Chewy Q3 Earnings & Sales Beat Estimates on Autoship-Led Momentum

Chewy, Inc. CHWY reported third-quarter fiscal 2025 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate and increased year over year. 
The company delivered top-line growth that exceeded the high end of the guidance, supported by the strong performance of its Autoship program.

Chewy Price, Consensus and EPS Surprise

Chewy price-consensus-eps-surprise-chart | Chewy Quote

CHWY’s Quarterly Performance: Key Metrics and Insights

The net income of the company reached $59.2 million, which includes $76.5 million in share-based compensation and related taxes. The net margin was 1.9%, rising 180 basis points year over year.

Chewy posted adjusted earnings of 32 cents per share, which beat the Zacks Consensus Estimate of 30 cents per share, and increased 12 cents from the prior-year period.

The company reported net sales of $3,116.6 million, which increased 8.3% year over year and surpassed the Zacks Consensus Estimate of $3,098 million. The year-over-year increase was driven by the continued strength of the Autoship program, as the Autoship customer sales rose nearly 13.6% year over year to a record $2,614 million.

Chewy ended the fiscal third quarter with 21.2 million active customers, reflecting a roughly 5% increase year over year. Chewy’s net sales per active customer reached $595, marking a 4.9% year-over-year increase.

CHWY’s Margin & Cost Performance

Chewy’s gross profit reached to $928.2 million in the quarter. The gross margin increased 50 basis points (bps) to 29.8% from 29.3% in the third quarter of fiscal 2024.

SG&A expenses reached to $665.1 million in the fiscal third quarter, from $626.5 million in the prior year period. Advertising and marketing expenses for the fiscal third quarter totaled $197.9 million compared with the year-ago period figure of $191.8 million.

Adjusted EBITDA was $180.9 million, a rise of $42.7 million from the year-ago quarter figure. The adjusted EBITDA margin increased 100 bps year over year to 5.8%.

CHWY’s Financial Health Snapshot

The company ended the quarter with $675.4 million in cash and cash equivalents. Total shareholders’ equity was $469.4 million. In the fiscal third quarter, the company generated free cash flow of $176 million.

What to Expect From CHWY in the Future?

For the fourth quarter of fiscal 2025, Chewy expects net sales between $3.24 billion and $3.26 billion. Adjusted earnings per share are anticipated to be in the range of 24 cents to 27 cents.

For fiscal 2025, Chewy now expects net sales to be between $12.58 billion and $12.6 billion compared with the previously guided range of $12.5 billion to $12.6 billion. The adjusted EBITDA margin is expected to be in the range of 5.6% to 5.7%, in comparison with the previously guided range of 5.4% to 5.7%.

This Zacks Rank #3 (Hold) stock has gained 2% in the past three months against the industry’s decline of 3.2%.

Stocks to Consider

Some better-ranked stocks have been discussed below:

Five Below, Inc. FIVE operates as a specialty value retailer in the United States. At present, Five Below sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for FIVE’s current fiscal-year sales and earnings indicates growth of 19.8% and 9.7%, respectively, from the year-ago figures. FIVE delivered a trailing four-quarter earnings surprise of 62.1%, on average.

American Eagle Outfitters, Inc. AEO operates as a specialty beauty retailer in the United States, Mexico, and Kuwait. At present, Ulta Beauty flaunts a Zacks Rank of 1.

The Zacks Consensus Estimate for AEO’s current fiscal-year sales implies growth of 1.8% and earnings indicate a decline of 25.3%, respectively, from the year-ago figures. AEO delivered a trailing four-quarter earnings surprise of 35.1%, on average.

Boot Barn Holdings, Inc. BOOT operates specialty retail stores in the United States and internationally. At present, Boot Barn carries a Zacks Rank of 2 (Buy).

The Zacks Consensus Estimate for Boot Barn’s current fiscal-year sales and earnings indicates growth of 16.2% and 20.5%, respectively, from the year-ago figures. BOOT delivered a trailing four-quarter earnings surprise of 5.4%, on average.

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This article originally published on Zacks Investment Research (zacks.com).

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