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Chewy's Solid Earnings Fail to Get Investors' Tails Wagging

Shares of online pet food and supplies retailer Chewy Inc. (NYSE:CHWY) fell 2% in extended trading on Tuesday despite reporting better-than-expected second-quarter results after the closing bell.

While the quarterly net loss widened to $82.9 million from $63.1 million a year ago, the Dania Beach, Florida-based e-commerce company, which was spun off of PetSmart in June, posted an adjusted loss of 10 cents per share, topping Refinitiv's estimates by a cent. Revenue grew 43% from the prior-year quarter to $1.15 billion, beating expectations of $1.13 billion.


During the earnings call, CEO Sumit Singh said Chewy recorded 12 million active customers for the quarter, a 13% increase year over year. Auto-ship customers, who receive recurring shipments from the company, accounted for approximately 69% of sales. He also emphasized that net sales per active customer were $352 in the second quarter.

"Keeping the customer at the center of everything we do is core to our mission of becoming the most trusted and convenient online destination for pet parents, and the team continues to execute well against our strategy of long-term, sustainable growth and margin expansion," he said in a prepared statement.

The company raised its full-year revenue guidance to between $4.75 billion and $4.8 billion, ahead of analysts' forecasts of $4.73 billion. For the third quarter, Chewy projects revenue will range from $1.19 billion to $1.21 billion, which was also higher than Wall Street's outlook of $1.17 billion.

The stock's decline carried over into Wednesday morning trading. With a market cap of $12.06 billion, shares of Chewy were down 6.64% at $28.24. GuruFocus estimates the stock has tumbled 15% since its market debut.


Of the gurus invested in Chewy, Steve Mandel (Trades, Portfolio) has the largest stake with 0.83% of outstanding shares. Other gurus who see value in the stock are Andreas Halvorsen (Trades, Portfolio), Chase Coleman (Trades, Portfolio), Steven Cohen (Trades, Portfolio), Louis Moore Bacon (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio).

Disclosure: No positions.

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This article first appeared on GuruFocus.