Chewy's Q4 Earnings: A Pet Retail Revolution!

Ladies and gentlemen, buckle up! We've got a winner on our hands, and it's not just any stock—it's Chewy, the online pet retailer that's taking the market by storm. The numbers are in, and they're nothing short of spectacular. Chewy's Q4 earnings report is a testament to the company's relentless growth and customer-centric approach. Let's dive in and see what makes this stock a must-have in your portfolio!

First things first, let's talk about the numbers. Chewy's revenue for the fourth quarter of 2024 soared to $3.3 billion, a whopping 17% increase from the previous year. But that's not all—earnings per share jumped to $0.28, beating Wall Street's expectations by a staggering 56%. This is not just growth; this is a revolution in the pet retail industry!

Now, let's break down the key metrics that make Chewy a standout performer:

1. Customer Growth: Chewy's active customer base grew by 2% year over year to 20.5 million. This might seem modest, but it's a significant turnaround from the previous quarter's decline. It shows that Chewy is successfully attracting and retaining customers.

2. Increased Spending: Net sales per active customer grew by 4% to $578 over the past 12 months. This means that existing customers are spending more on the platform, a clear sign of loyalty and satisfaction.

3. Autoship Success: Planned Autoship sales grew to 80.6% of total revenue. This program is a game-changer, offering convenience and savings to customers while driving recurring sales for Chewy.

4. Profitability: Adjusted EBITDA for the quarter was $124.5 million, up 44% year over year. The EBITDA margin improved by 70 basis points to 3.8%, and free cash flow nearly tripled to $156.6 million. These financial metrics demonstrate Chewy's ability to convert increased customer spending into profitability.



But the story doesn't end there. Chewy's strategic initiatives are what truly set it apart from the competition. Let's take a look at some of the key drivers behind this success:

1. Personalized Customer Engagement: Chewy goes above and beyond with personalized pet services, sending hand-painted portraits of customers’ pets and birthday cards to their furry friends. This level of personalization builds a strong emotional connection with customers.

2. Autoship Subscription Service: The Autoship program is a customer loyalty powerhouse, contributing significantly to Chewy’s net sales. With approximately 70% of sales coming from automatic order refills, this program is a key driver of recurring revenue.

3. Leveraging AI and Data Analytics: Chewy uses AI algorithms to analyze customer behavior and preferences, creating a more intuitive shopping experience. This data-driven approach allows them to predict what products a customer might need next, aligning perfectly with the fast-paced lives of pet owners.

4. Chewy Pharmacy: The launch of Chewy Pharmacy in 2018 has been a significant initiative, offering a seamless online pharmacy experience. This service allows pet owners to order prescriptions online and have them delivered directly to their homes, simplifying the process of obtaining pet medications.

5. Social Media Engagement: Chewy has built a vibrant community on social media platforms by sharing heartwarming stories, user-generated content, and educational resources. Their #ChewyInfluencer program encourages pet owners to share their experiences with Chewy products, creating a sense of belonging and community among followers.

6. Exceptional Customer Service: Chewy's commitment to exceptional customer service has not only gained them a loyal following but also gone viral, solidifying their brand reputation as a leader in empathetic customer care. For instance, a viral tweet highlighted Chewy’s heartfelt response to a customer’s loss of her pet, showcasing the extraordinary lengths that Chewy goes to in order to support their customers during difficult times.

Now, let's talk about the future. Chewy's guidance for fiscal 2025 first-quarter adjusted earnings of $0.30 to $0.35 per share is higher than Wall Street's expectation of $0.20 per share. For the full year, Chewy forecasts sales of between $12.3 billion and $12.45 billion, which at the high end of the guidance, forecasts revenue growth of about 5% compared to 2024's $11.8 billion. This is a clear indication that Chewy is poised for continued growth and profitability.

So, what's the bottom line? Chewy is a no-brainer for your portfolio. With its customer-centric approach, innovative strategic initiatives, and impressive financial performance, Chewy is a stock that you can't afford to miss. Do this: Buy Chewy now and watch your portfolio grow!