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Chewy swings to surprise profit, but warns of labor shortages, supply disruptions

Chewy swings to surprise profit, but warns of labor shortages, supply disruptions

Chewy Inc. surprised Wall Street late Thursday with a quarterly profit, but the stock headed lower as the pet-products retailer said it was facing labor shortages and supply problems that led it to run out of some items.

Chewy
CHWY,
+2.03%
said it earned $38.7 million, or 9 cents a share, in the first quarter, contrasting with a loss of $47.9 million, or 12 cents a share, in the year-ago period. Sales rose 32% to $2.14 billion, the company said.

Analysts polled by FactSet had expected the retailer to report a GAAP loss of 3 cents a share on sales of $2.12 billion. Chewy also raised sales guidance for the year.

Chewy shares fell more than 3% in the extended session, after ending the regular trading day up 2%.

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“Fiscal 2021 continues to be a busy and exciting year for Chewy,” the company said in a letter to shareholders. “Our strategy remains intact, demand remains strong, and we remain bullish about our future and our ability to maintain our pace of execution.”

The company is “not immune,” however, to labor shortages as it seeks to expand its fulfillment centers or “supply-chain challenges that are causing elevated out-of-stock issues across the retail landscape,” it said.

“Yet, as we net the tailwinds and headwinds against each other, our outlook still comes out more positive than it was when we gave our first 2021 guidance in March,” the company said.

Chewy raised its net sales guidance for fiscal 2021 to a range between $8.9 billion and $9 billion, or year-on-year growth between 25% and 26%. It guided for fiscal second-quarter sales between $2.15 billion and $2.17 billion.

The analysts polled by FactSet expect the retailer to report second-quarter sales of $2.13 billion and fiscal 2021 sales of $8.9 billion.

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