Chewy Inc.

06/11/2025 | Press release | Distributed by Public on 06/11/2025 05:29

Quarterly Report for Quarter Ending May 4, 2025 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended May 4, 2025 ("10-Q Report") and our audited consolidated financial statements and related notes thereto included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025 ("10-K Report"). This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" sections herein and in our 10-K Report, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context requires otherwise, references in this 10-Q Report to "Chewy," the "Company," "we," "our," or "us" refer to Chewy, Inc. and its consolidated subsidiaries.
Investors and others should note that we may announce material information to our investors using our investor relations website (https://investor.chewy.com/), filings with the SEC, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on these channels could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.
Overview
We are the largest pet e-tailer in the United States, offering virtually every product a pet needs. We launched Chewy in 2011 to bring the best of the neighborhood pet store shopping experience to a larger audience, enhanced by the depth and wide selection of products and services, as well as the around-the-clock convenience, that only e-commerce can offer. We believe that we are the preeminent destination for pet parents as a result of our broad selection of high-quality products and expanded menu of service offerings, which we offer at great prices and deliver with an exceptional level of care and a personal touch. We are the trusted source for pet parents and partners and continually develop innovative ways for our customers to engage with us. We partner with approximately 3,200 of the best and most trusted brands in the pet industry, and we create and offer our own outstanding private brands. Through our websites and mobile applications, we offer our customers approximately 130,000 products, compelling merchandising, an easy and enjoyable shopping experience, and exceptional customer service.
Macroeconomic Considerations
Evolving macroeconomic conditions, including current inflation levels, tariffs, and high interest rates, have affected, and continue to affect, our business and consumer shopping behavior. We continue to monitor conditions closely and adapt aspects of our logistics, transportation, supply chain, and purchasing processes accordingly to meet the needs of our growing community of pets, pet parents and partners. As our customers react to these economic conditions, we will adapt our business accordingly to meet their evolving needs.
We are unable to predict the duration and ultimate impact of evolving macroeconomic conditions on the broader economy or our operations and liquidity. As such, macroeconomic risks and uncertainties remain. Refer to the section titled "Cautionary Note Regarding Forward-Looking Statements" in this 10-Q Report and the section titled "Risk Factors" in Item 1A of our 10-K Report for the fiscal year ended February 2, 2025.
Fiscal Year End
We have a 52- or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Our 2025 fiscal year ends on February 1, 2026 and is a 52-week year. Our 2024 fiscal year ended February 2, 2025 and was a 53-week year.
Key Financial and Operating Data
We measure our business using both financial and operating data and use the following metrics and measures to assess the near-term and long-term performance of our overall business, including identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies, and monitoring our business.
13 Weeks Ended
(in millions, except net sales per active customer, per share data, and percentages)
May 4,
2025 		April 28,
2024 		% Change
Financial and Operating Data
Net sales $ 3,116.0 $ 2,877.7 8.3 %
Net income (1)
$ 62.4 $ 66.9 (6.7) %
Net margin 2.0 % 2.3 %
Adjusted EBITDA (2)
$ 192.7 $ 162.9 18.3 %
Adjusted EBITDA margin (2)
6.2 % 5.7 %
Adjusted net income (2)
$ 148.9 $ 137.1 8.6 %
Earnings per share, basic (1)
$ 0.15 $ 0.15 - %
Earnings per share, diluted (1)
$ 0.15 $ 0.15 - %
Adjusted earnings per share, basic (2)
$ 0.36 $ 0.32 12.5 %
Adjusted earnings per share, diluted (2)
$ 0.35 $ 0.31 12.9 %
Net cash provided by operating activities $ 86.4 $ 81.9 5.5 %
Free cash flow (2)
$ 48.7 $ 52.6 (7.4) %
Active customers 20.756 19.988 3.8 %
Net sales per active customer $ 583 $ 562 3.7 %
Autoship customer sales $ 2,562.7 $ 2,232.9 14.8 %
Autoship customer sales as a percentage of net sales 82.2 % 77.6 %
(1) Includes share-based compensation expense and related taxes of $78.0 million for the thirteen weeks ended May 4, 2025, compared to $69.5 million for the thirteen weeks ended April 28, 2024.
(2)Adjusted EBITDA, adjusted EBITDA margin, adjusted net income, adjusted basic and diluted earnings per share, and free cash flow are non-GAAP financial measures. See Non-GAAP Financial Measures below.
We define net margin as net income divided by net sales and adjusted EBITDA margin as adjusted EBITDA divided by net sales.
