Chewy less turnaround story, more acquisition target, Financial Times’ Lex says

Chewy (CHWY) this week cut its full-year sales guidance as it faces competition from Amazon (AMZN), Walmart (WMT) and Target (TGT). Despite higher advertising and marketing spending, the number of active customers at Chewy fell 1.3% year-over-year during the third quarter, Lex, the flagship investment column of the Financial Times, notes. Chewy appears to be less of a turnaround play and more of an acquisition target, FT’s Lex argues. Compared with bricks-and-mortar rival Petco (WOOF), it has an edge given its bigger online presence. Merging with a large big box retailer such as Walmart could help Chewy streamline its supply chain and lower its distribution costs, the publication argues. It needs to expand its margins. Either costs go down or it finds a way to sell more. A big owner could give it more scale and at current valuation it may find one, the investment column reads.