Chewy, Inc 10-Q for FY2023 Q1

Chewy, Inc. (CHWY)

10-Q 2022-06-01 For: 2022-05-01

Added on April 09, 2026

About this 10-Q

Chewy, Inc filed this 10-Q on June 1, 2022, covering the quarter ended May 1, 2022 (FY2023 Q1).

Headline figures

Quarter ended May 1, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.43B; up 13.7% from $2.14B a year earlier
Net income: $18.47M; down 52.3% from net income of $38.72M a year earlier
Diluted EPS: $0.04; down 55.6% from $0.09 a year earlier

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Delaware						90-1020167
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
1855 Griffin Road, Suite B-428, Dania Beach, Florida						33004
(Address of principal executive offices)						(Zip Code)


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share	CHWY	New York Stock Exchange


Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐


Class						Outstanding as of May 25, 2022
Class A Common Stock, $0.01 par value per share						109,418,531
Class B Common Stock, $0.01 par value per share						311,188,356


		Page
	PART I. FINANCIAL INFORMATION
Item 1.	Financial Statements (Unaudited)	2
	Condensed Consolidated Balance Sheets as of May 1, 202 2 and January 3 0 , 20 2 2	2
	Condensed Consolidated Statements of Operations for the Thirteen Weeks Ended May 1, 202 2 and M ay 2 , 202 1	3
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Thirteen Weeks Ended May 1, 202 2 and May 2 , 20 2 1	4
	Condensed Consolidated Statements of Cash Flows for the Thirt een Weeks Ended May 1, 202 2 and M a y 2 , 20 21	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	14
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	21
Item 4.	Controls and Procedures	22
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	22
Item 1A.	Risk Factors	22

Item 6.	Exhibits	23
	SIGNATURES	24


	As of
	May 1, 2022		January 30, 2022
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	604,761	$	603,079
Accounts receivable	133,233		123,510
Inventories	598,200		560,430
Prepaid expenses and other current assets	53,185		36,513
Total current assets	1,389,379		1,323,532
Property and equipment, net	403,942		367,166
Operating lease right-of-use assets	371,925		372,693
Other non-current assets	24,798		22,890
Total assets	$	2,190,044	$	2,086,281
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	956,994	$	883,316
Accrued expenses and other current liabilities	740,641		761,563
Total current liabilities	1,697,635		1,644,879
Operating lease liabilities	413,828		410,168
Other long-term liabilities	19,971		16,498
Total liabilities	2,131,434		2,071,545
Commitments and contingencies (Note 4)
Stockholders’ equity:
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding as of May 1, 2022 and January 30, 2022	—		—
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 109,418,531 and 108,918,032 shares issued and outstanding as of May 1, 2022 and January 30, 2022, respectively	1,094		1,089
Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 311,188,356 shares issued and outstanding as of May 1, 2022 and January 30, 2022	3,112		3,112
Additional paid-in capital	2,046,707		2,021,310
Accumulated deficit	(1,992,303)		(2,010,775)
Total stockholders’ equity	58,610		14,736
Total liabilities and stockholders’ equity	$	2,190,044	$	2,086,281


	13 Weeks Ended
	May 1, 2022		May 2, 2021
Net sales	$	2,428,327	$	2,135,178
Cost of goods sold	1,760,507		1,545,402
Gross profit	667,820		589,776
Operating expenses:
Selling, general and administrative	504,283		406,220
Advertising and marketing	144,721		144,435
Total operating expenses	649,004		550,655
Income from operations	18,816		39,121
Interest expense, net	(344)		(402)
Income before income tax provision	18,472		38,719
Income tax provision	—		—
Net income	$	18,472	$	38,719

Earnings per share attributable to common Class A and Class B stockholders:
Basic	$	0.04	$	0.09
Diluted	$	0.04	$	0.09
Weighted-average common shares used in computing earnings per share:
Basic	420,406		415,248
Diluted	426,710		427,597


	13 Weeks Ended May 1, 2022
	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of January 30, 2022	420,106	$	4,201	$	2,021,310	$	(2,010,775)	$	14,736

Share-based compensation expense	—	—		25,794		—		25,794
Vesting of share-based compensation awards	553	6		(6)		—		—
Tax withholdings for share-based compensation awards	(53)	(1)		(2,467)		—		(2,468)

Tax sharing agreement with related parties	—	—		2,076		—		2,076
Net income	—	—		—		18,472		18,472
Balance as of May 1, 2022	420,606	$	4,206	$	2,046,707	$	(1,992,303)	$	58,610

	13 Weeks Ended May 2, 2021
	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity (Deficit)
	Shares	Amount
Balance as of January 31, 2021	415,046	$	4,150	$	1,930,804	$	(1,936,958)	$	(2,004)

Share-based compensation expense	—	—		23,106		—		23,106
Vesting of share-based compensation awards	349	4		(4)		—		—


Tax sharing agreement with related parties	—	—		9,201		—		9,201
Net income	—	—		—		38,719		38,719
Balance as of May 2, 2021	415,395	$	4,154	$	1,963,107	$	(1,898,239)	$	69,022


	As of
	May 1, 2022		January 30, 2022
Outbound fulfillment	$	409,550	$	389,548
Advertising and marketing	86,809		86,285
Payroll liabilities	56,825		70,556
Accrued expenses and other	187,457		215,174
Total accrued expenses and other current liabilities	$	740,641	$	761,563


