“We’re making progress on pricing and inflation, inbound freight costs have moderated and various initiatives are working to mitigate higher outbound freight costs,” said CFO Mario Marte.
Chewy (CHWY) – Get Chewy, Inc. Class A Report shares fell sharply Wednesday after the online the pet food specialists posted a wider-than-expected fourth quarter loss as product cost inflation and shipping expenses ate into its bottom line.
Chewy said it lost $63.6 million over the three months ending in January, even as sales rose 17% from the same period last year to $2.39 billion, amid a 170 basis point slump in gross margins, to 25.4%, linked to labor, product cost inflation and inbound freight costs.
Looking into the current quarter, Chewy said it sees net sales in the region of $2.4 billion and $2.43 billion, with full-year revenues rising to between $$10.2 billion and $10.4 billion, a figure that would represent a 17% annual growth rate at the higher end.
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“While inflation and freight headwinds in the second half of the year capped our full year margin expansion, they did not prevent us from meeting our stated goal of delivering incremental and gradual margin expansion in 2021,” CFO Mario Marte told investors on a conference call late Tuesday.
“We’re making progress on pricing and inflation, inbound freight costs have moderated and various initiatives are working to mitigate higher outbound freight costs,” Marte added. “With continued progress in these areas and solid top line growth, we expect to hold gross margin broadly in line in 2022 versus 2021.”
Chewy shares were marked 13.7% lower in pre-market trading Wednesday to indicate an opening bell price of $44.00 each, a move that would extend the stock’s year-to-date decline to around 23.5%.
A raft of analysts also lowered their price targets and ratings on the group, with Morgan Stanley cutting its price target by $6 to $62 each and Wedbush lowering it by $10 to $45 each.
