Chewy, Inc. (NYSE: CHWY) (“Chewy”), a trusted destination for
pet parents and partners everywhere, has released its financial
results for the second quarter of fiscal year 2024 ended July 28,
2024.
Fiscal Q2 2024 Highlights:
- Net sales of $2.86 billion increased 2.6 percent year over
year
- Gross margin of 29.5 percent increased 120 basis points year
over year
- Net income of $299.1 million, including share-based
compensation expense and related taxes of $82.5 million
- Net margin of 10.5 percent increased 980 basis points year over
year
- Basic earnings per share of $0.70, an increase of $0.65 year
over year
- Diluted earnings per share of $0.68, an increase of $0.63 year
over year
- Adjusted EBITDA(1) of $144.8 million, an increase of $56.7
million year over year
- Adjusted EBITDA margin(1) of 5.1 percent increased 190 basis
points year over year
- Adjusted net income(1) of $104.8 million, an increase of $40.2
million year over year
- Adjusted basic and diluted earnings per share(1) of $0.24, an
increase of $0.09 year over year
“Our Q2 performance reflects another quarter of strong
execution, delivering net sales at the high end of our guidance
range,” said Sumit Singh, Chief Executive Officer of Chewy.
“Chewy’s compelling value proposition is driving broader and deeper
customer engagement, as reflected by our 20 million active
customers, which grew sequentially in the quarter, and net sales
per active customer of $565, which reached a new record for the
company.”
Management will host a conference call and webcast to discuss
Chewy's financial results today at 8:00 am ET.
Chewy Fiscal Second Quarter 2024 Financial Results Conference
Call When: Wednesday, August 28, 2024 Time: 8:00
am ET Live webcast and replay: https://investor.chewy.com
Conference call registration:
https://www.netroadshow.com/events/login?show=85fd03d6&confId=69154
(1)
Adjusted EBITDA, adjusted EBITDA margin,
adjusted net income, and adjusted basic and diluted earnings per
share are non-GAAP financial measures. See “Non-GAAP Financial
Measures” for additional information on non-GAAP financial measures
and a reconciliation to the most comparable GAAP measures.
About Chewy
Our mission is to be the most trusted and convenient destination
for pet parents and partners everywhere. We believe that we are the
preeminent online source for pet products, supplies, and
prescriptions as a result of our broad selection of high-quality
products and services, which we offer at competitive prices and
deliver with an exceptional level of care and a personal touch to
build brand loyalty and drive repeat purchasing. We seek to
continually develop innovative ways for our customers to engage
with us, as our websites and mobile applications allow our pet
parents to manage their pets’ health, wellness, and merchandise
needs, while enabling them to conveniently shop for our products.
We partner with approximately 3,500 of the best and most trusted
brands in the pet industry, and we create and offer our own private
brands. Through our websites and mobile applications, we offer our
customers approximately 115,000 products and services offerings, to
bring what we believe is a high-bar, customer-centric experience to
our customers.
Forward-Looking
Statements
This communication contains forward-looking statements about us
and our industry that involve substantial risks and uncertainties.
All statements other than statements of historical facts contained
in this communication, including statements regarding our share
repurchase program, our future results of operations or financial
condition, business strategy and plans and objectives of management
for future operations, are forward-looking statements.
In some cases, you can identify forward-looking statements
because they contain words such as “anticipate,” “believe,”
“contemplate,” “continue,” “could,” “estimate,” “expect,”
“forecast,” “intend,” “may,” “plan,” “potential,” “predict,”
“project,” “seek,” “should,” “target,” “will” or “would” or the
negative of these words or other similar terms or expressions.
