Chewy Inc.’s stock experienced a notable rise in the extended trading session on Wednesday following the pet-products retailer’s unexpected profit for the quarter.
Highlighting the resilience of the pet industry, Chewy asserted its position as a “key driver, leader, and beneficiary” of this ongoing trend.
For the fiscal fourth quarter, Chewy (CHWY) reported earnings of $32 million, or 7 cents per share, compared to $6.8 million, or 2 cents per share, in the corresponding period the previous year.
The company disclosed a 4% increase in sales, reaching $2.83 billion.
Chewy’s active customer base, representing individuals who made purchases on the platform over approximately the past 12 months, reached 20.1 million.
Analysts surveyed by FactSet had anticipated a loss of 4 cents per share on sales of $2.79 billion and an active customer count of 20.2 million.
Shares surged over 9% in after-hours trading initially, before slightly moderating. The stock concluded Wednesday’s regular session with a 6% increase.
In a recent research note, JPMorgan analysts noted that investor sentiment had been largely cautious ahead of the earnings release.
This caution stemmed from concerns regarding a potential decline in active customers, heightened competition, and a decrease in pet adoptions, as consumers prioritize expenditures on premium pet food and other household essentials.
Over the past 12 months, shares of Chewy have experienced a decline of 55.6%.
Mizuho analysts, in a recent note, emphasized that Chewy’s emphasis on pet health and veterinary clinics could serve as a buffer against one of the significant threats to online retailers, Amazon.com Inc. (AMZN). However, they suggested that the stock may remain rangebound.
“Shares are likely stuck at current levels until clear evidence emerges that top-line growth has definitively bottomed and [Chewy] is back to adding new customers – both of which we cannot underwrite at this point,” they commented.
