Chewy, Inc

In spite of the operating and economic climate difficulties, Chewy managed to deliver an all-around beat, surpassing the revenue, profitability, and free cash flow expectations of Wall Street. The company had another year of market share increases in the pet category, highlighting its resiliency in the face of changing macroeconomic conditions. Their net sales climbed 13% to $10 billion during the fourth quarter, representing an annual growth rate of roughly 14%. Consumables and health care remain the mainstays of the non-discretionary sector, with discretionary sectors like hard goods providing the offset. Autoship customer sales generated 73% of the company’s Q4 net sales. Moreover, their customer engagement increased as NSPAC increased 15% year over year to reach almost $500. Looking ahead, the company is on track to inaugurate Nashville’s fourth automated facility in the first half of this year. We give Chewy a ‘Hold’ rating with a revised target price.