Although we believe that these forward-looking statements are based
on reasonable assumptions, you should be aware that many factors
could cause actual results to differ materially from those in such
forward-looking statements, including but not limited to, our
ability to: sustain our recent growth rates and successfully manage
challenges to our future growth, including introducing new products
or services, improving existing products and services, and
expanding into new jurisdictions and offerings; successfully
respond to business disruptions; successfully manage risks related
to the macroeconomic environment, including any adverse impacts on
our business operations, financial performance, supply chain,
workforce, facilities, customer services and operations; acquire
and retain new customers in a cost-effective manner and increase
our net sales, improve margins and maintain profitability; manage
our growth effectively; maintain positive perceptions of the
Company and preserve, grow, and leverage the value of our
reputation and our brand; limit operating losses as we continue to
expand our business; forecast net sales and appropriately plan our
expenses in the future; estimating our market share; strengthen our
current supplier relationships, retain key suppliers, and source
additional suppliers; negotiate acceptable pricing and other terms
with third-party service providers, suppliers and outsourcing
partners and maintain our relationships with such parties; mitigate
changes in, or disruptions to, our shipping arrangements and
operations; optimize, operate and manage the expansion of the
capacity of our fulfillment centers; provide our customers with a
cost-effective platform that is able to respond and adapt to rapid
changes in technology; limit our losses related to online payment
methods; maintain and scale our technology, including the
reliability of our websites, mobile applications, and network
infrastructure; maintain adequate cybersecurity with respect to our
systems and retain third-party service providers that do the same
with respect to their systems; maintain consumer confidence in the
safety, quality and health of our products; limit risks associated
with our suppliers and our outsourcing partners; comply with
existing or future laws and regulations in a cost-efficient manner;
utilize net operating loss and tax credit carryforwards, and other
tax attributes; adequately protect our intellectual property
rights; successfully defend ourselves against any allegations or
claims that we may be subject to; attract, develop, motivate and
retain highly-qualified and skilled employees; predict and respond
to economic conditions, industry trends, and market conditions, and
their impact on the pet products market; reduce merchandise returns
or refunds; respond to severe weather and limit disruption to
normal business operations; manage new acquisitions, investments or
alliances, and integrate them into our existing business;
successfully compete in new offerings; manage challenges presented
by international markets; successfully compete in the pet products
and services health and retail industry, especially in the
e-commerce sector; comply with the terms of our credit facility;
raise capital as needed; and maintain effective internal control
over financial reporting.
You should not rely on forward-looking statements as predictions
of future events, and you should understand that these statements
are not guarantees of performance or results, and our actual
results could differ materially from those expressed in the
forward-looking statements due to a variety of factors. We have
based the forward-looking statements contained in this
communication primarily on our current assumptions, expectations,
and projections about future events and trends that we believe may
affect our business, financial condition, and results of
operations. The outcome of the events described in these
forward-looking statements is subject to risks, uncertainties and
other factors described in the section titled “Risk Factors” in our
Quarterly Report on Form 10-Q for the quarterly period ended April
28, 2024, in our other filings with the Securities and Exchange
Commission, and elsewhere in this communication. Moreover, we
operate in a very competitive and rapidly changing environment. New
risks and uncertainties emerge from time to time, and it is not
possible for us to predict all risks and uncertainties that could
have an impact on the forward-looking statements contained in this
communication. The results, events and circumstances reflected in
the forward-looking statements may not be achieved or occur, and
actual results, events or circumstances could differ materially
from those described in the forward-looking statements. In
addition, statements that “we believe” and similar statements
reflect our beliefs and opinions on the relevant subject. These
statements are based on information available to us as of the date
of this communication. While we believe that such information
provides a reasonable basis for these statements, this information
may be limited or incomplete. Our statements should not be read to
indicate that we have conducted an exhaustive inquiry into, or
review of, all relevant information. These statements are
inherently uncertain, and investors are cautioned not to unduly
rely on these statements. The forward-looking statements made in
this communication relate only to events as of the date on which
the statements are made. We undertake no obligation to update any
forward-looking statements made in this communication to reflect
events or circumstances after the date of this communication or to
reflect new information or the occurrence of unanticipated events,
except as required by law. We may not actually achieve the plans,
intentions or expectations disclosed in our forward-looking
statements, and you should not place undue reliance on our
forward-looking statements. Our forward-looking statements do not
reflect the potential impact of any future acquisitions, mergers,
dispositions, joint ventures or investments.
