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Chewy reports Q2 sales miss, stock falls after hours

Yahoo Finance Live anchor Seana Smith breaks down second-quarter earnings results for Chewy.

Video Transcript

SEANA SMITH: All right, Jared, thanks. We want to continue with the earnings reports here. Chewy out with its earnings results. Let's take a look at the stock, because shares under pressure here after hours. You can see it off just around nearly 7%.

A miss on sales for the quarter. They come in at $2.4 billion. The estimate was for $2.48 billion. Lowered guidance, though, a big reason why we are seeing such a drop here after hours-- loweing its full year net sales guidance as well as what they're expecting for the third quarter.

They're now expecting $2.4 billion in sales to $2.46 billion in sales for the third quarter, and also the full year net sales of $9.9 billion to $10 billion. Gross margin, 28.1%, expanding about 60 basis points on a year-over-year basis. But it's that miss there on that revenue number and also the lowered full year, as well as the third quarter guidance, that's weighing on the stock with shares off just about 8%.

DAVE BRIGGS: And then the question is, are they, as their CEO Sumit Singh said, recession-resistant pet category? He issues a statement in their Q2 earnings that says their auto ship business enabled us to continue taking market share, extend our leadership position-- again, in the recession-resistant pet category.

But doesn't this earnings report suggest perhaps it is not? Perhaps there is some softening. We're not even in recession yet, but if we are, you can certainly see some softening here.

SEANA SMITH: Yeah, you certainly, Rachelle, I think would expect to see a bit of a pullback here from consumer spending within this category if we do see a significant pullback here, like we forecasted, like we've talked to so many economists about here day in and day out on the show that we will likely see in the coming months.

RACHELLE AKUFFO: It's true. This is an interesting one because, obviously, we talk a lot about how a lot of people got more pets during the pandemic and the spending was up. So it's interesting to see that forward guidance starting to wane there.

But that auto ship business, a strong mover there. So I think that's going to probably be their strong suit as people really still want the convenience, but then if the prices keep going up and inflation really doesn't start to come down at a faster pace, and people have to cut costs and maybe just make that trip to the store, they might also continue to see some softness as well.