Chewy Beats Q4 EPS Estimates, Posts Record 2023 Sales and NSPAC; Guides Higher Margins in 2024 Alongside Vet Clinic Expansion

Chewy reported Q4 EPS of $0.11, beating expectations of $0.1. Full-year 2023 net sales grew 10.2% to $11.15B.

Autoship customer sales grew 8% in Q4 and 15% for the full year, outpacing overall sales growth. Net sales per active customer (NSPAC) reached a record $555.

Full-year gross margin expanded 40 bps to 28.4%. Adjusted EBITDA margin improved 30 bps to 3.3%. Generated $342.9M in free cash flow, nearly 3x higher than 2022.

Guidance calls for 2024 net sales growth of 4-6% and adjusted EBITDA margin of ~3.8%, driven by gross margin expansion and SG&A leverage. Expect free cash flow conversion above 80%.

Announced first Chewy Vet Care clinic location in Florida, with 4-8 total clinics expected in 2024. Encouraged by early signals around vet recruitment and customer demand.