Dive Brief:
- Chewy executives on Wednesday announced the brand is planning its first expansion outside of the U.S.
- The company is “actively building the capabilities and team to launch our first international market over the next few quarters,” CEO Sumit Singh said on a call with analysts.
- The announcement came as the online pet retailer reported fourth quarter net sales of $2.7 billion, a 13.4% increase from the year-ago period, and net income of $6.1 million from a loss of $63.6 million last year.
Dive Insight:
Chewy is preparing to venture outside of the U.S. for the first time.
“International expansion has long been a part of our strategy,” Singh said. “It was a matter of when, not if, Chewy would take our superior value proposition into new geographies.”
Executives on Wednesday said the company plans to bring “all components of our value proposition” to the new markets, while actively listening to customer feedback in those regions.
“We expect this important development to unlock meaningful incremental [total addressable market], and we are excited to introduce Chewy to a broader customer base with whom we believe our brand and mission will resonate strongly,” Singh said, adding that Chewy “took into account the size of TAM, the geographic proximity and consumer behavior similarities to the U.S., among other factors, as we thought about entry markets that possess attractive characteristics for our initial international expansion plans.”
The news came as the online pet retailer announced fiscal 2022 earnings results. For the full year, Chewy reported net sales increased 13.6% year over year to $10.1 billion, while gross margin expanded 130 basis points to 28%. The company swung to a profit, reporting a net income of $49.2 million for the year from a loss of $73.8 million. Strong sales of non-discretionary goods, like consumables and the retailer’s healthcare offerings, were offset by muted sales within discretionary categories, like hard goods, the company said.
Sales through the company’s Autoship subscription ordering program grew 18% to $7.4 billion for the year, representing 73.3% of Chewy’s net sales, while net sales per active customer reached $495, a 15% year-over-year increase. However, the retailer’s active customer base declined 1.2% year over year to reach 20.4 million, which Singh attributed to continued softness in discretionary spending as well as residual impact of attrition from its 2020 and 2021 customer cohorts.
“We anticipate returning to positive active customer growth this year and expect [net sales per active customer] will continue to strengthen,” Singh said.
Looking ahead to 2023, Chewy anticipates first quarter net sales between $2.72 billion and $2.74 billion, an increase of 12% to 13%. The retailer also expects full-year net sales to be between $11.1 billion and $11.3 billion, a 10% to 12% increase.
