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Is Chewy Inc. (CHWY) a good stock to buy?

Pet supplies retailer Chewy Inc. (NYSE: CHWY), like many other e-commerce businesses, is facing macro pressures. Rising fuel costs, inflation, and rising labor costs could have a negative impact on profits. However, Chewy’s strategy has allowed the company to only marginally cut margins, which is a big achievement in the current environment.

In the first quarter of the fiscal year 2022, Chewy Inc. (CHWY)’s gross margin fell 10 basis points to 27.5%. This was a very good result for a company operating in the consumer market, as the entire industry is now struggling with high fuel prices and labor shortages.

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At the same time, the company, even in difficult conditions, was able to increase net sales in the first financial quarter by 13.7% year on year. To achieve only a slight drop in the margin allowed the optimization of work.

For example, the stock allocation has been adjusted to reduce more expensive long-distance deliveries. The company also began processing incoming inventory in bulk, which reduced costs. In addition, Chewy Inc. (CHWY) continues to expand operations at its new automated facilities. As a rule, costs in such facilities are 19% lower than in older warehouses.

Note that between 2016 and 2022, Chewy Inc. (CHWY) revenue increased from $901 million to $8.9 billion. During the same period, the gross profit margin increased from 16.6% to 26.7%.

Shares of Chewy Inc. (NYSE: CHWY) are up 6.29 percent over the past week but are down -0.95 percent over the past three months. In the past six months, the stock’s price has plummeted -31.25 percent, but year-to-date trade has seen a -31.25 percent decline.

Despite the company’s impressive recent performance, investors’ general interest in the stock has significantly decreased. Due to this, its trading volume has decreased by -0.8%, which is below normal given the stock’s usual volumes. Given that the market is exposed to 87.75 million shares of the firm, this information is essential since it shows the amount of the float for the stocks.

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