Chewy gets its bark back with foray into Canada, forecast raise
Reuters
Published Jun 01, 2023 08:13AM ET
Updated Jun 01, 2023 09:46AM ET
By Vansh Agarwal
(Reuters) -Shares of Chewy (NYSE:CHWY) Inc surged 27% in early trading on Thursday after the pet products e-retailer announced its first foray into international markets via Canada and raised its annual revenue forecast.
Chewy, co-founded by activist investor Ryan Cohen, was one of the major gainers in the sector after the pandemic sparked a rise in pet ownership.
But demand has normalized from its pandemic-led peak due to high inflation in the United States. To counter that hit, U.S.-based Chewy announced its plan to enter the Canadian market next quarter as it has been looking to tap into international markets, while also investing more in advertising and automation centers.
Chewy's Canada expansion would increase its total addressable market by $12-$15 billion, Wells Fargo (NYSE:WFC) analysts estimated.
The company, known for sending customers flowers or other gifts if their pets die, posted a surprise profit for the first quarter as its sales benefited from strong customer loyalty.
"Perhaps the biggest news from quarterly results was the firm's decision to launch in its first international market," said Morningstar analyst Sean Dunlop in a research note.
"International expansion remains an important part of Chewy's long-term growth narrative, and we'll be closely monitoring the firm's first foray abroad."
At least four brokerages raised their price target.
Chewy, which turned profitable in the fourth quarter of 2021, currently trades at over 1,200 times the Wall Street's earnings estimates for the next twelve months. That compares to 17 times for peer Petco Health and Wellness Company Inc.
Chewy's shares rose 27% at $37.4, it's best day ever if gains hold, erasing most of its declines so far this year.
The company said it now expects full-year revenue of $11.15 billion to $11.35 billion, compared with $11.10 billion to $11.30 billion expected previously.
Excluding items, it posted first-quarter net income of 20 cents per share, compared with analysts' expectations of a loss of 4 cents per share.
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Written By: Reuters
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