Chewy breaks 3 financial records in Q1

PLANTATION, FLA. — Chewy, Inc. continues to ramp up its online pet care offerings amid steady revenue growth and despite recent dips in active customer levels. The pet retail giant shared its first quarter financial performance on May 29 for the three-month period ended April 28.

“Fiscal year 2024 is off to a solid start,” said Sumit Singh, chief executive officer of Chewy. “We delivered strong net sales as well as record-breaking adjusted EBITDA in the first quarter. Chewy’s value proposition continues to resonate with our customers, and I am proud of the teams at Chewy who are executing flawlessly on our strategic roadmap and the controllable elements of our business.”

Chewy posted net sales of $2.88 billion for the first quarter, up 3.1% year-over-year. Gross margin was 29.7%, an improvement of 130 basis points compared to a year ago, and net income was clocked at $66.9 million.

The company reached three financial milestones over the three-month period: net sales per active customer, autoship sales as a percentage of total net sales, and adjusted EBIDTA. Net sales per active customer averaged $562 in the first quarter, an all-time high despite the number of active customers being slightly down from 20.4 million in the first quarter of 2023 to 20.0 million in the first quarter of 2024.

Autoship customer sales continue to grow, reaching 77.6% of the company’s total net sales over the quarter. This represents an increase of 6.4% compared to the fourth quarter of fiscal 2023. Additionally, the company’s adjusted EBITDA was up 46.8% to $163 million year-over-year.

Chewy also shared it opened its first four Chewy Vet Care clinics in the first quarter as part of its mission to provide pet owners with everything they need — from pet food to accessories to veterinary care — to keep their pets happy and healthy.

“We partnered with hundreds of veterinarians and customers to design an in-practice and post-visit experience, which we believe will be unlike anything in the market and appreciated by both communities,” said Mita Malhotra, president of Chewy Health. “Our practices contain thoughtfully designed spaces for the comfort and privacy of our customers and care team. Chewy Vet Care will be powered by our proprietary, easy-to-use modern technology to deliver a seamless and memorable experience, which we have delivered for over a decade in our core businesses. Expanding into veterinary care is the natural next step in Chewy’s evolution and we are excited to bring our customer-forward thinking to our veterinarians and practice team.”

Benjamin Carter, DVM, chief medical officer of Chewy Vet Care, added, “We are confident we can drive positive change by addressing critical pain points straining the veterinary industry, such as burnout and lack of flexibility, while providing the convenient, transparent and trustworthy access to care that today’s discerning pet parents appreciate.”

In terms of guidance, Chewy shared it expects to achieve between $2.84 billion and $2.86 billion in sales in the second quarter of fiscal 2024, which would represent between 2% and 3% year-over-year growth. For the full year, net sales are expected between $11.6 billion and $11.8 billion, which would reflect between 4% and 6% year-over-year growth. Chewy anticipates its adjusted EBITDA margin for the full year will be between 4.1% and 4.3%.

In addition to its first-quarter earnings and full-year outlook, Chewy also announced its first share repurchase program. The company’s board of directors has authorized it to buy back up to $500 million in Class A and/or Class B stock, if it so chooses. The program is non-binding, does not expire and can be modified at any time, according to the company.

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