Chewy Q4 Report vs. Expectations
In its Q4 earnings report, the pet food and supply company generated $2.04 billion in net sales. This represents a 51% increase in total sales in comparison to the same quarter the year before. This figure also beat out analyst expectations for the quarter, which pegged the business to only earn $1.97 billion. Perhaps more impressive than the net sales was the fact that Chewy earned a profit — a feat the company could not even achieve during more normal economic circumstances.
In fact, the increase in total business led Chewy to report a net income of $21.05 million, or diluted earnings of about $0.05 per share. This is a stark increase from the same quarter the year before, where the company posted a loss of nearly $61 million for that quarter. The surprising profit also absolutely shattered analyst estimates, which had projected Chewy to post a diluted loss per share of $0.10.
A large possible reason for the unexpected success of the company in Q4 can be attributed to its online business model. While many pet food and supplies companies rely heavily on in-person sales, Chewy works almost exclusively in digital sales. With the pandemic bringing about a major spike in ecommerce, the company was well-positioned to take on new business without spending heavily to build an online infrastructure. The online approach has become incredibly popular, with Chewy adding a whopping 5.7 million new customers in Q4 alone.
Future Outlooks and Stock Market Response
While the pet food and supplies company did not provide Q1 guidance alongside its earnings report, a major highlight for Chewy is the growing United States (US) pet industry. In fact, in 2020, $103.6 billion were spent by pet owners on their animals across the entire industry. That figure is projected to grow even larger in 2021, reaching $109.6 billion in total money spent by pet owners over the course of this year.
Chewy has seen incredible enthusiasm from investors in pre-market trading as a result of the surprising success of the business and the positive trends for both ecommerce and pet industry growth. In fact, company stock is up over 11% before the bell today, as Chewy prices have now reached nearly $90 per share.
In a statement released alongside the Q4 report, Chewy CEO Sumit Singh said, “Years of preparation and focus have positioned us as the Internet’s preeminent neighborhood pet store and a leading pure-play e-commerce company in the pet space. We look forward to a future marked by ongoing innovation and to winning customers’ hearts and minds as we grow to become the most trusted and convenient online destination for pet parents (and partners) everywhere.”
About the Author
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.