time compared to the previous quarters.
Loss Widens
In the second quarter, sales surged 43% annually to $1.15 billion and exceeded the consensus forecast, reflecting a sharp increase in the number of active customers to 12 million. However, the company posted a wider loss of $0.21 per share that missed the estimates.
Upgrade
Chewy got a major boost Thursday after Morgan Stanley (MS) upgraded its rating on the stock to Overweight, citing favorable market conditions for the business that might help the company double its sales in the next five years.
Since the mixed Wall Street debut around six months ago, the stock declined steadily and hit an all-time low last month. The value dropped 34% so far and traded below the $25-mark this week.
Most Popular
Earnings Preview: What to look for when Shopify reports Q3 results
Shopify Inc. (NYSE: SHOP) delivered an impressive financial performance in the first half of fiscal 2024, navigating a mixed consumer spending environment. The e-commerce firm looks poised to maintain the
Beyond Meat (BYND): A few points to note on the plant-based meat company’s 3Q24 performance
Shares of Beyond Meat, Inc. (NASDAQ: BYND) were down over 2% on Friday. The stock has dropped 11% over the past three months. The company reported its third quarter 2024
DBX Earnings: A snapshot of Dropbox’s Q3 2024 results
Dropbox, Inc. (NASDAQ: DBX) reported an increase in adjusted earnings for the third quarter of 2024. Revenues rose modestly during the quarter. The company, a leading cloud-based document management platform,