10:48 AM EDT, 08/28/2024 (MT Newswires) -- Chewy (CHWY) on Wednesday reported better-than-expected fiscal second-quarter earnings, while the online pet store lifted its full-year core profit margin guidance.

Adjusted earnings came in at $0.24 per share for the quarter ended July 28, up from $0.15 the year before, topping the Capital IQ-polled consensus of $0.21. Sales advanced 2.6% year over year to $2.86 billion, largely in line with the Street's view. The stock jumped 10% in Wednesday trading.

"Our (second-quarter) results reflect another quarter of strong execution against our strategic priorities," Chief Executive Sumit Singh said during an earnings call, according to a Capital IQ transcript. "We delivered top line growth at the high end of our guidance range, continued significant adjusted (earnings before interest, taxes, depreciation and amortization) margin expansion and compelling free cash flow generation."

Net sales per active customer reached $565 during the quarter, compared to $532 last year. Customer sales from the company's Autoship business grew 5.8% to $2.24 billion. Gross margin rose by 120 basis points to 29.5% year over year, while adjusted EBITDA margin climbed 190 basis points to 5.1%.

For fiscal 2024, Chewy continues to project sales between $11.6 billion and $11.8 billion, implying a 4% to 6% growth over fiscal 2023's top line.

The company now sees an adjusted EBITDA margin of 4.5% to 4.7% for the fiscal year, according to an earnings presentation, compared with its prior guidance of 4.1% to 4.3%. "This second increase of the year demonstrates our continued execution towards a richer product mix and the increasing leverage in our business model," Chief Financial Officer David Reeder told analysts on the call.

For the ongoing three-month period, the firm expects sales to be in a range of $2.84 billion to $2.86 billion, reflecting annual gains of 3% to 4%.

"(Chewy) is benefiting from a rapidly growing high-margin sponsored ads program, disciplined promotions and a scaled business model that is driving solid flow-through of revenue growth despite a challenging demand environment," Wedbush Securities said in a client note.

Price: 28.44, Change: +2.58, Percent Change: +9.98