Non-GAAP Financial Measures
Adjusted EBITDA and Adjusted EBITDA Margin
To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this 10-Q Report adjusted EBITDA, a non-GAAP financial measure that we calculate as net income excluding depreciation and amortization; share-based compensation expense and related taxes; income tax provision (benefit); interest income (expense), net; transaction related costs; changes in the fair value of equity warrants; severance and exit costs; and litigation matters and other items that we do not consider representative of our underlying operations. We have provided a reconciliation below of adjusted EBITDA to net income, the most directly comparable GAAP financial measure.
We have included adjusted EBITDA and adjusted EBITDA margin in this 10-Q Report because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA and adjusted EBITDA margin facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, we believe that adjusted EBITDA and adjusted EBITDA margin provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
We believe it is useful to exclude non-cash charges, such as depreciation and amortization and share-based compensation expense from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision (benefit); interest income (expense), net; transaction related costs; changes in the fair value of equity warrants; and litigation matters and other items which are not components of our core business operations. We believe it is useful to exclude severance and exit costs because these expenses represent temporary initiatives to realign resources and enhance operational efficiency, which are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
•adjusted EBITDA does not reflect share-based compensation and related taxes. Share-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy;
•adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;
•adjusted EBITDA does not reflect transaction related costs and other items which are either not representative of our underlying operations or are incremental costs that result from an actual or planned transaction or initiative and include changes in the fair value of equity warrants, severance and exit costs, litigation matters, integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems; and
•other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.
Because of these limitations, you should consider adjusted EBITDA and adjusted EBITDA margin alongside other financial performance measures, including various cash flow metrics, net income, net margin, and our other GAAP results.
The following table presents a reconciliation of net income to adjusted EBITDA, as well as the calculation of net margin and adjusted EBITDA margin, for each of the periods indicated:
(in millions, except percentages)
13 Weeks Ended
Reconciliation of Net Income to Adjusted EBITDA
May 4, 2025 April 28, 2024
Net income
$ 62.4 $ 66.9
Add (deduct):
Depreciation and amortization 30.0 28.0
Share-based compensation expense and related taxes 78.0 69.5
Interest income, net (3.2) (14.5)
Change in fair value of equity warrants 2.6 0.7
Income tax provision 15.5 11.5
Severance costs 5.9 -
Transaction related costs 0.1 -
Other 1.4 0.8
Adjusted EBITDA $ 192.7 $ 162.9
Net sales $ 3,116.0 $ 2,877.7
Net margin 2.0 % 2.3 %
Adjusted EBITDA margin 6.2 % 5.7 %
Adjusted Net Income and Adjusted Basic and Diluted Earnings per Share
To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this 10-Q Report adjusted net income and adjusted basic and diluted earnings per share, which represent non-GAAP financial measures. We calculate adjusted net income as net income excluding share-based compensation expense and related taxes, releases of valuation allowances associated with deferred tax assets, changes in the fair value of equity warrants, and severance and exit costs. We calculate adjusted basic and diluted earnings per share by dividing adjusted net income attributable to common stockholders by the weighted-average shares outstanding during the period. We have provided a reconciliation below of adjusted net income to net income, the most directly comparable GAAP financial measure.
We have included adjusted net income and adjusted basic and diluted earnings per share in this 10-Q Report because each is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted net income and adjusted basic and diluted earnings per share facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable gains and losses that do not represent a component of our core business operations. We believe it is useful to exclude non-cash share-based compensation expense because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude releases of valuation allowances associated with deferred tax assets as this is not a component of our core business operations. We believe it is useful to exclude changes in the fair value of equity warrants because the variability of equity warrant gains and losses is not representative of our underlying operations. We believe it is useful to exclude severance and exit costs because these expenses represent temporary initiatives to realign resources and enhance operational efficiency, which are not components of our core business operations. Accordingly, we believe that these measures provide useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Adjusted net income and adjusted basic and diluted earnings per share have limitations as financial measures and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Other companies may calculate adjusted net income and adjusted basic and diluted earnings per share differently, which reduces their usefulness as comparative measures. Because of these limitations, you should consider adjusted net income and adjusted basic and diluted earnings alongside other financial performance measures, including various cash flow metrics, net income, basic and diluted earnings per share, and our other GAAP results.
