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Chewy stock surges on increased sales expectations

Yahoo Finance Live checks out online retailer Chewy's stock following a boost to sales estimates.

Video Transcript

DAVE BRIGGS: My play is Chewy, symbol CHWY, surging today at nearly double digits on numbers from YipitData suggesting the company will exceed Q3 sales estimates. Analysts are expecting $2.46 billion in sales. That's an 11% plus increase from '21. The company expected to report earnings in early December.

Customer loyalty really is the secret sauce here. 73% of Chewy's total order volume comes from its auto-ship program. It just comes every month. People don't even adjust it. Over the last year, net sales per customer increased 14% to $462. Chewy reached 20 million active customers earlier this year.

Their CEO, Sumit Singh, saying, quote, "I believe in the speed of innovation and the loyalty and longevity of customer care that a company deliver." And that's what makes them so strong. Shares have been rough, though-- rough, yeah, pun intended-- sliding 40% over the last 12 months, but up today, you can see, 12% on the afternoon. Customer loyalty leading them in the long run to a very good place, Rachelle.

RACHELLE AKUFFO: I mean, you have to think, when you have a brand that's giving you the discounts with the subscriptions at a time when people are already trying to save money, when people already adopted a lot of pets over the pandemic-- pets usually aren't the place you're usually going to sacrifice.

So I know it has been, obviously, a very tough year for Chewy and for a lot of these pet companies. So good to see a little bit of brightness here, perhaps as people get a little bit more comfortable. Obviously, prices still elevated, but at least it looks like there's some light at the end of the tunnel here for Chewy.

SEANA SMITH: Yeah, I think the big question is how big of a downturn we could potentially see over the coming months. People don't seem to be pulling back on spending on their pets yet, but of course, we could see maybe people rein in their purse strings just a little bit more if the economic picture does start to materially deteriorate here.

The stock is off pretty substantially, like you said, Dave, year to date. So it's also a bit of a valuation call when you just take a look at where Chewy is trading today versus where it was at the start of the year. So 37.17-- that's with that 12% jump today. We'll see whether it's able to make up some of the earlier losses from earlier in the year.

DAVE BRIGGS: Yeah, you see some of that dip there-- maybe some of the bad news already priced in.