Chewy posts a profit, but outlook remains modest for the rest of 2024
The American pet retailer sees wins with its autoship sales, which increased 15% in the last 12 months.
For the fiscal year (FY) 2023 ending 28 January 2024, Chewy’s net sales jumped 10.2% year-over-year (YoY), standing at $11.1 billion (€10.2B).
Net sales per active customer rose 11.9% YoY to $555 (€510.5), while its total number of active customers faced a 1.6% decline YoY at 20.1 million.
“Our favorable mix of non-discretionary consumables and health categories continues to be a pillar of strength for Chewy, representing approximately 85% of full-year 2023 net sales,” CEO Sumit Singh wrote in a letter to shareholders.
The US pet retailer posted a net income of $39.6 million (€36.4M), a decrease of $10 million (€9.2M) YoY. Adjusted EBITDA increased by $61 million (€56.1M) YoY, jumping to $368 million (€338.5M).
According to a MarketWatch analysis, Chewy’s profits took the market by surprise; however, “post-earnings share gains evaporated as it signaled muted prospects for the year ahead, as fewer people take on pet ownership and benefits from higher prices fall away,” the website notes.
Autoship
The company’s autoship subscription program delivered “nearly” $8.5 billion (€7.8B) of autoship customer sales for FY 2023. Commenting on this, Singh says the program provides “differentiated convenience for pet parents while enhancing customer stickiness for Chewy.”
He added that growth in autoship customer sales “meaningfully outpaced” overall topline growth, increasing by nearly 15%.
Canada
The Florida-based retailer also says the expansion of its business into Canada, announced last year, is progressing as planned.
“Success metrics that we are tracking closely, such as basket sizes and autoship sign-up rates, as well as other customer experiences metrics such as delivery speed and reliability, remain healthy,” it says.
Chewy highlighted to stakeholders the “positive indications” of the business they are building in the neighboring country.
After the expansion, the company plans to double down on its offerings going forward.
Q4 performance
Chewy posted net sales of $2.83 billion (€2.6B) in its fourth quarter of FY 2023, an improvement of 4.2% YoY. Its net income increased by $25 million (€22.9M) YoY, standing at $32 million (€29.4M). Adjusted EBITDA saw a $6 million (€5.5M) YoY decline at $86 million (€79.1M).
Autoship customer sales recorded a growth of 8% in the fourth quarter, the company says.
A return to normality?
Chewy’s CEO noted that the pet industry is a “recession-resilient” and an “above GDP growth industry” with an increasing shift toward online channels.
Due to market conditions, the company expects the industry to see “modest growth” in 2024 with a “return to normality” in 2025. But for itself, Chewy expects to gain market share over the year.
The company is especially hopeful about its entry into vet care, anticipating opening 4 to 8 clinics this fiscal year. The first clinic will be launched in Florida, close to Chewy’s headquarters, with more locations set to open in the first half of 2024.
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