Why Chewy Stock Dropped 10.5% at the Open Today
Shares of online pet retailer Chewy (NYSE: CHWY) fell out of the gate on Dec. 10, dropping a quick 10% in early trading. The loss wasn't a surprise, however, as investors digested the company's after-the-close third-quarter 2021 earnings update from Dec. 9. The results themselves were a bit mixed, but it's the trend that's likely the real problem.
The third quarter's results showed a number of very big positives. For example, sales of just over $2.2 billion increased 24.1% compared to the third quarter of 2020. Of that total, sales to customers using "autoship" increased 26.7% to 70.6% of overall sales. These are customers who set their purchases of food and other items to recur regularly, making them almost an annuity-like income stream. Meanwhile, Chewy's active customer count increased 14.7% year over year, and sales per active customer jumped 15.4%. That's all very good news for a still-growing company, given that Chewy also recently entered the pet insurance sector and has been working with veterinary practices to integrate the online retailer's services into their practices (creating another revenue source for the vet and adding respected promotors/sellers for Chewy). That said, the company lost $0.08 per share in the quarter, in line with the same period last year. But red ink is not uncommon for a growth-oriented company. All in all, shareholders should probably be pleased with the quarter despite the loss.
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Source Fool.com
