Chewy IPO: High Growth but No Profits

The highly popular online pet products retailer Chewy (CHWY) booked $3.5 billion in sales for the fiscal year ended February 3, 2019, up 68%, and grew revenue by 45% in the first quarter of its 2020 fiscal year. But, profits remain elusive due to its policy of shipping most orders for free. Here are four things you need to know when Chewy debuts in the coming week.

  1. Chewy sells 45,000 SKUs from 1,600 brands to 11.3 million active

  2. Customers who use autoship account for 66% of net sales, giving Chewy a large source of recurring revenue.

  3. Acquired by PetSmart in 2017 for $3.4 billion, PetSmart is selling 36 million shares on the offering (86% of the 41.6 million shares offered) and will own 70% of the shares outstanding with 77% voting control.

  4. Large retailers, including Walmart and Amazon, are expanding their pet offerings to capitalize on attractive industry dynamics.

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The article Chewy IPO: High Growth but No Profits originally appeared on IPO investment manager Renaissance Capital's web site renaissancecapital.com.

Investment Disclosure: The information and opinions expressed herein were prepared by Renaissance Capital's research analysts and do not constitute an offer to buy or sell any security. Renaissance Capital's Renaissance IPO ETF (symbol: IPO), Renaissance International ETF (symbol: IPOS), or separately managed institutional accounts may have investments in securities of companies mentioned.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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