- Chewy on Wednesday reported first quarter net sales increased 13.7% year over year to $2.4 billion, according to a company press release. Gross margin in the period declined 10 basis points from the year-ago period to 27.5%.
- The online pet retailer’s active customer base reached 20.6 million, up 4.2% year over year but down 0.5% from the previous quarter. Net sales per active customer increased 15% from last year and reached an all-time high of $446, CEO Sumit Singh said on a call with analysts.
- Chewy’s net income declined by more than 50% year over year to $18.5 million, which included a share-based compensation expense of $27.2 million, and reflects gross margin decline and higher selling, general and administrative spend.
Chewy beat expectations on both its top and bottom lines during the first quarter as consumers continue to spend on their pets.
The pet category experienced a boost in the early days of the pandemic as adoption rates increased and consumers allocated more dollars to their pets. Chewy was particularly well-positioned to benefit from selling both in a category in high demand and online where consumers were doing most of their spending at the time.
The pet retailer has been able to hold onto some of those gains, lapping last year’s sales and posting a 50% increase over the same period in 2020.
And despite concerns over inflation intensifying, Chewy executives expect sales growth to continue in the quarter ahead. In the second quarter, the company projects net sales to be between $2.43 billion and $2.46 billion, a 13% to 14% year-over-year increase.
The pet category historically has been resilient in times of economic uncertainty because even as consumers pull back spending on some discretionary purchases, they will often continue to spend on their pets.
Chewy’s mix of non-discretionary items may help it in the year ahead. The retailer reported its strongest categories in the first quarter were consumables and healthcare.
“The pet category is durable and has proven itself to be resilient through the full range of economic cycles. Chewy continues to execute in the face of unprecedented macro volatility to deliver strong top-line growth and improving sequential profitability,” Mario Marte, Chewy’s chief financial officer, said on a call with analysts.
For the full year, Chewy reiterated its outlook, expecting net sales to be between $10.2 billion and $10.4 billion, a 15% to 17% year-over-year increase. The company also expects EBITDA margin to break even or be 1%.