Chewy's stock is down nearly 10% since the company reported earnings, and perhaps the problem is that they confirmed that growth is slowing. However, it doesn't seem like the market should have reacted so bearishly. Chewy is delivering strong customer gains and margin expansion, indicating customers still want to spend, so although it's battling Amazon.com for preeminence, it looks like the online pet supplies retailer is ably managing its expansion.
Chewy said revenue rose 43% in the quarter to $1.15 billion generating an adjusted loss before interest, tax, depreciation, and amortization of $29.2 million, which exceeded expectations of $1.13 billion and an adjusted loss of $29.8 million. Management also guided toward full-year revenue between $4.75 billion to $4.80 billion compared to a consensus forecast of $4.73 billion.
The online retailer was able to enjoy gross margin expandsion of 300 basis points in the quarter to account for 23.6% of sales while increasing the number of active customers to 12 million, a 40% gain over last year. Importantly, net sales per active customer grew 10% year over year to $352, meaning its best customers are spending more with the chain.
Sales through Chewy's autoship program also saw substantial growth, surging almost 49% to $800 million and now accounting for 69% of sales. However, this is less than it seems.