In an impressive showing for the fiscal second quarter, Chewy, the leading online pet store, reported earnings that exceeded analysts' expectations, while also raising its full-year guidance for core profit margins. During the quarter ended July 28, Chewy's adjusted earnings reached $0.24 per share, a notable increase from $0.15 per share in the same period last year, surpassing the consensus estimate of $0.21, according to data from Capital IQ.
Furthermore, the company experienced a year-over-year sales increase of 2.6%, totaling $2.86 billion, which aligned closely with market forecasts. Following this positive news, Chewy's stock surged by 10% during trading on Wednesday. Chief Executive Officer Sumit Singh highlighted the company's strategic focus during the earnings call, stating, "Our (second-quarter) results reflect another quarter of strong execution against our strategic priorities.
We delivered top line growth at the high end of our guidance range, continued significant adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) margin expansion and compelling free cash flow generation." During the quarter, the company reported that the net sales per active customer rose to $565, compared to $532 in the same period of the previous year.
Additionally, Chewy's Autoship business experienced a robust growth of 5.8%, generating $2.24 billion in revenue. The gross margin increased by 120 basis points to reach 29.5% year over year, while the adjusted EBITDA margin climbed by 190 basis points to 5.1%. Looking ahead to fiscal 2024, Chewy maintains its sales forecast in the range of $11.6 billion to $11.8 billion, which translates to an anticipated growth of 4% to 6% over the fiscal 2023 top line.
The company has also revised its adjusted EBITDA margin expectations to between 4.5% and 4.7% for the fiscal year, a positive adjustment from its previous guidance of 4.1% to 4.3%. Chief Financial Officer David Reeder shared insights on the firm's strategic approach, noting, "This second increase of the year demonstrates our continued execution towards a richer product mix and the increasing leverage in our business model." For the current quarter, Chewy anticipates sales will be between $2.84 billion and $2.86 billion, reflecting an annual growth rate of 3% to 4%.
Notably, Wedbush Securities commented in a client note that Chewy is experiencing benefits from a rapidly expanding high-margin sponsored advertising program, alongside disciplined promotional strategies and a scalable business model that enables solid flow-through of revenue growth, even in a challenging market for demand. The stock price noted at the time of the earnings report was $28.44, reflecting a change of +2.58, which accounts for a percentage change of +9.98..