CHEWY, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(in thousands, except share and
per share data)
As of
July 28, 2024
January 28,
2024
Assets
(Unaudited)
Current assets:
Cash and cash equivalents
$
694,460
$
602,232
Marketable securities
490
531,785
Accounts receivable
200,983
154,043
Inventories
803,338
719,273
Prepaid expenses and other current
assets
53,957
97,015
Total current assets
1,753,228
2,104,348
Property and equipment, net
526,163
521,298
Operating lease right-of-use assets
464,706
474,617
Goodwill
39,442
39,442
Deferred tax assets
275,669
—
Other non-current assets
43,283
47,146
Total assets
$
3,102,491
$
3,186,851
Liabilities and stockholders’
equity
Current liabilities:
Trade accounts payable
$
1,179,807
$
1,104,940
Accrued expenses and other current
liabilities
875,371
1,005,937
Total current liabilities
2,055,178
2,110,877
Operating lease liabilities
517,274
527,795
Other long-term liabilities
43,290
37,935
Total liabilities
2,615,742
2,676,607
Stockholders’ equity:
Preferred stock, $0.01 par value per
share, 5,000,000 shares authorized, no shares issued and
outstanding as of July 28, 2024 and January 28, 2024
—
—
Class A common stock, $0.01 par value per
share, 1,500,000,000 shares authorized, 142,967,945 and 132,913,046
shares issued and outstanding as of July 28, 2024 and January 28,
2024, respectively
1,430
1,329
Class B common stock, $0.01 par value per
share, 395,000,000 shares authorized, 274,646,551 and 298,863,356
shares issued and outstanding as of July 28, 2024 and January 28,
2024, respectively
2,746
2,989
Additional paid-in capital
2,091,864
2,481,984
Accumulated deficit
(1,609,638
)
(1,975,652
)
Accumulated other comprehensive income
(loss)
347
(406
)
Total stockholders’ equity
486,749
510,244
Total liabilities and stockholders’
equity
$
3,102,491
$
3,186,851
CHEWY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(in thousands, except per share
data)
(Unaudited)
13 Weeks Ended
26 Weeks Ended
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net sales
$
2,858,589
$
2,785,302
$
5,736,314
$
5,575,941
Cost of goods sold
2,014,753
1,996,581
4,038,486
3,994,364
Gross profit
843,836
788,721
1,697,828
1,581,577
Operating expenses:
Selling, general and administrative
621,267
619,889
1,223,828
1,204,278
Advertising and marketing
190,518
185,491
377,333
369,224
Total operating expenses
811,785
805,380
1,601,161
1,573,502
Income (loss) from operations
32,051
(16,659
)
96,667
8,075
Interest income, net
12,921
8,928
27,444
16,944
Other income, net
1,541
29,242
782
20,354
Income before income tax (benefit)
provision
46,513
21,511
124,893
45,373
Income tax (benefit) provision
(252,604
)
1,304
(241,121
)
2,307
Net income
$
299,117
$
20,207
$
366,014
$
43,066
Comprehensive income:
Net income
$
299,117
$
20,207
$
366,014
$
43,066
Foreign currency translation
adjustments
351
—
753
—
Comprehensive income
$
299,468
$
20,207
$
366,767
$
43,066
Earnings per share attributable to common
Class A and Class B stockholders:
Basic
$
0.70
$
0.05
$
0.85
$
0.10
Diluted
$
0.68
$
0.05
$
0.84
$
0.10
Weighted-average common shares used in
computing earnings per share:
Basic
429,377
428,618
432,125
427,735
Diluted
437,882
431,576
437,153
431,024
CHEWY, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)
26 Weeks Ended
July 28, 2024
July 30, 2023
Cash flows from operating activities
Net income
$
366,014
$
43,066
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
56,455
56,712
Share-based compensation expense
146,958
114,549
Non-cash lease expense
16,179
22,072
Change in fair value of equity warrants
and investments
592
(20,244
)
Deferred income tax benefit
(275,669
