On August 28, 2024, Chewy Inc (CHWY, Financial) released its 8-K filing for the second quarter of fiscal year 2024, ending July 28, 2024. Chewy, the largest e-commerce pet care retailer in the US, reported net sales of $2.86 billion, a 2.6% year-over-year increase, and a net income of $299.1 million, significantly surpassing analyst estimates.
Company Overview
Chewy Inc (CHWY, Financial) is the leading e-commerce pet care retailer in the United States, generating $11.2 billion in 2023 sales across various categories, including pet food, treats, hard goods, and pharmacy products. Founded in 2011 and acquired by PetSmart in 2017, Chewy became a stand-alone public company in 2019. The company offers a broad selection of high-quality products and services at competitive prices, aiming to be the most trusted and convenient destination for pet parents and partners.
Q2 2024 Financial Highlights
Chewy Inc (CHWY, Financial) reported the following key financial metrics for Q2 2024:
| Metric | Q2 2024 | Q2 2023 | Change |
|---|---|---|---|
| Net Sales | $2.86 billion | $2.79 billion | 2.6% |
| Gross Margin | 29.5% | 28.3% | 120 bps |
| Net Income | $299.1 million | $20.2 million | n/m |
| Net Margin | 10.5% | 0.7% | 980 bps |
| Basic EPS | $0.70 | $0.05 | $0.65 |
| Diluted EPS | $0.68 | $0.05 | $0.63 |
| Adjusted EBITDA | $144.8 million | $88.1 million | 64.3% |
| Adjusted EBITDA Margin | 5.1% | 3.2% | 190 bps |
Performance Analysis
Chewy Inc (CHWY, Financial) delivered a robust performance in Q2 2024, with net sales reaching $2.86 billion, aligning closely with the estimated revenue of $2.869 billion. The company's gross margin improved by 120 basis points to 29.5%, reflecting efficient cost management and operational improvements. Notably, the net income surged to $299.1 million, a significant increase from $20.2 million in the same quarter last year, driven by higher sales and improved margins.
Key Financial Metrics
Chewy Inc (CHWY, Financial) reported a basic earnings per share (EPS) of $0.70 and a diluted EPS of $0.68, both significantly higher than the estimated EPS of $0.62. The adjusted EBITDA of $144.8 million, up 64.3% year-over-year, underscores the company's strong operational performance. Additionally, the adjusted EBITDA margin expanded by 190 basis points to 5.1%, indicating improved profitability.
Income Statement and Balance Sheet Highlights
Chewy Inc (CHWY, Financial) reported a net sales increase of 2.6% year-over-year to $2.86 billion. The cost of goods sold was $2.01 billion, resulting in a gross profit of $843.8 million. Operating expenses totaled $811.8 million, leading to an operating income of $32.1 million. The net income of $299.1 million was bolstered by a significant income tax benefit of $252.6 million.
On the balance sheet, Chewy Inc (CHWY, Financial) reported total assets of $3.10 billion, with cash and cash equivalents of $694.5 million. Total liabilities stood at $2.62 billion, resulting in a stockholders' equity of $486.7 million.
Cash Flow and Operational Metrics
Chewy Inc (CHWY, Financial) generated $205.3 million in net cash from operating activities in the first half of 2024. Capital expenditures amounted to $61.2 million, resulting in a free cash flow of $144.1 million. The company reported 20 million active customers, with net sales per active customer reaching a record $565.
Management Commentary
"Our Q2 performance reflects another quarter of strong execution, delivering net sales at the high end of our guidance range," said Sumit Singh, Chief Executive Officer of Chewy. "Chewy’s compelling value proposition is driving broader and deeper customer engagement, as reflected by our 20 million active customers, which grew sequentially in the quarter, and net sales per active customer of $565, which reached a new record for the company."
Conclusion
Chewy Inc (CHWY, Financial) has demonstrated strong financial performance in Q2 2024, exceeding analyst estimates and showcasing significant growth in key metrics. The company's ability to drive higher sales, improve margins, and generate substantial net income highlights its robust operational capabilities and market position in the e-commerce pet care industry. Value investors and potential GuruFocus.com members are encouraged to explore Chewy Inc (
Explore the complete 8-K earnings release (here) from Chewy Inc for further details.
