To The Moon

$Chewy, Inc.(CHWY)$ is scheduled to report its third-quarter results earnings on 04 Dec 2024 after market close. CHWY is expected to report notable results due to its accelerating sales growth and continued margin strength despite a slowdown in website traffic in October.

The fiscal third-quarter sales is anticipated to come in with an annual increase of more than 4%, this is much higher than the 2.6% obtained in the previous quarter (Mar to June).

In August, CHWY give a forecast of sales to be between $2.84 billion to $2.86 billion in the third quarter, this works out to be a yearly gains of 3% to 4%.

The earnings per share is expected to come in at 6 cents which is positive compared to a negative 8 cents in the same period last year.

Growing Personal Consumption Expenditures (PCE) Suggest Improved Demand

If we looked at the PCE from September 2024, there is an improvement suggesting that despite deflationary pressures modestly increased, consumer are seen to be spending.

Chewy (CHWY) Web Traffic Trends Show Signs Of Slowdown In October

In 2024, U.S. pet owners will spend $28.5 billion buying pet food and supplies online, up 2.60% year-over-year (YoY). Projections indicate that U.S. e-commerce in the consumer pet industry will grow to $60 billion by 2030.

The e-commerce market share was 22% in 2023 and will expand with a CAGR of 4.53% until 2030. Projections indicate that, by 2030, the e-commerce market share of U.S. pet expenditures will be approximately 30%. In the U.S., 1,861 online businesses sell pet food and supplies.

If we were look at CHWY web traffic trend, there seem to be a nice consistent growth in the third quarter, but signs of slowdown can be seen in October from the chart below, this trend could be driven by a combination of comping increased promotional intensity in October 2023, extended promotional duration by competitors around (Amazon's) Prime Day and a change in consumer behavior ahead of the election.

CHWY marketing strategy could be helping it to gain more share from the competitive pet market, and with initiatives in healthcare and tailwinds from its new customer relationship management software.

Chewy (CHWY) Marketing Strategy Helped To Gain Shares

Chewy’s marketing strategy stands out in the pet retail industry due to its multifaceted approach emphasizing customer satisfaction, personalized engagement, and innovative use of technology.

Chewy heavy investment in customer support, providing 24/7 assistance and fostering a loyal customer base through personalized interactions and surprise gifts.

Chewy also uses data analytics to tailor product recommendations to individual pets, considering breed, age, size, and dietary needs. This level of personalization ensures every interaction is meaningful and intentional, helping to build a strong emotional connection with customers​. 

One important aspect of Chewy marketing strategy is customer engagement is more significant as there is a sense of belonging fostered among pet enthusiasts. Chewy engage the customers through active social media engagement, interactive campaigns, and community events,

Chewy has created a space where pet parents can connect, share stories, and seek advice​​. Chewy’s innovative and empathetic approach to customer service, such as sending personalized gifts and handwritten notes, further enhances its reputation and customer loyalty​​.

Need to mention Chewy’s Autoship program, which allows customers to set up automatic recurring deliveries, has been instrumental in driving customer loyalty and recurring sales. This program not only offers convenience and savings to customers but also contributes significantly to Chewy’s net sales, with approximately 70% of sales coming from automatic order refills​.

Chewy market share has been particularly notable in the online pet retail sector, where it has become a dominant player, outpacing many competitors.

Technical Analysis - MACD and Multi-timeframe (MTF)

Even though we are seeing increased web site traffics in the third quarter, there have been a sign of slowdown from October and leading up to the holiday in December, as we can see from the stock price, it has been on the decline.

Despite the decline, CHWY is still trading above the short-term and long-term MA period, but something to note of further decline is the MACD and MTF, both are not giving any potential upward trend, so I would be looking at how CHWY would be able to translate the consistent growth of web site traffics to revenue and earnings.

There have been many programs that Chewy have tried to implement, but will these be able to contribute to the revenue earnings significantly?

Summary

I think though Chewy’s revenue has steadily increased year over year, reflecting the success of its strategic initiatives and market expansion efforts.

There are still some headwinds of consumers cutting back on their spending due to signs of inflation might creep back, because there is still no clear signs that the economy is growing steadily and will be gathering lower inflation rate.

Appreciate if you could share your thoughts in the comment section whether you think Chewy would be able to post better-than-expected revenue and earnings per share.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.