)
—
Unrealized foreign currency losses,
net
1,064
—
Other
(2,501
)
793
Net change in operating assets and
liabilities:
Accounts receivable
(46,991
)
(37,487
)
Inventories
(84,212
)
(64,969
)
Prepaid expenses and other current
assets
(5,207
)
(16,843
)
Other non-current assets
2,005
(1,975
)
Trade accounts payable
74,891
90,445
Accrued expenses and other current
liabilities
(28,513
)
131,374
Operating lease liabilities
(16,744
)
(11,066
)
Other long-term liabilities
1,026
860
Net cash provided by operating
activities
205,347
307,287
Cash flows from investing activities
Capital expenditures
(61,225
)
(79,217
)
Proceeds from maturities of marketable
securities
538,402
350,000
Purchases of marketable securities
—
(442,769
)
Cash paid for acquisition of business, net
of cash acquired
—
(367
)
Net cash provided by (used in) investing
activities
477,177
(172,353
)
Cash flows from financing activities
Repurchases of common stock
(531,956
)
—
Income taxes paid for, net of proceeds
from, parent reorganization transaction
(57,559
)
—
Principal repayments of finance lease
obligations
(535
)
(354
)
Payments for tax withholdings related to
vesting of share-based compensation awards
(12
)
(5
)
Payments for tax sharing agreement with
related parties
—
(7,606
)
Payment of debt modification costs
—
(175
)
Net cash used in financing activities
(590,062
)
(8,140
)
Effect of exchange rate changes on cash
and cash equivalents
(234
)
—
Net increase in cash and cash
equivalents
92,228
126,794
Cash and cash equivalents, as of beginning
of period
602,232
331,641
Cash and cash equivalents, as of end of
period
$
694,460
$
458,435
Key Financial and Operating
Data
We measure our business using both financial and operating data
and use the following metrics and measures to assess the near-term
and long-term performance of our overall business, including
identifying trends, formulating financial projections, making
strategic decisions, assessing operational efficiencies, and
monitoring our business.
13 Weeks Ended
26 Weeks Ended
(in thousands, except net sales per active
customer, per share data, and percentages)
July 28, 2024
July 30, 2023
% Change
July 28, 2024
July 30, 2023
% Change
Financial and Operating Data
Net sales
$
2,858,589
$
2,785,302
2.6
%
$
5,736,314
$
5,575,941
2.9
%
Net income (1)
$
299,117
$
20,207
n/m
$
366,014
$
43,066
n/m
Net margin
10.5
%
0.7
%
6.4
%
0.8
%
Adjusted EBITDA (2)
$
144,835
$
88,147
64.3
%
$
307,759
$
199,020
54.6
%
Adjusted EBITDA margin (2)
5.1
%
3.2
%
5.4
%
3.6
%
Adjusted net income (2)
$
104,790
$
64,577
62.3
%
$
241,854
$
152,504
58.6
%
Earnings per share, basic (1)
$
0.70
$
0.05
n/m
$
0.85
$
0.10
n/m
Earnings per share, diluted (1)
$
0.68
$
0.05
n/m
$
0.84
$
0.10
n/m
Adjusted earnings per share, basic (2)
$
0.24
$
0.15
60.0
%
$
0.56
$
0.36
55.6
%
Adjusted earnings per share, diluted
(2)
$
0.24
$
0.15
60.0
%
$
0.55
$
0.35
57.1
%
Net cash provided by operating
activities
$
123,410
$
158,575
(22.2
)%
$
205,347
$
307,287
(33.2
)%
Free cash flow (2)
$
91,484
$
100,931
(9.4
)%
$
144,122
$
228,070
(36.8
)%
Active customers
20,002
20,367
(1.8
)%
20,002
20,367
(1.8
)%
Net sales per active customer
$
565
$
532
6.2
%
$
565
$
532
6.2
%
Autoship customer sales
$
2,242,169
$
2,119,511
5.8
%
$
4,475,055
$
4,217,782
6.1
%
Autoship customer sales as a percentage of
net sales
78.4
%
76.1
%
78.0
%
75.6
%
n/m - not meaningful
(1)
Includes share-based compensation expense
and related taxes of $82.5 million and $152.0 million for the
thirteen and twenty-six weeks ended July 28, 2024, compared to
$68.3 million and $122.1 million for the thirteen and twenty-six
weeks ended July 30, 2023.