The following table presents a reconciliation of net income to adjusted net income, as well as the calculation of adjusted basic and diluted earnings per share, for each of the periods indicated:
(in millions, except per share data)
13 Weeks Ended
Reconciliation of Net Income to Adjusted Net Income
May 4, 2025 April 28, 2024
Net income $ 62.4 $ 66.9
Add:
Share-based compensation expense and related taxes 78.0 69.5
Change in fair value of equity warrants 2.6 0.7
Severance costs 5.9 -
Adjusted net income $ 148.9 $ 137.1
Weighted-average common shares used in computing earnings per share and adjusted earnings per share:
Basic 413.7 434.9
Effect of dilutive share-based awards
11.6 1.5
Diluted
425.3 436.4
Earnings per share attributable to common Class A and Class B stockholders
Basic $ 0.15 $ 0.15
Diluted
$ 0.15 $ 0.15
Adjusted basic $ 0.36 $ 0.32
Adjusted diluted
$ 0.35 $ 0.31
Free Cash Flow
To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this 10-Q Report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by operating activities less capital expenditures (which consist of purchases of property and equipment, capitalization of labor related to our websites, mobile applications, software development, and leasehold improvements). We have provided a reconciliation below of free cash flow to net cash provided by operating activities, the most directly comparable GAAP financial measure.
We have included free cash flow in this 10-Q Report because it is used by our management and board of directors as an important indicator of our liquidity as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.
Free cash flow has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate free cash flow differently. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by operating activities, capital expenditures and our other GAAP results.
The following table presents a reconciliation of net cash provided by operating activities to free cash flow for each of the periods indicated:
(in millions)
13 Weeks Ended
Reconciliation of Net Cash Provided by Operating Activities to Free Cash Flow May 4, 2025 April 28, 2024
Net cash provided by operating activities $ 86.4 $ 81.9
Deduct:
Capital expenditures (37.7) (29.3)
Free Cash Flow $ 48.7 $ 52.6
Free cash flow may be affected in the near to medium term by the timing of capital investments (such as the launch of new fulfillment centers, pharmacy facilities, veterinary clinics, customer service infrastructure, and corporate offices and purchases of IT and other equipment), fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle due to increases or decreases of vendor payment terms as well as inventory turnover.
Key Operating Metrics
Active Customers
As of the last date of each reporting period, we determine our number of active customers by counting the total number of individual customers who have ordered a product or service, and for whom a product has shipped or for whom a service has been provided, at least once during the preceding 364-day period. The change in active customers in a reporting period captures both the inflow of new customers and the outflow of customers who have not made a purchase in the last 364 days. We view the number of active customers as a key indicator of our growth, ability to acquire and retain customers as a result of our marketing efforts, and the value we provide to our customers. The number of active customers has grown over time as we acquired new customers and retained previously acquired customers.
Net Sales Per Active Customer
We define net sales per active customer as the aggregate net sales for the preceding four fiscal quarters, divided by the total number of active customers at the end of that period. We view net sales per active customer as a key indicator of our customers' purchasing patterns, including their initial and repeat purchase behavior.
Autoship and Autoship Customer Sales
We define Autoship customers as customers in a given fiscal quarter that had an order shipped through our Autoship subscription program during the preceding 364-day period. We define Autoship as our subscription program, which provides automatic ordering, payment, and delivery of products to our customers. We view our Autoship subscription program as a key driver of recurring net sales and customer retention. For a given fiscal quarter, Autoship customer sales consist of sales and shipping revenues from all Autoship subscription program purchases and purchases outside of the Autoship subscription program by Autoship customers, excluding taxes collected from customers, excluding any refunds, and net of any promotional offers (such as percentage discounts off current purchases and other similar offers) for that quarter. For a given fiscal year, Autoship customer sales equal the sum of the Autoship customer sales for each of the fiscal quarters in that fiscal year.
Autoship Customer Sales as a Percentage of Net Sales
We define Autoship customer sales as a percentage of net sales as the Autoship customer sales in a given reporting period divided by the net sales from all orders in that period. We view Autoship customer sales as a percentage of net sales as a key indicator of our recurring sales and customer retention.
Components of Results of Consolidated Operations
Net Sales
We derive net sales primarily from sales of both third-party brand and private brand pet food, pet products, pet medications and other pet health products, and related shipping fees. Sales of third-party brand and private brand pet food, pet products and shipping revenues are recorded when products are shipped, net of promotional discounts and refunds and allowances. Taxes collected from customers are excluded from net sales. Net sales is primarily driven by growth of new customers and active customers, and the frequency with which customers purchase and subscribe to our Autoship subscription program.
