Chewy Inc (NYSE:CHWY) stock fell 1.96% (As on December 7, 11:22:10 AM UTC-4, Source: Google Finance) after the company posted mixed result for the third quarter of FY 23 and cut its annual sales forecast on weakening demand for pet products. The company has been grappling with softening sales as inflation-hit customers trade down from wet pet food to dry pet food. Autoship customer sales continued to outpace overall top-line growth and were up nearly 13% in the quarter and represented over 76% of net sales. Nondiscretionary consumables and health categories anchor the business, collectively representing approximately 85% of third quarter net sales. Pharmacy continued to grow at a premium to the overall company and now represents north of $1 billion business for the company based on trailing 12-month net sales. The company had launched Chewy Canada at the end of September, bringing Chewy’s compelling value proposition to millions of pet parents in Canada. Initial customer demand has been strong. Autoship sign-up rates are healthy, the delivery experience is compelling, and customer satisfaction is high.

CHWY in the third quarter of FY 23 has reported the adjusted earnings per share of 15 cents, beating the analysts’ estimates for the adjusted earnings per share of 9 cents. The company had reported the adjusted revenue growth of 8.2 percent to $2.74 billion in the third quarter of FY 23, missing the analysts’ estimates for revenue of $2.76 billion. The company reported gross margin of 28.5%, which is a new record in itself. Strength in gross margins reflects mix/rate benefits, tightly managing promotional spend, and strong performance in logistics by the team.

For Q4/23, the company expects net sales to be in the range of $2.78-$2.80B, missing the consensus estimate of $2.93B.

For the full year, the company sees net sales at $11.08-$11.10B, again worse than the consensus of $11.25B.

Furthermore, the company announced the appointment of David Reeder as CFO, effective February 14, 2024. Reeder will join Chewy next year February and replace interim CFO Stacy Bowman who will continue to serve as chief accounting officer.

Meanwhile, in November, as part of the 2024 strategic planning process, the company implemented actions to reduce the headcount in certain areas of the organization. This decision was carefully considered as part of the ongoing focus on becoming an ever more agile and disciplined company and aligns the efforts into priorities, which the company believes will gain the company the most significant customer wins and generate the highest business returns.