		As of
Leases	Balance Sheet Classification	May 1, 2022		January 30, 2022
Assets
Operating	Operating lease right-of-use assets	$	371,925	$	372,693
Total operating lease assets		$	371,925	$	372,693

Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	22,189	$	24,225
Non-current
Operating	Operating lease liabilities	413,828		410,168
Total operating lease liabilities		$	436,017	$	434,393


	Number of PRSUs	Weighted-Average Grant Date Fair Value
Unvested and outstanding as of January 30, 2022	6,573	$	36.16
Granted	86	$	43.59
Vested	(136)	$	28.99
Forfeited	(113)	$	37.87
Unvested and outstanding as of May 1, 2022	6,410	$	36.38


	Number of RSUs	Weighted-Average Grant Date Fair Value
Unvested and outstanding as of January 30, 2022	3,207	$	68.96
Granted	5,824	$	43.59
Vested	(417)	$	76.66
Forfeited	(256)	$	64.14
Unvested and outstanding as of May 1, 2022	8,358	$	51.04


	13 Weeks Ended
(in thousands, except net sales per active customer and percentages)	May 1, 2022			May 2, 2021			% Change
Financial and Operating Data
Net sales	$	2,428,327		$	2,135,178		13.7	%
Net income (1)	$	18,472		$	38,719		(52.3)	%
Net margin	0.8		%	1.8		%
Adjusted EBITDA(2)	$	60,516		$	77,354		(21.8)	%
Adjusted EBITDA margin(2)	2.5		%	3.6		%
Net cash provided by operating activities	$	82,433		$	98,366		(16.2)	%
Free cash flow(2)	$	6,412		$	59,484		(89.2)	%
Active customers	20,601			19,765			4.2	%
Net sales per active customer	$	446		$	388		14.9	%
Autoship customer sales	$	1,753,681		$	1,480,240		18.5	%
Autoship customer sales as a percentage of net sales	72.2		%	69.3		%

(1) Includes share-based compensation expense, including related taxes, of $27.2 million for the thirteen weeks ended May 1, 2022, compared to $24.8 million for the thirteen weeks ended May 2, 2021.

(2) Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures.


($ in thousands, except percentages)	13 Weeks Ended
Reconciliation of Net Income to Adjusted EBITDA	May 1, 2022			May 2, 2021
Net income	$	18,472		$	38,719
Add:
Depreciation and amortization	17,340			11,426
Share-based compensation expense and related taxes	27,194			24,772
Interest expense, net	344			402

Transaction related costs	1,158			831
Other	(3,992)			1,204
Adjusted EBITDA	$	60,516		$	77,354
Net sales	$	2,428,327		$	2,135,178
Net margin	0.8		%	1.8		%
Adjusted EBITDA margin	2.5		%	3.6		%


($ in thousands)	13 Weeks Ended
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow	May 1, 2022		May 2, 2021
Net cash provided by operating activities	$	82,433	$	98,366
Deduct:
Capital expenditures	(76,021)		(38,882)
Free Cash Flow	$	6,412	$	59,484


	As of
	May 1, 2022		January 30, 2022
Cash	$	452,814	$	401,119
Level 1 securities:
Money market funds	72,000		67,000
Commercial paper	79,947		74,965
U.S. Treasury securities	—		59,995

Cash and cash equivalents	$	604,761	$	603,079


	As of
	May 1, 2022		January 30, 2022
Furniture, fixtures and equipment	$	138,951	$	132,727
Computer equipment	57,035		55,164
Internal-use software	103,936		95,302
Leasehold improvements	160,748		153,797
Construction in progress	113,961		85,043
	574,631		522,033
Less: accumulated depreciation and amortization	170,689		154,867
Property and equipment, net	$	403,942	$	367,166


	13 Weeks Ended
($ in thousands)	May 1, 2022		May 2, 2021		$ Change		% Change
Consumables	$	1,698,139	$	1,455,013	$	243,126	16.7	%
Hardgoods	316,024		343,629		(27,605)		(8.0)	%
Other	414,164		336,536		77,628		23.1	%
Net sales	$	2,428,327	$	2,135,178	$	293,149	13.7	%


			CHEWY, INC.





Date:	June 1, 2022	By:	/s/ Mario Marte
			Mario Marte
			Chief Financial Officer
			(Principal Financial Officer)


	13 Weeks Ended
							% of net sales
($ in thousands)	May 1, 2022		May 2, 2021		% Change		May 1, 2022		May 2, 2021
Consolidated Statements of Operations
Net sales	$	2,428,327	$	2,135,178	13.7	%	100.0	%	100.0	%
Cost of goods sold	1,760,507		1,545,402		13.9	%	72.5	%	72.4	%
Gross profit	667,820		589,776		13.2	%	27.5	%	27.6	%
Operating expenses:
Selling, general and administrative	504,283		406,220		24.1	%	20.8	%	19.0	%
Advertising and marketing	144,721		144,435		0.2	%	6.0	%	6.8	%
Total operating expenses	649,004		550,655		17.9	%	26.7	%	25.8	%
Income from operations	18,816		39,121		(51.9)	%	0.8	%	1.8	%
Interest expense, net	(344)		(402)		14.4	%	—	%	—	%
Income before income tax provision	18,472		38,719		(52.3)	%	0.8	%	1.8	%
Income tax provision	—		—		—	%	—	%	—	%
Net income	$	18,472	$	38,719	(52.3)	%	0.8	%	1.8	%


Date:	June 1, 2022	/s/ Sumit Singh
		Sumit Singh
		Chief Executive Officer
		(Principal Executive Officer)