We also periodically provide promotional offers, including discount offers, such as percentage discounts off current purchases and other similar offers. These offers are treated as a reduction to the purchase price of the related transaction and are reflected as a net amount in net sales.
Cost of Goods Sold
Cost of goods sold consists of the cost of third-party brand and private brand products sold to customers, inventory freight, shipping supply costs, inventory shrinkage costs, and inventory valuation adjustments, offset by reductions for promotions and percentage or volume rebates offered by our vendors, which may depend on reaching minimum purchase thresholds. Generally, amounts received from vendors are considered a reduction of the carrying value of inventory and are ultimately reflected as a reduction of cost of goods sold.
Selling, General and Administrative
Selling, general and administrative expenses consist of fulfillment costs incurred in operating and staffing fulfillment centers, customer service centers, and veterinary clinics; payroll and related expenses for employees involved in general corporate functions, including accounting, finance, tax, legal and human resources; costs associated with the use of facilities and equipment, such as depreciation expense and rent; share-based compensation, professional fees and other general corporate costs.
Fulfillment costs include costs attributable to buying, receiving, inspecting and warehousing inventories, picking, packaging and preparing customer orders for shipment, payment processing, providing pet health services, and responding to inquiries from customers. Included within fulfillment costs are merchant processing fees charged by third parties that provide merchant processing services for credit cards.
Advertising and Marketing
Advertising and marketing expenses consist of advertising and payroll related expenses for personnel engaged in marketing, business development and selling activities.
Interest and Other Income (Expense), net
We generate interest income from our cash and cash equivalents and marketable securities. We incur interest expense in relation to our borrowing facilities, finance leases, and uncertain tax positions.
Our other income (expense), net consists of changes in the fair value of equity warrants, equity investments, tax indemnification receivables, foreign currency transaction gains and losses, and allowances for credit losses.
Results of Consolidated Operations
The following tables set forth our results of operations for the periods presented and express the relationship of certain line items as a percentage of net sales for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results:
13 Weeks Ended
% of net sales
(in millions, except percentages) May 4,
2025 		April 28,
2024 		% Change May 4,
2025 		April 28,
2024
Consolidated Statements of Operations
Net sales $ 3,116.0 $ 2,877.7 8.3 % 100.0 % 100.0 %
Cost of goods sold 2,192.2 2,023.7 8.3 % 70.4 % 70.3 %
Gross profit 923.8 854.0 8.2 % 29.6 % 29.7 %
Operating expenses:
Selling, general and administrative 653.1 602.6 8.4 % 21.0 % 20.9 %
Advertising and marketing 193.8 186.8 3.7 % 6.2 % 6.5 %
Total operating expenses 846.9 789.4 7.3 % 27.2 % 27.4 %
Income from operations 76.9 64.6 19.0 % 2.5 % 2.2 %
Interest and other income, net 1.0 13.8 (92.8) % 0.0 % 0.5 %
Income before income tax provision 77.9 78.4 (0.6) % 2.5 % 2.7 %
Income tax provision 15.5 11.5 34.8 % 0.5 % 0.4 %
Net income $ 62.4 $ 66.9 (6.7) % 2.0 % 2.3 %
Thirteen Weeks Ended May 4, 2025 Compared to Thirteen Weeks Ended April 28, 2024
Net Sales
13 Weeks Ended
(in millions, except percentages)
May 4,
2025 		April 28,
2024 		$ Change % Change
Consumables $ 2,177.9 $ 2,046.9 $ 131.0 6.4 %
Hardgoods 342.2 304.7 37.5 12.3 %
Other 595.9 526.1 69.8 13.3 %
Net sales $ 3,116.0 $ 2,877.7 $ 238.3 8.3 %
Net sales for the thirteen weeks ended May 4, 2025 increased by $238.3 million, or 8.3%, to $3.1 billion compared to $2.9 billion for the thirteen weeks ended April 28, 2024. This increase was primarily driven by growth in active customers, which improved by 3.8%, to 20.8 million, and higher net sales per active customer, which increased $21, to $583 in the thirteen weeks ended May 4, 2025 compared to the thirteen weeks ended April 28, 2024, driven by growth across our healthcare, specialty, and hardgoods businesses.
Cost of Goods Sold and Gross Profit
Cost of goods sold for the thirteen weeks ended May 4, 2025 increased by $168.5 million, or 8.3%, to $2.2 billion compared to $2.0 billion in the thirteen weeks ended April 28, 2024. This increase was primarily due to an increase in associated product, outbound freight, and shipping supply costs. The increase in cost of goods sold was consistent with the increase in net sales on a percentage basis, reflecting our ability to balance increases in product and supply chain related costs.
