Chewy announces $2.14 billion in net sales for Q1
The American pet giant grew 31.7 percent year over year.
Key growth strategies
Two strategies have been key for their growth: Efficiently adding new customers and then growing their share of wallet.
The company had 19.8 million active customers in Q1, a 31.6% increase compared to Q1 of the previous year. And it saw a 13 percent year-over-year increase in first quarter 2021 average spend per new customer.
In his shareholder letter, CEO Sumit Singh shares his expectations for the future:
“Taking a broader view, over the past two years, we have increased our active customer base by 8.4 million, or 75 percent. The practical effect of this is that the weighted average tenure in our active customer base is just under two years. In other words, our average active customer is still squarely on the left-hand side of their lifetime spending curve with us. For context, our customers historically spend over $400 with us in their second year, compared to approximately $700 in their fifth year and almost $900 in their ninth year. As such, we believe that we still have significant future share of wallet gains left to realize from a substantial component of our customer base.”
Some interesting announcements:
- Although sales increased, elevated out-of-stock levels were a persistent issue throughout the quarter, which resulted in an estimated sales loss of $40 million (€33m). Chewy expects these issues to be resolved by the second half of the year.
- They entered into the fresh and prepared pet food space with new selections from the segment’s leading brand, Freshpet, and their premium proprietary brand, Tylee’s.
- They’ve developed (and patented) new sustainable packaging that allows them to preserve product quality throughout the delivery process (Currently in Beta mode)
Other fiscal Q1 2021 highlights:
- Gross margin of 27.6 percent expanded 420 basis points year over year
- Net income of $38.7 million (€31.96m), including share-based compensation expense of $24.8 million
- Net margin of 1.8 percent improved 480 basis points year over year
- Adjusted EBITDA of $77.4 million, an increase of $73.9 million year over year
Read their full shareholder letter here