Chewy, Inc 10-Q for FY2023 Q2

Chewy, Inc. (CHWY)

10-Q 2022-08-30 For: 2022-07-31

Added on April 09, 2026

About this 10-Q

Chewy, Inc filed this 10-Q on August 30, 2022, covering the quarter ended July 31, 2022 (FY2023 Q2).

Headline figures

Quarter ended July 31, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $2.43B; up 12.8% from $2.16B a year earlier
Net income: $22.35M; compared with a net loss of $16.69M a year earlier
Diluted EPS: $0.05; compared with -$0.04 a year earlier

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Delaware						90-1020167
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)
7700 West Sunrise Boulevard, Plantation, Florida						33322
(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 August 23, 2022
Class A Common Stock, $0.01 par value per share						111,527,385
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 July 31 , 2022 and January 30, 2022	2
	Condensed Consolidated Statements of Operations for the Thirteen and Twenty-Six Weeks Ended July 31 , 2022 and August 1 , 2021	3
	Condensed Consolidated Statements of Stockholders’ Equity (Deficit) for the Thirteen and Twenty-Six Weeks Ended July 3 1, 2022 and August 1 , 2021	4
	Condensed Consolidated Statements of Cash Flows for the Thirteen and Twenty-Six Weeks Ended July 3 1, 2022 and August 1 , 2021	6
	Notes to Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23
Item 4.	Controls and Procedures	23
	PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	24
Item 1A.	Risk Factors	24

Item 6.	Exhibits	24
	SIGNATURES	25


	As of
	July 31, 2022		January 30, 2022
Assets	(Unaudited)
Current assets:
Cash and cash equivalents	$	606,800	$	603,079
Accounts receivable	143,805		123,510
Inventories	707,921		560,430
Prepaid expenses and other current assets	46,902		36,513
Total current assets	1,505,428		1,323,532
Property and equipment, net	431,554		367,166
Operating lease right-of-use assets	411,231		372,693
Other non-current assets	20,300		22,890
Total assets	$	2,368,513	$	2,086,281
Liabilities and stockholders’ equity
Current liabilities:
Trade accounts payable	$	1,049,390	$	883,316
Accrued expenses and other current liabilities	728,916		761,563
Total current liabilities	1,778,306		1,644,879
Operating lease liabilities	456,701		410,168
Other long-term liabilities	16,115		16,498
Total liabilities	2,251,122		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 July 31, 2022 and January 30, 2022	—		—
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 111,458,932 and 108,918,032 shares issued and outstanding as of July 31, 2022 and January 30, 2022, respectively	1,114		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 July 31, 2022 and January 30, 2022	3,112		3,112
Additional paid-in capital	2,083,123		2,021,310
Accumulated deficit	(1,969,958)		(2,010,775)
Total stockholders’ equity	117,391		14,736
Total liabilities and stockholders’ equity	$	2,368,513	$	2,086,281


	13 Weeks Ended				26 Weeks Ended
	July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021
Net sales	$	2,431,011	$	2,155,036	$	4,859,338	$	4,290,214
Cost of goods sold	1,748,214		1,561,582		3,508,721		3,106,984
Gross profit	682,797		593,454		1,350,617		1,183,230
Operating expenses:
Selling, general and administrative	516,983		437,672		1,021,266		843,892
Advertising and marketing	144,159		171,968		288,880		316,403
Total operating expenses	661,142		609,640		1,310,146		1,160,295
Income (loss) from operations	21,655		(16,186)		40,471		22,935
Interest income (expense), net	690		(500)		346		(902)
Income (loss) before income tax provision	22,345		(16,686)		40,817		22,033
Income tax provision	—		—		—		—
Net income (loss)	$	22,345	$	(16,686)	$	40,817	$	22,033

Earnings (loss) per share attributable to common Class A and Class B stockholders:
Basic	$	0.05	$	(0.04)	$	0.10	$	0.05
Diluted	$	0.05	$	(0.04)	$	0.10	$	0.05
Weighted-average common shares used in computing earnings per share:
Basic	421,690		416,665		421,048		415,957
Diluted	426,833		416,665		426,772		427,458


	13 Weeks Ended July 31, 2022
	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of May 1, 2022	420,606	$	4,206	$	2,046,707	$	(1,992,303)	$	58,610

Share-based compensation expense	—	—		38,377		—		38,377
Vesting of share-based compensation awards	1,948	19		(19)		—		—
Distribution to parent	93	1		(1)		—		—
Tax withholdings for share-based compensation awards	—	—		(4)		—		(4)
Tax sharing agreement with related parties	—	—		(1,937)		—		(1,937)
Net income	—	—		—		22,345		22,345
Balance as of July 31, 2022	422,647	$	4,226	$	2,083,123	$	(1,969,958)	$	117,391