Gross profit for the thirteen weeks ended May 4, 2025 increased by $69.8 million, or 8.2%, to $923.8 million compared to $854.0 million in the thirteen weeks ended April 28, 2024. This increase was primarily due to the year-over-year increase in net sales as described above. Gross margin for the thirteen weeks ended May 4, 2025 was 29.6%, a decrease of 10 basis points compared to 29.7% for the thirteen weeks ended April 28, 2024. The decline in gross margin was primarily due to the thirteen weeks ended April 28, 2024 benefiting from certain one-time items including the timing of vendor reimbursements, lower fuel costs, and a lower than expected promotional environment. Sponsored ads continues to be the largest driver of gross margin improvement, combined with strong autoship and product mix shift into margin accretive categories.
Selling, General and Administrative
Selling, general and administrative expenses for the thirteen weeks ended May 4, 2025 increased by $50.5 million, or 8.4%, to $653.1 million compared to $602.6 million in the thirteen weeks ended April 28, 2024. This was primarily due to an increase of $36.6 million in costs associated with expansion of operations at our fulfillment center in Houston, Texas and the continued expansion of our pharmacy fulfillment network, to support the overall growth of our business. We also experienced increases of $8.5 million in share-based compensation expense and related taxes, and an increase of $5.4 million in facilities expenses, principally due to business growth and new return to office initiatives at our corporate offices in Plantation, Florida and Boston, Massachusetts.
We have recently undertaken a project that will modernize our finance information technology architecture. At the conclusion of this project, which we believe will occur towards the end of our 2025 fiscal year, we aim to have, among other things, (i) the ability to produce financial information across different segments of the Company, which supports scalability for future growth, (ii) expanded visibility and analytical capabilities with respect to our data, and (iii) an infrastructure that enables the use of artificial intelligence and other system advancements that will create further efficiencies for our team members. The project will not require meaningful capital investment.
Advertising and Marketing
Advertising and marketing expenses for the thirteen weeks ended May 4, 2025 increased by $7.0 million, or 3.7%, to $193.8 million compared to $186.8 million in the thirteen weeks ended April 28, 2024. Our marketing expenses increased due to additional investment in our lower and upper funnel marketing channels contributing to new customer acquisition and improved customer retention. For our 2025 fiscal year, we expect advertising and marketing expense to be approximately 6.7 to 6.8 percent of net sales.
Interest and Other Income (Expense), net
Interest income for the thirteen weeks ended May 4, 2025 decreased by $11.3 million, to $3.2 million compared to interest income of $14.5 million in the thirteen weeks ended April 28, 2024. This decrease was due to a decrease in interest income generated from marketable securities, which matured during the thirteen weeks ended April 28, 2024.
Other expense for the thirteen weeks ended May 4, 2025 increased by $1.5 million, to $2.2 million compared to other expense of $0.7 million in the thirteen weeks ended April 28, 2024. This increase was primarily due to a termination of equity warrants partially offset by a decrease in foreign currency losses.
Liquidity and Capital Resources
We finance our operations and capital expenditures primarily through cash flows generated by operations. Our principal sources of liquidity are expected to be our cash and cash equivalents and our revolving credit facility. Cash and cash equivalents consisted primarily of cash on deposit with banks. Cash and cash equivalents totaled $616.4 million as of May 4, 2025, an increase of $20.6 million from February 2, 2025.
We believe that our cash and cash equivalents and availability under our revolving credit facility will be sufficient to fund our working capital, capital expenditure requirements, and contractual obligations for at least the next twelve months. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures, share repurchases, or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled "Risk Factors" in Item 1A of our 10-K Report for the fiscal year ended February 2, 2025. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.
Cash Flows
13 Weeks Ended
($ in millions)
May 4, 2025 April 28, 2024
Net cash provided by operating activities $ 86.4 $ 81.9
Net cash (used in) provided by investing activities $ (41.2) $ 505.7
Net cash used in financing activities $ (25.0) $ (55.1)
Operating Activities
Net cash provided by operating activities was $86.4 million for the thirteen weeks ended May 4, 2025, which primarily consisted of $62.4 million of net income and $120.4 million of non-cash adjustments, including share-based compensation expense of $74.5 million and depreciation and amortization expense of $30.0 million. These amounts were partially offset by working capital changes of $88.8 million, which were primarily driven by a decrease in accrued expenses and other current liabilities, coupled with an increase in accounts receivable and prepaid expenses and other current assets. These changes were partially offset by a decrease in inventories.
