It was another year of strong growth for Chewy. The online retailer recently announced that its third-quarter sales were up 24% year-on-year., and its sales in the first three quarters of fiscal 2021 grew just over 27% year-on-year. Still, the bigger numbers only tell part of the story, so Pet Business delved a little deeper into Chewy’s third quarter earnings report and found three factors that surely were key to Chewy’s success. the business so far this year.
While Chewy posted its first profitable quarter At the end of fiscal 2020, the company’s ability to maintain long-term profitability is still in question. However, improving the operational efficiency of the company will certainly go a long way towards achieving this goal. In fact, the online retailer reduced its operating losses in the first three quarters of fiscal 2021 by 92% year-on-year, following a trend that has continued since at least 2019.
While Chewy’s decision-makers have become complacent about the sales growth the company has experienced consistently over the past few years, it is certainly not reflected in the company’s marketing efforts. In the first three quarters of fiscal 2021, the online retailer increased its advertising / marketing spending by almost 30% year-on-year. This represents an acceleration of a three-year trend, which saw Chewy increase his marketing / advertising spend by 12% and 18% in the first 39 weeks of 2020 and 2019, respectively.
More customers and bigger baskets
All of these marketing expenses paid off for Chewy, who added more than half a million active customers in the first three quarters of fiscal 2021. In addition, the company’s net sales per active customer have increased 8% between Q1 and Q3 and 15% year-on-year, while sales of its autoship customers in the first 39 weeks of fiscal 2021 were up nearly 27% year-on-year.
While each of these factors, taken in isolation, reflects well how Chewy performed over the past three quarters, when taken together and for their potential to drive future growth, it becomes clear that Chewy will only become more dangerous as a as a competitor in the pet specialty market for the months and years to come.