(2)
Adjusted EBITDA, adjusted EBITDA margin,
adjusted net income, adjusted basic and diluted earnings per share,
and free cash flow are non-GAAP financial measures.
We define net margin as net income divided by net sales and
adjusted EBITDA margin as adjusted EBITDA divided by net sales.
Non-GAAP Financial
Measures
Adjusted EBITDA and Adjusted EBITDA Margin
To provide investors with additional information regarding our
financial results, we have disclosed in this earnings release
adjusted EBITDA, a non-GAAP financial measure that we calculate as
net income (loss) excluding depreciation and amortization;
share-based compensation expense and related taxes; income tax
provision (benefit); interest income (expense), net; transaction
related costs; changes in the fair value of equity warrants;
severance and exit costs; and litigation matters and other items
that we do not consider representative of our underlying
operations. We have provided a reconciliation below of adjusted
EBITDA to net income (loss), the most directly comparable GAAP
financial measure.
We have included adjusted EBITDA and adjusted EBITDA margin in
this earnings release because each is a key measure used by our
management and board of directors to evaluate our operating
performance, generate future operating plans and make strategic
decisions regarding the allocation of capital. In particular, the
exclusion of certain expenses in calculating adjusted EBITDA and
adjusted EBITDA margin facilitates operating performance
comparability across reporting periods by removing the effect of
non-cash expenses and certain variable charges. Accordingly, we
believe that adjusted EBITDA and adjusted EBITDA margin provide
useful information to investors and others in understanding and
evaluating our operating results in the same manner as our
management and board of directors.
We believe it is useful to exclude non-cash charges, such as
depreciation and amortization and share-based compensation expense
from our adjusted EBITDA because the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of our business operations. We believe it is useful to
exclude income tax provision (benefit); interest income (expense),
net; transaction related costs; changes in the fair value of equity
warrants; and litigation matters and other items which are not
components of our core business operations. We believe it is useful
to exclude severance and exit costs because these expenses
represent temporary initiatives to realign resources and enhance
operational efficiency, which are not components of our core
business operations. Adjusted EBITDA has limitations as a financial
measure and you should not consider it in isolation or as a
substitute for analysis of our results as reported under GAAP. Some
of these limitations are:
- although depreciation and amortization are non-cash charges,
the assets being depreciated and amortized may have to be replaced
in the future and adjusted EBITDA does not reflect capital
expenditure requirements for such replacements or for new capital
expenditures;
- adjusted EBITDA does not reflect share-based compensation and
related taxes. Share-based compensation has been, and will continue
to be for the foreseeable future, a recurring expense in our
business and an important part of our compensation strategy;
- adjusted EBITDA does not reflect interest income (expense),
net; or changes in, or cash requirements for, our working
capital;
- adjusted EBITDA does not reflect transaction related costs and
other items which are either not representative of our underlying
operations or are incremental costs that result from an actual or
planned transaction or initiative and include changes in the fair
value of equity warrants, severance and exit costs, litigation
matters, integration consulting fees, internal salaries and wages
(to the extent the individuals are assigned full-time to
integration and transformation activities) and certain costs
related to integrating and converging IT systems; and
- other companies, including companies in our industry, may
calculate adjusted EBITDA differently, which reduces its usefulness
as a comparative measure.
