Chewy Reports 4.8% Net Sales Increase and Net Income Turnaround in Q3 Fiscal 2024

Chewy, Inc. reported a net sales increase of 4.8% for the third quarter of fiscal 2024, reaching $2.88 billion compared to $2.75 billion in the same period last year. The company's net income for the quarter was $3.93 million, a significant turnaround from a net loss of $35.37 million in the prior year. This improvement reflects a net margin of 0.1%, up from a negative margin of 1.3% in the previous year. For the first three quarters of the fiscal year, Chewy's net sales totaled $8.61 billion, a 3.5% increase from $8.32 billion in the same period last year, with net income rising to $369.95 million from $7.69 million.

The company experienced notable changes in its operational metrics, with active customers slightly declining to 20.16 million from 20.27 million year-over-year. However, net sales per active customer increased by 4.2% to $567, driven by higher spending from both new and existing customers. Chewy's Autoship program continued to be a significant contributor, accounting for 80% of net sales, with Autoship customer sales rising by 8.7% year-over-year.

In terms of strategic developments, Chewy has been actively repurchasing shares, with a total of $875.2 million spent on stock repurchases during the first three quarters of fiscal 2024. The company also expanded its marketing efforts, particularly in Canada, which contributed to customer acquisition and retention. Additionally, Chewy is modernizing its finance information technology architecture, aiming to enhance operational efficiency and scalability.

Operationally, Chewy's cost of goods sold increased by 3.6% to $2.03 billion for the third quarter, reflecting rising product and shipping costs. However, gross profit improved by 7.9% to $843.87 million, aided by supply chain efficiencies. The company reported a significant increase in adjusted EBITDA, which rose by 67.4% to $138.25 million for the quarter, indicating improved operational performance.

Looking ahead, Chewy remains cautious about macroeconomic conditions, including inflation and interest rates, which could impact consumer behavior. The company believes its current cash and cash equivalents, along with marketable securities, will be sufficient to meet its operational needs for at least the next twelve months. Chewy's management continues to monitor market conditions closely and adapt its strategies accordingly to sustain growth and profitability.