Chewy Inc. Surprises with Strong Earnings Growth in Q2
Chewy Inc. Reports Strong Q2 Earnings
Chewy Inc. (NYSE: CHWY) has made a significant mark with its latest earnings report, showcasing results that exceeded expectations and secured a favorable outlook.
Positive Earnings Performance
In its latest update, Chewy announced an adjusted earnings figure of 33 cents per share for the second quarter of 2025, a surprising increase from the market's consensus forecast of 14 cents per share. This robust performance not only surpassed market estimates but also exceeded the company's own guidance range of 30 to 35 cents.
Significant Revenue Growth
The company reported overall sales of $3.10 billion, marking an 8.6% rise compared to the previous year. This figure also trumped expectations, with the consensus estimate set at $3.08 billion and the company's guidance indicating a range from $3.06 billion to $3.09 billion.
CEO's Comments on Performance
Sumit Singh, the CEO of Chewy, expressed satisfaction with the results, stating, "Q2 net sales exceeded the high end of our guidance range… Chewy's differentiated value proposition was once again on display." He highlighted the growth in active customers, which increased by 4.5% year over year to nearly 21 million, with the average spend per customer hitting $591.
Future Outlook and Guidance
Looking ahead, Chewy anticipates adjusted earnings for the third quarter to be in the range of 28 to 33 cents per share, higher than the consensus of 23 cents. Additionally, the company projects third-quarter sales to fall between $3.07 billion and $3.1 billion, compared to the expected $3.05 billion.
Increased Annual Sales Forecast
Chewy has also revised its fiscal 2025 sales expectations, now estimating a range of $12.5 billion to $12.6 billion, compared to a prior estimate of $12.3 billion to $12.45 billion, albeit slightly below the consensus estimate of $12.58 billion. The adjusted EBITDA margin is expected to be around 5.4% to 5.7%.
Market Reaction
In response to this impressive quarterly performance, Chewy’s stock rose by 2.7% to reach a trading price of $36.06. The positive financial announcements have led to various analysts adjusting their price targets for the stock.
Analyst Price Target Revisions
Following the earnings release, several analysts weighed in with updates to their price targets for Chewy:
- Barclays analyst Trevor Young maintained an Overweight rating but lowered the price target from $50 to $47.
- Baird analyst Justin Kleber continues to rate Chewy as Outperform, adjusting the target from $52 down to $48.
- RBC Capital's Steven Shemesh maintained an Outperform rating, adjusting the target from $44 to $43.
- Morgan Stanley's Lauren Schenk also keeps an Overweight rating but has lowered the price target from $50 to $48.
- TD Cowen’s Bill Kerr rated the company a Buy and decreased the target from $50 to $48.
- JP Morgan analyst Doug Anmuth also maintained an Overweight rating while adjusting the price target to $45 from $47.
- Citigroup analyst Steven Zaccone has a Buy rating for the stock, dropping the target from $49 to $48.
- Finally, UBS analyst Michael Lasser maintained a Neutral rating, cutting the price target from $46 to $43.
Investor Considerations
For potential investors considering purchasing CHWY stock, analysts have expressed a favorable outlook, indicating that the overall growth strategy and market positioning of Chewy could lead to further successes in the near future.
Frequently Asked Questions
What did Chewy Inc. report for their Q2 earnings?
Chewy reported adjusted earnings of 33 cents per share, surpassing expectations of 14 cents.
How much did Chewy’s sales grow in the last year?
The company reported sales of $3.10 billion, which is an increase of 8.6% year over year.
What are Chewy's adjusted earnings expectations for Q3?
Chewy anticipates adjusted earnings in the range of 28 to 33 cents per share for the third quarter.
How is Chewy's stock performing in response to its earnings report?
Following the report, Chewy's stock rose by 2.7%, reaching $36.06.
What has changed in Chewy’s annual sales forecast?
The sales guidance was revised to a range of $12.5 billion to $12.6 billion for fiscal 2025.
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