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Chewy (CHWY) is trading lower, driven by the surprise departure of CFO David Reeder, and a reaffirm of 1Q25 guidance that's stirring up some disappointment following the company's stellar Q4 earnings report in late March. Mr. Reeder, who joined CHWY in March 2023 after serving as CFO of Global Foundries, is stepping down to assume a CEO role in the semiconductor industry, with his exit slated for after the 1Q25 results on June 11, 2025. The departure of a seasoned CFO -- particularly one who has overseen a period of robust financial performance -- introduces some uncertainty around CHWY's ability to sustain its momentum.

• Investors often view executive turnover as a potential risk to operational stability, particularly for a company navigating a competitive e-Commerce landscape and macroeconomic headwinds like tariff concerns and inflation. The absence of a named successor amplifies these worries as CHWY has only indicated that a search for Reeder's replacement is underway, leaving a leadership gap that could unsettle the market.
• Additionally, Reeder's recent stock sales -- totaling around $16 mln across February transactions -- may signal a lack of long-term commitment, further eroding investor confidence.
• In the same press release, CHWY reaffirmed its Q1 guidance, projecting net sales of $3.06-$3.09 bln and EPS of $0.30-$0.35. By failing to deliver an upward revision of its outlook, CHWY likely added to the negative sentiment, especially with shares up by 146% on a yr/yr basis. The decision to maintain guidance, despite a robust 4Q24 earnings report in which CHWY easily beat EPS expectations and returned to double-digit revenue growth for the first time since 2Q24 at +15%, suggests possible caution around consumer spending softness in discretionary pet categories.
• CHWY's improved growth in Q4 was underpinned by a return to active customer growth and enhanced customer loyalty through its Autoship program. Autoship customer sales, a cornerstone of CHWY’s recurring revenue model, surged 21% in Q4 to $2.62 billion, representing 80.6% of net sales. The reaffirmed Q1 guidance, while solid, may be perceived as conservative, failing to capitalize on the Q4 beat’s momentum.

The departure of CFO David Reeder, coupled with his significant stock sales and the lack of a named successor, has rattled investors, raising concerns about CHWY’s ability to maintain its strong financial trajectory amid a competitive and uncertain macro environment. The decision to merely reaffirm Q1 2025 guidance, despite a robust Q4 earnings beat, has further disappointed investors expecting a more bullish outlook, contributing to today’s stock price decline. While CHWY’s operational momentum remains intact, the leadership transition and conservative guidance signal near-term risks.