Because of these limitations, you should consider adjusted
EBITDA and adjusted EBITDA margin alongside other financial
performance measures, including various cash flow metrics, net
income (loss), net margin, and our other GAAP results.
The following table presents a reconciliation of net income to
adjusted EBITDA, as well as the calculation of net margin and
adjusted EBITDA margin, for each of the periods indicated.
(in thousands, except percentages)
13 Weeks Ended
26 Weeks Ended
Reconciliation of Net Income to
Adjusted EBITDA
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net income
$
299,117
$
20,207
$
366,014
$
43,066
Add (deduct):
Depreciation and amortization
28,455
27,814
56,455
56,712
Share-based compensation expense and
related taxes
82,467
68,302
151,951
122,079
Interest income, net
(12,921
)
(8,928
)
(27,444
)
(16,944
)
Change in fair value of equity
warrants
(1,125
)
(29,192
)
(442
)
(20,258
)
Income tax (benefit) provision
(252,604
)
1,304
(241,121
)
2,307
Exit costs
—
5,260
—
7,617
Transaction related costs
481
2,126
471
2,126
Other
965
1,254
1,875
2,315
Adjusted EBITDA
$
144,835
$
88,147
$
307,759
$
199,020
Net sales
$
2,858,589
$
2,785,302
$
5,736,314
$
5,575,941
Net margin
10.5
%
0.7
%
6.4
%
0.8
%
Adjusted EBITDA margin
5.1
%
3.2
%
5.4
%
3.6
%
Adjusted Net Income (Loss) and Adjusted Basic and Diluted
Earnings (Loss) per Share
To provide investors with additional information regarding our
financial results, we have disclosed in this earnings release
adjusted net income (loss) and adjusted basic and diluted earnings
(loss) per share, which represent non-GAAP financial measures. We
calculate adjusted net income (loss) as net income (loss) excluding
share-based compensation expense and related taxes, changes in
valuation allowances associated with deferred tax assets, changes
in the fair value of equity warrants, and severance and exit costs.
We calculate adjusted basic and diluted earnings (loss) per share
by dividing adjusted net income (loss) attributable to common
stockholders by the weighted-average shares outstanding during the
period. We have provided a reconciliation below of adjusted net
income to net income, the most directly comparable GAAP financial
measure.
We have included adjusted net income (loss) and adjusted basic
and diluted earnings (loss) per share in this earnings release
because each is a key measure used by our management and board of
directors to evaluate our operating performance, generate future
operating plans and make strategic decisions regarding the
allocation of capital. In particular, the exclusion of certain
expenses in calculating adjusted net income (loss) and adjusted
basic and diluted earnings (loss) per share facilitates operating
performance comparability across reporting periods by removing the
effect of non-cash expenses and certain variable gains and losses
that do not represent a component of our core business operations.
We believe it is useful to exclude non-cash share-based
compensation expense because the amount of such expenses in any
specific period may not directly correlate to the underlying
performance of our business operations. We believe it is useful to
exclude changes in valuation allowances associated with deferred
tax assets as this is not a component of our core business
operations. We believe it is useful to exclude changes in the fair
value of equity warrants because the variability of equity warrant
gains and losses is not representative of our underlying
operations. We believe it is useful to exclude severance and exit
costs because these expenses represent temporary initiatives to
realign resources and enhance operational efficiency, which are not
components of our core business operations. Accordingly, we believe
that these measures provide useful information to investors and
others in understanding and evaluating our operating results in the
same manner as our management and board of directors.
Adjusted net income (loss) and adjusted basic and diluted
earnings (loss) per share have limitations as financial measures
and you should not consider them in isolation or as substitutes for
analysis of our results as reported under GAAP. Other companies may
calculate adjusted net income (loss) and adjusted basic and diluted
earnings (loss) per share differently, which reduces their
usefulness as comparative measures. Because of these limitations,
you should consider adjusted net income (loss) and adjusted basic
and diluted earnings (loss) alongside other financial performance
measures, including various cash flow metrics, net income (loss),
basic and diluted earnings (loss) per share, and our other GAAP
results.
