Here is why Chewy shares dropped 15%

Chewy Inc. (NYSE: CHWY) was down 15% after releasing its fiscal Q4 and FY 2021 financial results for the period ended  January 30, 2022.

Chewy grew net sales by 24% in 2021

CEO Sumit Singh said:

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Our ability to deliver 24 percent net sales growth in 2021, on top of the outsized growth we delivered last year, reflects the durability of our business and the Pet category beyond the near-term benefits of the pandemic, and is a strong testament to Chewy’s ability to execute in the face of rapidly evolving macro conditions.

For the fourth quarter, the company reported sales of $2.39 billion, a 17% YoY increase. The gross margin was 25.4%, dropping 170 basis points from a year ago. Net loss in Q4 2021 was $63.6 million, and it includes a stock-based compensation charge of $15.8 million.

Chewy posted a net margin of 2.7% in Q4 2021, a drop of 370 basis points from last year. Adjusted EBITDA loss was $28.1 million, which was a drop from $88.9 million a year before. Year over year adjusted EBITDA margin dropped 420 basis points to 1.2%.

The company reported 24% YoY growth in net sales to $8.89 billion for the entire year. The gross margin was 26.7%, an increase of 120 basis points from a year ago. Also, the company had a net loss of around $73.8 million, including a stock-based compensation impairment of $85.3 million. Adjusted EBITDA was $78.6 million dropping from $6.6 million in Q4 2020. In addition, Chewy reported an adjusted EBITDA margin of $0.9%, which was a YoY drop of 30 basis points.

Chewy had net sales per active customer of $430

Singh added:

“Net sales per active customer, or NSPAC, of $430 is a new company high and demonstrates strong customer loyalty and engagement on our platform, as well as our ability to steadily grow share of wallet. As we look to 2022 and beyond, our innovation pipeline remains robust, our strategy remains intact, and we remain optimistic about the growth opportunity ahead of us.”