Dive Brief:
- Chewy on Wednesday reported third-quarter net sales grew nearly 5% year over year to $2.9 billion, exceeding the high end of its guidance for the quarter.
- The online pet retailer moved into the black during the quarter, reporting an operating income of $25.6 million, from a loss of $9.7 million in the year-ago period, and a $3.9 million net income, from a $35.4 million loss, according to a press release.
- Chewy’s active customer base fell slightly year over year to 20.2 million, but its net sales per active customer increased 4.2% to $567.
Dive Insight:
Executives on Wednesday attributed the third-quarter sales performance to strength in its Autoship subscription program, as well as customer loyalty in its nondiscretionary categories, like consumables and healthcare products and services.
During Q3, Autoship sales grew 8.7% year over year to $2.3 billion and represented about 80% of total net sales during the quarter, an increase of 290 basis points from last year. “Our Autoship program enables high ability and predictability in our business and drives customer stickiness for Chewy,” CEO Sumit Singh said on a call Wednesday.
Chewy reported that its nondiscretionary categories accounted for 85% of net sales in the third quarter.
The retailer continues to build out its healthcare offerings and is on track to hit the high end of its Chewy Vet Clinic goal by the end of the fiscal year. The retailer projected four to eight clinic openings in 2024 and currently operates six, according to Singh.
“With the launch of Chewy Vet Care clinics earlier this year, we not only unlocked the $25 billion vet services [total addressable market] opportunity, but we are also observing compelling complementarities across the entire Chewy ecosystem,” Singh said. “Performance across our clinic footprint is promising … The proportion of new to Chewy customers acquired through Chewy Vet Care continues to outperform relative to expectations.”
Singh added that the Chewy Vet Clinics have also helped drive customers to make purchases on the retailer’s website after clinic visits, something that has grown from the previous quarter.
Looking ahead, Chewy raised its full-year guidance. The retailer now expects net sales to be between $11.79 billion and $11.81 billion, up from previous guidance of $11.6 billion to $11.8 billion, representing a 6% increase from the prior year. Chewy also expects its adjusted EBITDA margin to be between 4.6% and 4.8%, up from 4.5% to 4.7%.
