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Chewy IPO, retail sales — What to know in markets Friday

·Reporter
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It’s a busy Friday ahead for market watchers.

Ahead of the opening bell, the Census Bureau will release the retail sales data for May.

“Retail sales were volatile to start the year and unexpectedly fell in April. Meanwhile, consumer sentiment has proved resilient to trade uncertainty so far,” Credit Suisse wrote in a note Thursday. “Although we expect a solid rebound in consumption in May, labor income growth has moderated slightly, suggesting a slowdown in trend consumption growth is likely.”

Core retail sales in May is expected to have jumped 0.5%, according to economists polled by Bloomberg.

Online pet-products retailer Chewy is expected to make its public debut Friday morning. The company priced shares at $22 Thursday evening.

Chewy is expected to start trading on the New York Stock Exchange under the ticker “CHWY.”

Much like its recent IPO peers, Chewy is not yet a profitable company. According to its S-1 filing, Chewy reported sales of $3.5 billion in 2018, up 67% from the prior year, and a net loss of $268 million. About 42% of total revenue comes from pet food sales, while 25% comes from vet care and 22% comes from supplies and medicine. Furthermore, Chewy’s Autoship subscription service generated about $2.3 billion in sales in 2018.

As a pet-products e-commerce platform, Chewy relies heavily on web traffic. According to alternative data analyzed by Thinknum, Chewy has been seeing a healthy uptrend since 2017.

PetSmart acquired Chewy in 2017 and is its largest shareholder. Chewy’s stock will trade under a dual-class structure. PetSmart will own 278 million Class B shares, which will represent approximately 70% of Chewy’s total outstanding shares of common stock and approximately 77% of the combined voting power of both classes of common stock.

Heidi Chung is a reporter at Yahoo Finance. Follow her on Twitter: @heidi_chung.

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