The following table presents a reconciliation of net income to
adjusted net income, as well as the calculation of adjusted basic
and diluted earnings per share, for each of the periods
indicated.
(in thousands, except per share data)
13 Weeks Ended
26 Weeks Ended
Reconciliation of Net Income to
Adjusted Net Income
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net income
$
299,117
$
20,207
$
366,014
$
43,066
Add (deduct):
Share-based compensation expense and
related taxes
82,467
68,302
151,951
122,079
Change in fair value of equity
warrants
(1,125
)
(29,192
)
(442
)
(20,258
)
Deferred income tax benefit
(275,669
)
—
(275,669
)
—
Exit costs
—
5,260
—
7,617
Adjusted net income
$
104,790
$
64,577
$
241,854
$
152,504
Weighted-average common shares used in
computing earnings per share and adjusted earnings per share:
Basic
429,377
428,618
432,125
427,735
Effect of dilutive share-based awards
8,505
2,958
5,028
3,289
Diluted
437,882
431,576
437,153
431,024
Earnings per share attributable to common
Class A and Class B stockholders
Basic
$
0.70
$
0.05
$
0.85
$
0.10
Diluted
$
0.68
$
0.05
$
0.84
$
0.10
Adjusted basic
$
0.24
$
0.15
$
0.56
$
0.36
Adjusted diluted
$
0.24
$
0.15
$
0.55
$
0.35
Free Cash Flow
To provide investors with additional information regarding our
financial results, we also disclose free cash flow, a non-GAAP
financial measure that we calculate as net cash provided by (used
in) operating activities less capital expenditures (which consist
of purchases of property and equipment, capitalization of labor
related to our websites, mobile applications, software development,
and leasehold improvements). We have provided a reconciliation
below of free cash flow to net cash provided by (used in) operating
activities, the most directly comparable GAAP financial
measure.
We have included free cash flow because it is used by our
management and board of directors as an important indicator of our
liquidity as it measures the amount of cash we generate.
Accordingly, we believe that free cash flow provides useful
information to investors and others in understanding and evaluating
our operating results in the same manner as our management and
board of directors.
Free cash flow has limitations as a financial measure and you
should not consider it in isolation or as a substitute for analysis
of
our results as reported under GAAP. There are limitations to
using non-GAAP financial measures, including that other companies,
including companies in our industry, may calculate free cash flow
differently. Because of these limitations, you should consider free
cash flow alongside other financial performance measures, including
net cash provided by (used in) operating activities, capital
expenditures and our other GAAP results.
The following table presents a reconciliation of net cash
provided by operating activities to free cash flow for each of the
periods indicated.
(in thousands)
13 Weeks Ended
26 Weeks Ended
Reconciliation of Net Cash Provided by
Operating Activities to Free Cash Flow
July 28, 2024
July 30, 2023
July 28, 2024
July 30, 2023
Net cash provided by operating
activities
$
123,410
$
158,575
$
205,347
$
307,287
Deduct:
Capital expenditures
(31,926
)
(57,644
)
(61,225
)
(79,217
)
Free Cash Flow
$
91,484
$
100,931
$
144,122
$
228,070
Free cash flow may be affected in the near to medium term by the
timing of capital investments (such as the launch of new
fulfillment centers, pharmacy facilities, veterinary clinics,
customer service infrastructure, and corporate offices and
purchases of IT and other equipment), fluctuations in our growth
and the effect of such fluctuations on working capital, and changes
in our cash conversion cycle due to increases or decreases of
vendor payment terms as well as inventory turnover.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240828532036/en/
Investor Contact: Jennifer Hsu ir@chewy.com
Media Contact: Diane Pelkey dpelkey@chewy.com
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