Investing.com -- Chewy (NYSE:CHWY) stock fell nearly 5% in pre-market Thursday after the company offered a weaker-than-expected full-year sales forecast.
The pet product retailer reported adjusted profit of 15 cents a share on revenue of $2.78 billion, up 14.3%. Analysts expected a loss of 5 cents a share on revenue of $2.76B.
Chewy said its gross margin of 28.3% was up 20 basis points from the same time last year.
“We delivered solid results in Q2 across both topline and profitability, with 14% growth exceeding guidance,” said CEO Sumit Singh. “Chewy once again gained share as our customers recognize the power of our personalized Autoship service, best-in-class healthcare experience, and overall value proposition as key differentiators, resulting in robust ordering behavior, which in turn is driving our strong performance.”
Chewy sees third-quarter net sales of $2.74B to $2.76B. It sees full year net sales of $11.15B to $11.35B. Analysts were looking for $2.79B and $11.31B, respectively.
Evercore ISI analysts cut the rating to In Line from Outperform with a price target lowered by $18 to $35 per share.
"What makes us incrementally cautious is the disappointing FQ2 decline in Net Adds (52K), after the FQ1 modest increase, as well as management’s subdued outlook for H2 Net Adds," analysts said in a client note.
"We had expected a subsiding of Covid-cohort churn impact to start becoming material, starting a process of rising Net Adds, especially with the launch of the Canada market in FQ3. But we are now estimating no material increase in Net Adds in H2 and are reducing our FY24 outlook from 800K to 500K Net Adds."
Morgan Stanley analysts said the key debates surrounding the CHWY name are still "unchanged."
"Investor focus from here likely shifts to CHWY's officially announced investor day (expected to be held in late 2023 or early 2024) and potential updates to long-term financial targets," they added.
Additional reporting by Senad Karaahmetovic