Web-only pet goods retailer Chewy reported its first quarterly results since going public, with its expanding private-label business and its online pet pharmacy helping to keep revenue growing. Chewy grew sales to $1.11 billion during its first fiscal quarter ending May 5, up 45.4% from $763.5 million during the same period last year. Chewy is owned by PetSmart, No. 58 in the Internet Retailer 2019 Top 1000, which used the initial public offering to help pay down $8 billion in debt.
Part of Chewy’s growth is coming from sales of its private-label brands, which Chewy CEO Sumit Singh said made up 5% of sales at the end of 2018 but will grow to 15% of sales in the long term. At that point, Singh expects private brands to be more profitable than selling brands owned by other companies. This quarter, losses shrank 50.5% to $29.6 million, down from $59.8 million last year.
Chewy also is increasing the amount its loyal customers are spending with the retailer. Active customers spent $343 with Chewy on average during the quarter, up 8.9% from $315 last quarter. That allowed Chewy to reduce its share of sales spent on marketing, down to 9.2% of net sales from 11.4% during the same period last year, as existing shoppers are less expensive to market to, according to Singh.
Those loyal customers also include “autoship” users, who sign up for regular deliveries of pet goods. 67.1% of Chewy’s Q1 revenue came from autoship orders. Singh hopes to replicate that success with Chewy Pharmacy, its online pet pharmacy, which launched a year ago. To support that vertical, Chewy launched a pharmacy fulfillment center co-located with its Phoenix shipping facility.
In other earnings news
- Fashion retailer ASOS Plc Holdings (No. 31) warned that earnings will slump this year, putting pressure on CEO Nick Beighton as he tries to fix distribution issues and prop up a falling stock price. Profit before tax may fall as much as 71%, ASOS forecast Thursday. The slowdown was blamed on shifting to new technology at U.S. and European warehouses is taking longer than expected and affecting stock availability, according to the apparel retailer.
- Online marketplace eBay Inc., No. 5 in the ranking of Internet Retailer Online Marketplaces, reported a 1.9% rise in revenue to $2.69 billion from $2.64 billion a year earlier for its second fiscal quarter ending June 30. Gross merchandise volume—the value of all goods sold on eBay properties—fell 4.4% (in comparable dollars and excluding currency fluctuations) to $22.60 billion in the second quarter from a year earlier. However, quarterly profit before operating expenses topped analysts’ estimates at 0.7% growth to $2.06 billion in the face of slowing sales growth, showing the company can extract more from its millions of loyal buyers and sellers, even if it struggles to attract many new customers. Part of that growth was from a 130% increase in revenue from advertising sales.
Bloomberg contributed to this report.Favorite