	13 Weeks Ended August 1, 2021
	Class A and Class B Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Stockholders’ Equity
	Shares	Amount
Balance as of May 2, 2021	415,395	$	4,154	$	1,963,107	$	(1,898,239)	$	69,022

Share-based compensation expense	—	—		21,778		—		21,778
Vesting of share-based compensation awards	2,274	23		(23)		—		—
Distribution to parent	93	1		(1)		—		—

Tax sharing agreement with related parties	—	—		939		—		939
Net loss	—	—		—		(16,686)		(16,686)
Balance as of August 1, 2021	417,762	$	4,178	$	1,985,800	$	(1,914,925)	$	75,053



	26 Weeks Ended July 31, 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	—	—		64,171		—		64,171
Vesting of share-based compensation awards	2,501	25		(25)		—		—
Tax withholdings for share-based compensation awards	(53)	(1)		(2,471)		—		(2,472)
Distribution to parent	93	1		(1)		—		—

Tax sharing agreement with related parties	—	—		139		—		139
Net income	—	—		—		40,817		40,817
Balance as of July 31, 2022	422,647	$	4,226	$	2,083,123	$	(1,969,958)	$	117,391

	26 Weeks Ended August 1, 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	—	—		44,884		—		44,884
Vesting of share-based compensation awards	2,623	27		(27)		—		—
Distribution to parent	93	1		(1)		—		—

Tax sharing agreement with related parties	—	—		10,140		—		10,140

Net income	—	—		—		22,033		22,033
Balance as of August 1, 2021	417,762	$	4,178	$	1,985,800	$	(1,914,925)	$	75,053


	As of
	July 31, 2022		January 30, 2022
Outbound fulfillment	$	378,958	$	389,548
Advertising and marketing	84,333		86,285
Payroll liabilities	72,150		70,556
Accrued expenses and other	193,475		215,174
Total accrued expenses and other current liabilities	$	728,916	$	761,563


		As of
Leases	Balance Sheet Classification	July 31, 2022		January 30, 2022
Assets
Operating	Operating lease right-of-use assets	$	411,231	$	372,693
Total operating lease assets		$	411,231	$	372,693

Liabilities
Current
Operating	Accrued expenses and other current liabilities	$	22,841	$	24,225
Non-current
Operating	Operating lease liabilities	456,701		410,168
Total operating lease liabilities		$	479,542	$	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	(2,080)	$	36.24
Forfeited	(218)	$	36.73
Unvested and outstanding as of July 31, 2022	4,361	$	36.24


	Number of RSUs	Weighted-Average Grant Date Fair Value
Unvested and outstanding as of January 30, 2022	3,207	$	68.96
Granted	7,487	$	42.79
Vested	(516)	$	73.90
Forfeited	(883)	$	55.01
Unvested and outstanding as of July 31, 2022	9,295	$	48.93


	13 Weeks Ended								26 Weeks Ended
(in thousands, except net sales per active customer and percentages)	July 31, 2022			August 1, 2021			% Change		July 31, 2022			August 1, 2021			% Change
Financial and Operating Data
Net sales	$	2,431,011		$	2,155,036		12.8	%	$	4,859,338		$	4,290,214		13.3	%
Net income (loss)(1)	$	22,345		$	(16,686)		233.9	%	$	40,817		$	22,033		85.3	%
Net margin	0.9		%	(0.8)		%			0.8		%	0.5		%
Adjusted EBITDA(2)	$	83,055		$	23,272		256.9	%	$	143,571		$	100,626		42.7	%
Adjusted EBITDA margin(2)	3.4		%	1.1		%			3.0		%	2.3		%
Net cash provided by operating activities	$	49,172		$	85,085		(42.2)	%	$	131,605		$	183,451		(28.3)	%
Free cash flow(2)	$	981		$	60,253		(98.4)	%	$	7,393		$	119,737		(93.8)	%
Active customers	20,490			20,077			2.1	%	20,490			$	20,077		2.1	%
Net sales per active customer	$	462		$	404		14.4	%	$	462		$	404		14.4	%
Autoship customer sales	$	1,776,583		$	1,513,944		17.3	%	$	3,530,264		$	2,994,184		17.9	%
Autoship customer sales as a percentage of net sales	73.1		%	70.3		%			72.6		%	69.8		%

(1) Includes share-based compensation expense, including related taxes, of $39.7 million and $66.9 million for the thirteen and twenty-six weeks ended July 31, 2022, respectively, compared to $25.6 million and $50.4 million for the thirteen and twenty-six weeks ended August 1, 2021, respectively.

