Chewy (CHWY) is set for meaningful growth in the coming year, here’s why | AlphaStreet

Shares of Chewy, Inc. (NYSE: CHWY) stayed purple on Thursday. The inventory has dropped 2% over the previous three months. The pet merchandise firm ended fiscal yr 2024 on a robust observe with strong outcomes for the fourth quarter and full yr. It additionally made important progress on its strategic priorities. Chewy expects this momentum to proceed in the coming yr as properly. Right here’s a take a look at its key growth drivers:  

Gross sales and earnings growth

Chewy noticed robust growth in gross sales and earnings for the fourth quarter and full yr of 2024. Internet gross sales elevated practically 15% year-over-year to $3.25 billion in This fall, pushed by a rise in lively prospects, a return to growth in arduous items merchandise, and Autoship buyer loyalty throughout the consumables, and well being and wellness classes. Full-year 2024 gross sales grew 6.4% YoY to $11.86 billion.

The highest line additionally benefited from an additional week in fiscal yr 2024, which added approx. $227 million in gross sales to each the quarter and the yr. Excluding the influence of the 53^rd week, gross sales grew practically 7% in This fall and over 4% in FY2024.

Adjusted earnings per share grew greater than 50% YoY for each the quarter and the yr, amounting to $0.28 in This fall 2024 and $1.04 in FY2024.

Sturdy enterprise efficiency

Throughout the fourth quarter, Chewy noticed robust efficiency throughout its enterprise with growth in all its key metrics. Autoship buyer gross sales elevated 21% YoY to $2.62 billion in This fall. The Autoship program, which accounted for practically 81% of web gross sales in the fourth quarter, offers a predictable recurring income stream to the firm.

Chewy ended the fourth quarter with 20.5 million lively prospects, reflecting a YoY improve of two.1%. The corporate’s efforts in bettering its assortment, on-site and cell app capabilities, and advertising and marketing helped drive growth in new prospects and reactivations, together with an enchancment in gross churn. Chewy believes its lively buyer growth has reached an inflection level and it expects to ship growth in this metric in 2025. The corporate additionally noticed growth in web gross sales per lively buyer, which rose 4.1% YoY to $578 in This fall.

Chewy’s gross margin expanded 30 foundation factors YoY to twenty-eight.5% in This fall. This enchancment was pushed primarily by features in its sponsored adverts enterprise in addition to a shift in product combine to premium classes.

CHWY’s community of Chewy Vet Care (CVC) clinics continues to yield advantages in phrases of buyer acquisition and engagement. The corporate is seeing rising engagement from each new and present prospects. It opened eight CVC areas, reaching the higher finish of its annual goal vary of 4-8 openings. The pet provides supplier plans to open 8-10 new clinics in FY2025, because it expands its attain over the approx. $25 billion vet providers market.

Encouraging outlook

Chewy has supplied an encouraging outlook for fiscal yr 2025. As the pet trade continues to see normalization, the firm believes it is on monitor to ship growth and margin growth in the coming yr.

Internet gross sales are anticipated to vary between $3.06-3.09 billion for the first quarter of 2025 and between $12.30-12.45 billion for the full yr of 2025. This represents a YoY growth of approx. 6-7% for each the quarter and the yr, when adjusted to exclude the influence of the 53^rd week in FY2024.

Gross sales growth is anticipated to be pushed by growth in lively prospects and web gross sales per lively buyer, in addition to minimal worth inflation. Primarily based on the present atmosphere, the firm is optimistic that it is going to be capable of ship YoY lively buyer growth in the low single-digit vary with the degree of web additions broadly constant all through the course of the yr.

For the first quarter of 2025, Chewy expects adjusted EPS to vary between $0.30-0.35.