US specialist retailer Chewy (CHWY:NYSE) is a pretty similar beast to UK-listed Pets at Home (PETS), selling pet food, treats and toys while also offering grooming and veterinary services.
Like Pets at Home, the shares have come back to earth having gone somewhat stratospheric during the pandemic when many people on both sides of the Atlantic introduced a new furry or feathered friend into their household.
Today the stock trades at around $40 compared to more than $100 in early 2021. However, one area where a comparison with Pets at Home does not match up is valuation.
Chewy trades on 50.9 times forecast earnings for the 12 months to 31 January 2027, Pets by contrast is on a PE (price-to-earnings) ratio of around 12 times.
Chewy’s first-quarter numbers (12 June) got a mixed reception, albeit following a strong run for the shares heading into the results.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortisation) came in at $192.7 million, an increase of 18.3% from $162.9 million reported a year earlier.
The adjusted EBITDA margin increased 50 basis points year-on-year to 6.2%, while revenue and earnings per share were ahead of expectations.
Yet a soggy outlook did little for sentiment, and when the firm posts second-quarter earnings on 9 September investors will be looking at just how much lower the adjusted EBITDA margin is versus the first three months of the year after the company warned of a modest decline.
The group also said it expected second-quarter net sales to be between $3.06 billion and $3.09 billion, representing year-over-year growth of around 7% to 8%.
Beyond the numbers, the focus is likely to be on commentary around current trading and whether pet owners are proving as willing to spend lavishly on their animal companions as they have been historically.
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