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


($ in thousands, except percentages)	13 Weeks Ended						26 Weeks Ended
Reconciliation of Net Income (Loss) to Adjusted EBITDA	July 31, 2022			August 1, 2021			July 31, 2022			August 1, 2021
Net income (loss)	$	22,345		$	(16,686)		$	40,817		$	22,033
Add:
Depreciation and amortization	20,338			12,691			37,678			24,117
Share-based compensation expense and related taxes	39,739			25,589			66,933			50,361
Interest (income) expense, net	(690)			500			(346)			902

Transaction related costs	237			140			1,395			971
Other	1,086			1,038			(2,906)			2,242
Adjusted EBITDA	$	83,055		$	23,272		$	143,571		$	100,626
Net sales	$	2,431,011		$	2,155,036		$	4,859,338		$	4,290,214
Net margin	0.9		%	(0.8)		%	0.8		%	0.5		%
Adjusted EBITDA margin	3.4		%	1.1		%	3.0		%	2.3		%


	As of
	July 31, 2022		January 30, 2022
Cash	$	414,839	$	401,119
Level 1 securities:
Money market funds	127,000		67,000
Commercial paper	64,961		74,965
U.S. Treasury securities	—		59,995

Cash and cash equivalents	$	606,800	$	603,079


	As of
	July 31, 2022		January 30, 2022
Furniture, fixtures and equipment	$	197,069	$	132,727
Computer equipment	60,740		55,164
Internal-use software	112,316		95,302
Leasehold improvements	163,742		153,797
Construction in progress	86,391		85,043
	620,258		522,033
Less: accumulated depreciation and amortization	188,704		154,867
Property and equipment, net	$	431,554	$	367,166


	13 Weeks Ended								26 Weeks Ended
($ in thousands)	July 31, 2022		August 1, 2021		$ Change		% Change		July 31, 2022		August 1, 2021		$ Change		% Change
Consumables	$	1,712,832	$	1,483,954	$	228,878	15.4	%	$	3,410,971	$	2,938,967	$	472,004	16.1	%
Hardgoods	290,804		318,593		(27,789)		(8.7)	%	606,828		662,222		(55,394)		(8.4)	%
Other	427,375		352,489		74,886		21.2	%	841,539		689,025		152,514		22.1	%
Net sales	$	2,431,011	$	2,155,036	$	275,975	12.8	%	$	4,859,338	$	4,290,214	$	569,124	13.3	%


			CHEWY, INC.





Date:	August 30, 2022	By:	/s/ Mario Marte
			Mario Marte
			Chief Financial Officer
			(Principal Financial Officer)


	13 Weeks Ended								26 Weeks Ended
							% of net sales										% of net sales
($ in thousands)	July 31, 2022		August 1, 2021		% Change		July 31, 2022		August 1, 2021		July 31, 2022		August 1, 2021		% Change		July 31, 2022		August 1, 2021
Consolidated Statements of Operations
Net sales	$	2,431,011	$	2,155,036	12.8	%	100.0	%	100.0	%	$	4,859,338	$	4,290,214	13.3	%	100.0	%	100.0	%
Cost of goods sold	1,748,214		1,561,582		12.0	%	71.9	%	72.5	%	3,508,721		3,106,984		12.9	%	72.2	%	72.4	%
Gross profit	682,797		593,454		15.1	%	28.1	%	27.5	%	1,350,617		1,183,230		14.1	%	27.8	%	27.6	%
Operating expenses:
Selling, general and administrative	516,983		437,672		18.1	%	21.3	%	20.3	%	1,021,266		843,892		21.0	%	21.0	%	19.7	%
Advertising and marketing	144,159		171,968		(16.2)	%	5.9	%	8.0	%	288,880		316,403		(8.7)	%	5.9	%	7.4	%
Total operating expenses	661,142		609,640		8.4	%	27.2	%	28.3	%	1,310,146		1,160,295		12.9	%	27.0	%	27.0	%
Income (loss) from operations	21,655		(16,186)		233.8	%	0.9	%	(0.8)	%	40,471		22,935		76.5	%	0.8	%	0.5	%
Interest income (expense), net	690		(500)		238.0	%	—	%	—	%	346		(902)		138.4	%	—	%	—	%
Income (loss) before income tax provision	22,345		(16,686)		233.9	%	0.9	%	(0.8)	%	40,817		22,033		85.3	%	0.8	%	0.5	%
Income tax provision	—		—		—	%	—	%	—	%	—		—		—	%	—	%	—	%
Net income (loss)	$	22,345	$	(16,686)	233.9	%	0.9	%	(0.8)	%	$	40,817	$	22,033	85.3	%	0.8	%	0.5	%


Date:	August 30, 2022	/s/ Sumit Singh
		Sumit Singh
		Chief Executive Officer
		(Principal Executive Officer)