Chewy reports solid performance in Q2

PLANTATION, FLA. — Stronger customer engagement and increased net sales per customer contributed to Chewy, Inc.’s solid performance in the second quarter. The pet retailer shared its second quarter financial performance on Aug. 28 for the three-month period ended July 28.

“Our Q2 performance reflects another quarter of strong execution, delivering net sales at the high end of our guidance range,” said Sumit Singh, chief executive officer of Chewy. “Chewy’s compelling value proposition is driving broader and deeper customer engagement, as reflected by our 20 million active customers, which grew sequentially in the quarter, and net sales per active customer of $565, which reached a new record for the company.”

Chewy recorded net sales of $2.86 billion for the second quarter, up 2.6% year-over-year, though down slightly from its $2.88 billion recorded for the first quarter. The gross margin was 29.5%, an increase of 120 basis points compared to a year ago. Net income was posted at $299.1 million. Additionally, the company’s adjusted EBITDA was $144.8 million, an increase of $56.7 million year-over-year.

“Auto-ship customer sales grew by almost 6% to reach 78% of net sales — reflecting both the convenience and value of the program and the strength of our non-discretionary categories including consumables and health, which collectively represented approximately 85% of our net sales in the quarter,” Singh said.

A recognized accomplishment for the second quarter included all-time high net sales per active customer, which averaged $565. The company’s mobile app was credited for this increase in sales.

“Notable was strengthening customer engagement through our mobile app,” Singh said. “Over the past year or so we have been hard at work redesigning our mobile app and making the overall user experience more convenient for our customers. This quarter we saw early signs of this strategy paying dividends. Unique customers who placed orders through our app increased by approximately 13%, year-over-year, with overall mobile app orders increasing approximately 15%, year-over-year.”

Chewy also shared it opened two additional Chewy Vet Care clinics, in Denver and South Florida, in the second quarter. The company set a goal to open four to eight clinics in 2024 — four clinics were already opened in the first quarter.

Chewy anticipates its adjusted EBITDA margin for the full year will be between 4.5% and 4.7%.

“This second increase of the year demonstrates our continued execution toward a richer product mix and the increasing leverage in our business model,” said David Reeder, chief financial officer. “The new guidance midpoint indicates expected adjusted EBIDTA margin expansion of approximately 130 basis points year-over-year.”

In addition, the company reported an adjusted net income of $104.8 million, a 62% increase of $40.2 million year-over-year

“Our second quarter results reflect another quarter of strong execution — solid growth against the backdrop of a normalizing pet industry and continued margin expansion as our business benefits from incrementally higher profit flow-through at scale,” Reeder said. “I’m incredibly proud of the hard work that drove our results this quarter and want to thank each of our Chewy team members for their collective efforts.”

Read more about corporate strategy, financial performance, mergers and acquisitions on our Business page.