Chewy Falls Premarket On Labor, Supply Chain Worries
By Dhirendra Tripathi Investing.com – Chewy (NYSE:CHWY) stock fell in Friday’s premarket trading as concerns over labor shortages, higher wages eating into margins and supply chain challenges outweighed the company’s swing back to profit. In his letter to shareholders, Chewy CEO Sumit Singh said the company raised wages and invested in short-term incentives to overcome some of the fulfillment center staffing constraints. Singh said the company has introduced part-time shifts to better optimize interval-level labor forecasting and provide more flexibility to staff. Elevated out-of-stock levels were a persistent headwind through the quarter and reduced Chewy’s first quarter net sales by an estimated $40 million, Singh said. Active customers increased by 4.7 million, or 31.6% year over year, to close the first quarter on May 2 at 19.8 million customers. Singh expressed confidence about the future, saying the company has significant gains left to realize from its customer base, pointing out that typically customers spend more every year as they stay on. The company earned $38.7 million in the first quarter, a reversal from the $47.9 million loss in the first quarter of last fiscal year. Net sales rose 31.7% year-on-year to $2.14 billion. Chewy sees its second quarter net sales between $2.15 billion and $2.17 billion. For fiscal 2021, it sees net sales in the range of $8.9 billion to $9 billion.
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