- Shares of Chewy.com fell as much as 10% on Thursday after its second-quarter earnings report missed estimates.
- The company said it added fewer new customers in the quarter as growth slowed in the post-pandemic quarter.
- Despite the growth slowdown, Chewy said it's growing market share among pet supply retailers.
- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
Chewy plunged as much as 10% on Thursday after the online pet supply retailer missed second-quarter earnings estimates.
The company said growth slowed down in the quarter relative to the year prior when customers were flocking to e-commerce amid the pandemic, limiting their in-person store visits. Despite the slowdown in growth, Chewy said its market share continues to grow among pet supply retailers.
Here were the key numbers:
Revenue: $2.16 billion, versus estimates of $2.17 billion
Earnings per share: -$0.04, versus estimates of -$0.01
Revenue grew 27% year-over-year, and gross margins expanded by 2% to 27.5%. Meanwhile, a bulk of the net loss was tied to share-based compensation charges of more than $25 million.
"Our results once again demonstrate the strength of our business model and the incredible bond between pets and pet parents. Our business remains healthy, with second quarter net sales up 27%, driven by a 21% increase in active customers and a 13% increase in net sales per active customer," Chewy CEO Sumit Singh said.
JPMorgan was impressed with Chewy's results, and in a note on Wednesday reiterated its Overweight rating but lowered its price target to $95 from $98.
"We remain positive on Chewy and view the pullback as a buying opportunity when the dust settles," JPMorgan said, adding that it "remains encouraged by overall execution and new initiatives such as Practice Hub within Chewy Health."
Shares of Chewy.com are down 12% year-to-date, with much of those losses being printed in Thursday's trading session.