Invest in Petco instead of Chewy, says Jim Cramer

CNBC’s Jim Cramer said Wednesday that investors should buy stock of Petco instead of Chewy after the latter reported a disappointing quarter on Tuesday.

“If [Chewy] aren’t turning a profit yet after all these years, I find it impossible to recommend their stock in this environment. If you want to play the humanization of pets, I’d much rather buy the stock of Petco, which has the added advantage of making a lot of money,” the “Mad Money” host said.

Chewy reported a worse-than-expected quarterly loss and revenue on Tuesday, as well as weak revenue guidance for the first quarter and full year. The online pet product retailers’ stock dropped in after-hours trading the same day and was down 16.1% on Wednesday.

Petco stock was down 3.76% on Wednesday. The company earlier this month reported better-than-expected top and bottom lines in the fourth quarter as well as a rosy 2022 revenue guidance.

Cramer posited that Chewy’s poor performance could be due to consumers’ desire for human interaction since staying inside due to Covid. Another reason he prefers Petco to Chewy is that the former offers in-person veterinary services for pets, he added.

Petco has said it plans to grow its roster of full-service veterinary hospitals to 900 from the nearly 200 it had at the end of its fiscal year. Chewy launched virtual veterinary visits for pets in October 2020.

“There’s nothing like going to the store and meeting the vet while you get whatever else you need for your pets, including more pets,” Cramer said.

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