Chewy on Tuesday reported "record" net sales in the third quarter of $1.8 billion, a 45% year-over-year increase. That sales momentum continued into "Black Friday and Cyber Week with those two days being the highest ... net sales days in the company's history," CEO Sumit Singh told analysts Tuesday.
The online pet retailer also reported that its net active customers reached 17.8 million in the third quarter. Year-to-date the company said it added 5.1 million new customers, a nearly 40% increase. Net sales per active customer grew 2.8% to $363 in the quarter.
Chewy narrowed its net loss to $32.8 million from a loss of $79 million a year ago.
Chewy has proven itself relatively pandemic-proof as it continues to notch record sales results quarter after quarter this year.
The pet retail sector as a whole has seen a boost since the start of the pandemic as consumers turn to pets for comfort. Operating largely online has proven especially beneficial for Chewy as consumers remain wary of shopping in stores during the pandemic. According to Placer.ai, Petco and PetSmart, retailers that rely more on their brick-and-mortar stores, saw foot traffic declines on Black Friday of 23% and 20%, respectively.
In its most recent quarter ended Nov. 1, Chewy "handily beat" consensus forecasts on both its top and bottom lines, Wedbush analyst Seth Basham said in emailed comments. The retailer continues to benefit from increased pet adoptions by attracting and acquiring new customers — adding some 1.2 million from the second quarter. The number of U.S. households with pets is expected to grow 4% this year, according to data from Packaged Facts.
"New customer behavior is very encouraging, with recent customer cohorts spending ~10% more than pre-COVID cohorts and their spend mix is geared more toward high-margin hardgoods that new pet parents need," Basham said. "Not only do new pet parents spend more than other new customers initially, they are more 'sticky' as they tend to enroll in Autoship, providing strong visibility to revenue growth unlike many other pandemic-boosted hardlines companies."
Chewy's Autoship subscription customers accounted for 69.2% of total net sales to reach $1.2 billion in the period, up 42.5% from the year-ago period. And this new cohort of customers, Basham said, could continue to benefit the retailer in the months ahead with those customers alone projected to contribute at least 10% revenue growth in 2021.
Looking to broaden its position as an online pet destination, Chewy in recent months launched a telehealth pet service dubbed "Connect with a Vet" as well as compounded medications for pets, building on the pharmacy business it launched two years ago.
Chewy expects its total pharmacy operations to generate more than $500 million in gross revenue this year, "which we believe makes us the largest e-commerce pet pharmacy in the U.S.," Singh said, with the company holding about 40% online share in that segment by its own estimates.