Should You Buy Chewy?

 

Chewy, Inc. (NYSE: CHWY) (“Chewy“), a trusted online destination for pet parents and partners everywhere, has released its financial results for the fiscal fourth quarter and full year 2020 ended January 31, 2021

Fiscal Q4 2020 Highlights:

   -- Net sales of $2.04 billion grew 51 percent year over year 
 
   -- Gross margin of 27.1 percent expanded 300 basis points year over year 
 
   -- Net income of $21.0 million, including share-based compensation expense 
      of $24.0 million 
 
   -- Net margin of 1.0 percent improved 550 basis points year over year 
 
   -- Adjusted EBITDA(1) of $60.8 million, an increase of $66.6 million year 
      over year 
 
   -- Adjusted EBITDA margin(1) of 3.0 percent improved 340 basis points year 
      over year

Fiscal 2020 Highlights:

   -- Net sales of $7.15 billion grew 47 percent year over year 
 
   -- Gross margin of 25.5 percent expanded 190 basis points year over year 
 
   -- Net loss of $92.5 million, including share-based compensation expense of 
      $129.2 million 
 
   -- Net margin of (1.3) percent improved 390 basis points year over year 
 
   -- Adjusted EBITDA(1) of $85.2 million, an increase of $166.2 million year 
      over year 
 
   -- Adjusted EBITDA margin(1) of 1.2 percent improved 290 basis points year 
      over year

“2020 was an incredibly challenging and unpredictable year for all of us. During this time, Chewy performed exceptionally well and made significant strategic and operational progress. Specifically, we grew net sales by 47 percent year over year, increased our customer base by 43 percent year over year, delivered our first full year of positive adjusted EBITDA, and generated the company’s first quarter of positive net income in the fourth quarter of 2020,” said Sumit Singh, Chief Executive Officer of Chewy. “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.”

Management will host a conference call and webcast to discuss Chewy‘s financial results today at 5:00 pm ET.

 

CWEB Analyst believe Chewy’s valuation is elevated, but deservedly so. Its promising growth and niche within an ideal sector sets it up very well for the long term. Chewy has a great chance to continue powering solid shareholder profits and potential to reach $150 by 2021.

 


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