Chewy, the leading online retailer of pet products, saw its shares slump by 12% in premarket trading on Thursday after providing disappointing guidance for the January quarter and reducing its full-year outlook. The company cited ongoing macroeconomic pressures as the primary reason for these projections.
Chewy’s revenue for the fiscal third quarter, which ended on October 31, stood at $2.74 billion, representing an 8% increase from the previous year. However, this figure fell at the lower end of the company’s guidance range and also fell short of the Street consensus of $2.75 billion. On an adjusted basis, Chewy posted a profit of 15 cents per share, exceeding the Street consensus, which had predicted a loss of 6 cents per share.
January Quarter Projections
The real story for Chewy this quarter lies in its guidance for the January quarter. While the company projects a sales increase of 3% to be between $2.78 billion and $2.8 billion, it falls short of the Street consensus at $2.93 billion.
Adjusted Full-Year Outlook
Chewy has revised its full-year revenue guidance to a range of $11.08 billion to $11.1 billion, down from the previously forecasted range of $11.15 billion to $11.35 billion. The company has also reiterated its expectations of an adjusted Ebitda margin of 3%.
Macroeconomic Pressures Impacting Industrywide
In a letter to shareholders, Chewy expressed confidence in its ability to continue gaining market share and achieving profitability. However, it acknowledged that the reduced guidance reflects the macroeconomic pressures that are being observed across the industry. Although the company saw encouraging performance during the Black Friday and Cyber Monday sales events following Thanksgiving, it noted that sales trends have now returned to pre-holiday levels.
Chewy has announced the appointment of David Reeder as its new Chief Financial Officer. Reeder, previously in the same role at chip fab operator GlobalFoundries, will be replacing Stacey Bowman, who will resume her position as Chief Accounting Officer after serving as interim CFO.