Friday File: AdTech to the Lock Box

A new stock shoved into the lockbox, plus updates on DocuSign, Stitch Fix, Chewy, Dream Finders Homes and more...

By Travis Johnson, Stock Gumshoe, June 11, 2021

Today I’ll start us out with some relatively minor updates on Real Money Portfolio companies, then I’ve got a new stock for the $100K Lock Box to talk about.

Chewy (CHWY)

Chewy (CHWY), everyone’s favorite online pet food and accessory retailer, had yet another strong quarter as, believe it or not, those people who rushed out to get a puppy during the pandemic still have dogs… and those dogs get bigger and eat more food, and still, even when the pandemic is mostly over for folks in the US, nobody really wants to drive to the pet store and lug home a 40lb bag of kibble.  We’ve all got better stuff to do.

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There’s competition, of course, but pet owners are as loyal as their charges — and Chewy turns that into money by getting most people on an autoship program for dog and cat food (and other stuff) automatically sending you a new bag or case or whatever on whatever schedule you expect to need… they’re now up to almost 70% of sales coming from autoship customers, and that’s a hugely valuable relationship to have with your customer.  As a customer, I have to say it’s a huge convenience, and CHWY is not necessarily the low-cost leader… but the service is fantastic, and it doesn’t really cost more than anyone else, so it’s worth it.

What do the numbers say?  Well, that it’s working — they grew revenues by about 32% over last year’s first quarter, they earned a small profit where none was expected (9 cents/share), they guided to a little bit stronger second quarter than anticipated, but they did also keep the lid on a bit by failing to upgrade their annual forecast dramatically.  They’re expecting to have between $8.9-9.0 billion in revenue this year from their nearly 20 million active customers (and the customer growth has slowed a bit post-pandemic, but remains positive), and analysts were already in that range.  That’s about twice the sales that their newly public rival Petco (WOOF) has, with their bricks-and-mortar stores and competing e-commerce operation, and they were growing much faster than Petco or PetSmart before the pandemic and will, I expect, continue to do so in this new world.   It’s a big company now, with a market cap over $30 billion, and there are some challenges on the horizon with input costs and rising ...

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