CHWY Stock Is Falling Because Even Fido Can’t Outsmart Supply Chain Woes

Chewy (NYSE:CHWY) can’t catch a break. Shares of CHWY stock are down 7% this morning after the company reported greater than expected losses. The e-commerce pet supplies company reported a net loss of $32.2 million compared to $32.8 million a year ago.

chewy website zoomed in on the logo
Source: Postmodern Studio /

Indeed, the net loss this quarter was nearly double Q2’s net loss of $16.7 million. CEO Sumit Singh shed some light on the situation:

“At the same time, our third-quarter profitability reflects the impact of ongoing supply chain disruptions, labor shortages, and higher inflation. As we work through these macro uncertainties, we remain squarely focused on the long term and on building an enduring franchise to serve millions of loyal pets, pet parents, and partners.”

Losses driven by supply chain issues, labor shortages and inflation negatively affected Chewy’s earnings per share (EPS) as well. The company reported EPS of -8 cents, which was well below the consensus estimate of -4 cents. It seems as if the momentum that Chewy showed previously during the height of the coronavirus pandemic is nowhere to be found. While profitability remains a major issue for CHWY stock holders, the company did manage to report some positive metrics.

So, what else do you need to know about Chewy’s Q3 earnings? Let’s dive right in.

CHWY Stock Slumps Amid Earnings Report: What to Know

  • Chewy reported net sales of $2.21 billion, up 24% year-over-year (YOY). Net sales per active customer was $419, up 15.4% YOY.
  • Active customers increased 14.7% YOY and 1.5% quarter-over-quarter (QOQ). Additionally, Chewy ended Q3 with 20.4 million total customers.
  • Furthermore, gross margins were 26.4%, up 0.9% YOY. Net margins were -1.5%, up 0.3% YOY.
  • Compared to Q2, revenue grew 2.3%, while gross margins fell 1.1%.
  • Amid the disappointing losses and EPS figure, CEO Sumit Singh tried to brighten the situation: “Demand and consumer engagement remained strong through the third quarter, with net sales up 24 percent year over year, or 86 percent on a two-year stack basis. Our sustained growth this year shows the soundness of our growth strategy, the uniqueness of Chewy’s value proposition, and the durability of the pet category.”
  • Chewy has high hopes for its new PracticeHub platform for veterinarians. The platform will offer an e-commerce solution for veterinarians to sell prescription medicine and foods without having to worry about inventory or fulfillment, as Chewy will cover this. There are currently 50 clinics participating by invitation, and Chewy expects an expansion of availability in the near term.
  • Finally, shares of CHWY stock are now down more than 40% year-t0-date (YTD).

On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

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