Chewy Takes a Big Bite of Pet Sales in Q1
Pantry loading during the COVID-19 crisis has not just benefited grocery retailers. Online pet retailer Chewy saw a sales boom during its first quarter, and the company's CEO says the boom is here to stay.
“The increased demand levels that we are experiencing are here to stay,” Chief Executive Officer Sumit Singh said in an interview with Bloomberg. “We do not view our first-quarter results as a one-off event” and believe the company can continue growing its sales with 2020 set up to be a pivotal year for Chewy.
For the first quarter ended May 3, Chewy had net sales of $1.62 billion, which grew 46% year-over-year. This exceeded even the higher end of analyst estimates by more than 6%. Even more impressive was Chewy's fast pivot to profitability: adjusted earnings in Q1 were $3.4 million. Analysts hadn’t expected the figure to turn positive until 2021. In its new guidance, the company said it expects to break even for the full fiscal year, which ends in February 2021.
Chewy’s expectations for second-quarter net sales of between $1.62 and $1.64 billion topped the highest analyst estimate and implies at least 40% growth compared to last year.
“We had a strong start to 2020 with first quarter net sales increasing 46 percent year-over-year and gross margins expanding 50 basis points. We also achieved a significant milestone by delivering our first ever quarter of positive adjusted EBITDA,” said Singh. “We are proud to be the e-tailer of choice for millions of new and existing pet parents during this unprecedented time. Chewy is well-positioned to thrive in this expanded marketplace, and we remain focused, as always, on our mission of becoming the most trusted and convenient online destination for pet parents (and partners) everywhere.”
The company added a record 1.6 million net active customers, more than double the average quarterly pace for 2019, Bloomberg reported. The company also said a high percentage of new customers returned to make a second purchase and, on average, spent more on the follow-up orders.
“The behavior of new customers is very consistent to our mature or existing customer cohorts and that’s encouraging,” Singh said. “Yes these customers have been with us for a short period of time, but when we analyze data that are available to us” it shows promising results on measures such as basket size, repeat behavior, and Autoship rates.
Chewy.com, a division of Petsmart, is based in Dania Beach, Fla.