Chewy (CHWY) Drops 14% on Earnings, Lost Q4 Sales ‘Twice As High’

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Ollie Martin
Updated: 30 Mar 2022

Key points:

  • CHWY shares tanked 14% as the pet retailer missed Q4 EPS and revenue expectations
  • Company looks to deteriorating operating conditions and supply disruption
  • Additional pressure resulted in lost sales ‘twice as high' as projected

Chewy (NYSE: CHWY), the e-commerce behemoth of pet food and pet-related products, announced its fourth-quarter earnings last night; disappointing investors as another victim of an unprecedented economic environment, with shares dropping 14%. Retailers are up against it as headwinds weigh on normal growth metrics, and clearly, the digital world of e-commerce is feeling the widespread blight of increasing costs and supply disruptions. Only some have been able to navigate the strong current, with artisanal decorator Arhaus boasting strong earnings this morning and a similarly firm outlook. 

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The pet food retailer reported an adjusted loss of $0.15 per share on revenue of $2.39B. The EPS loss came in at nearly double the $0.08 per share loss that Wall Street expected. On the bottom line, Chewy closely missed revenue expectations of $2.4B. Although revenue climbed 17% year over year, growth appears to be tailing off compared to previous years. 

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Chewy is citing the deterioration of operating conditions in certain areas, as well as the mid-quarter arrival on Omicron that further disrupted already fragile supply chains. The additional pressure resulted in lost sales twice as high as initially forecasted. The story of Chewy is indicative of the current climate; where fundamental consumer demand fights with the crawling pace of a lackluster operating environment. 

Chewy’s recent move towards health care services for pets will ease some of the strain on supply. If the company can distance itself from an almost sole reliance on consumables, then it wouldn’t be utterly susceptible to logistical delays of products. It’s a problematic time for retailers when management will be forced to think outside of the box in order to maintain normative growth expectations. 

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