Net cash provided by operating activities was $81.9 million for the thirteen weeks ended April 28, 2024, which primarily consisted of $66.9 million of net income, $101.0 million of non-cash adjustments such as share-based compensation expense of $65.4 million and depreciation and amortization expense of $28.0 million, partially offset by a cash decrease of $79.3 million from working capital. Cash decreases from working capital were primarily driven by a decrease in other current liabilities and an increase in inventories, receivables, and other current assets, partially offset by an increase in payables.
Investing Activities
Net cash used in investing activities was $41.2 million for the thirteen weeks ended May 4, 2025, primarily consisting of $37.7 million for capital expenditures related to expanding operations at our Houston, Texas fulfillment center, veterinary clinics, and future pharmacy facility capabilities.
Net cash provided by investing activities was $505.7 million for the thirteen weeks ended April 28, 2024, primarily consisting of $535.0 million for the maturities of marketable securities, partially offset by $29.3 million for capital expenditures related to the launch of new and future pharmacy facilities, veterinary clinics, and fulfillment centers as well as additional investments in IT hardware and software.
Financing Activities
Net cash used in financing activities was $25.0 million for the thirteen weeks ended May 4, 2025 primarily consisting of $23.1 million for repurchases of common stock, principal repayments of finance lease obligations, and payments for secondary offering costs.
Net cash used in financing activities was $55.1 million for the thirteen weeks ended April 28, 2024, primarily consisting of $54.8 million for income taxes paid for, net of proceeds from, the parent reorganization transaction as well as principal repayments of finance lease obligations.
Other Liquidity Measures
ABL Credit Facility
We have a senior secured asset-based credit facility (the "ABL Credit Facility"), which matures on April 1, 2030 following an amendment entered into on April 1, 2025, and provides for non-amortizing revolving loans in the aggregate principal amount of up to $800 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities of (i) $250 million, (ii) the amount of permanent reductions of commitments thereunder and (iii) if greater than zero, the amount by which the borrowing base as of the date of incurrence exceeds the commitments thereunder, subject to customary conditions. Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to either a base rate or a term Secured Overnight Financing Rate ("SOFR") (with no credit spread adjustment) at the Company's option, plus a margin determined based on the Company's average excess availability, which is either (i) 0.25%, 0.50%, or 0.75% for borrowings at the base rate, or (ii) 1.25%, 1.50%, or 1.75% for SOFR borrowings. We are required to pay a 0.25% per annum commitment fee with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility. Based on our borrowing base as of May 4, 2025, which is reduced by standby letters of credit, we had $782.8 million of borrowing capacity under the ABL Credit Facility. As of May 4, 2025 and February 2, 2025, we did not have any outstanding borrowings under the ABL Credit Facility, respectively.
Share Repurchase Activity
On May 24, 2024, our Board of Directors authorized the Company to repurchase up to $500 million of its Class A common stock, par value $0.01 per share (the "Class A common stock"), and/or Class B common stock, par value $0.01 per share (the "Class B common stock" and together with the Class A common stock, the "common stock"), pursuant to a share repurchase program (the "Repurchase Program"). The actual timing and amount of any share repurchases remains subject to a variety of factors, including stock price, trading volume, market conditions, compliance with applicable legal requirements, and other general business considerations. We are not required to repurchase any specific dollar amount or to acquire any specific number of shares of common stock. The Repurchase Program has no expiration date and may be modified, suspended, or terminated at any time.
During the thirteen weeks ended May 4, 2025, 664,533 shares of Class A common stock were repurchased and subsequently cancelled and retired pursuant to the Repurchase Program for a total cost of $23.2 million, excluding the cost of commissions and excise taxes. The authorized value of shares available to be repurchased under the Repurchase Program excludes the cost of commissions and excise taxes and as of May 4, 2025, the remaining value of shares of common stock that were authorized to be repurchased under the Repurchase Program was $383.5 million. As of May 4, 2025 and February 2, 2025, the total unpaid cost of share repurchases was $5.7 million and $5.6 million, respectively, which included $5.1 million, respectively, for excise taxes.
Recent Accounting Pronouncements
Information regarding recent accounting pronouncements is provided in Item 1 of Part I, "Financial Statements (Unaudited) - Note 2 - Basis of Presentation and Significant Accounting Policies - Recent Accounting Pronouncements" and is incorporated by reference herein.
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