Chewy, Inc. (NYSE:CHWY) shares dropped more than 16% following the company’s worse than expected Q4 results, with revenue of $2.39 billion (vs. Street’s $2.42 billion) and adjusted EBITDA loss of $28.1 million (vs. an expected loss of $73,000).

The reason for a quarterly miss was the incremental supply-chain issues associated with out-of-stock levels weighed on revenues. The company provided its full 2022-year sales guidance, with the high end coming in at $10.4 billion, below the consensus estimate of $10.7 billion. However, with out-of-stock sales headwinds meant to weigh on revenue by $200-300 million for the full year, ex these incremental transitory issues, guidance would have been in line.

While partially an input to these transitory out-of-stock headwinds, analysts at Deutsche Bank are incrementally concerned that retention rates in the first half of the year are likely to be weaker than expected. They believe that once these headwinds abate, retention is likely to revert to normalized levels, as evidenced by retention generally running within normalized ranges between Q1 and Q3/21.