Pet product retailer Chewy Inc. saw earnings bark past expectations in Q2. The company reported a 2.6% rise in net sales of $2.86 billion for the period. It also saw its net sales per active customer rise 6% from last year, the company reported.

“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,” said Chewy CEO Sumit Singh in the earnings announcement.

Chewy is No. 12 in the Top 1000, which is Digital Commerce 360’s database ranking North America’s largest online retailers by their annual web sales. In the Top 1000, Digital Commerce 360 categorizes Chewy as a Specialty retailer. Digital Commerce 360 projects that Chewy online sales will reach $11.59 billion in 2024.

Chewy web sales by year

Chewy Q2 earnings highlights

“We delivered top-line growth at the high end of our guidance range, continued significant adjusted EBITDA margin expansion, and compelling free cash flow generation,” Singh noted.

Other takeaways from Chewy’s Q2 earnings release include:

• Net income: $299.1 million (up from $280.2 million in Q2 2023)
• Adjusted EBITDA: $144.8 million. That’s a $56.7 million increase year over year.
• Adjusted net income: $104.8 million, an increase of $40.2 million year over year

In addition, Chewy’s profit margin was up 11% (up from 0.7% in Q2 2023). The increase in margin was primarily driven by lower expenses, company leaders said.

Chewy Vet Care grows

Chewy has expanded its brand into animal care by opening Chewy Vet Clinics across the country. Two more clinics — one in Denver, the other in South Florida — opened during Q2. There are six Chewy Vet Clinics open now with plans for a couple more by year’s end. Singh described the synergy between the clinics and Chewy products.

“The leading indicators are promising,” he said during the company’s earnings call. “First, Chewy Vet Care is serving as an acquisition funnel, with the proportion of net new customers acquired through our clinics exceeding our expectation.”

He said he believes that success is leading to stronger customer relationships.

“Many customers are deepening their commitment to the Chewy ecosystem by purchasing pharmacy or food for the first time,” he added.

Chewy’s app use rises

Chewy customers are increasingly using the company’s app to drive sales, Singh said.

“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,” Singh said.

He noted that Chewy observed both higher units per order and better retention when customers download and use the Chewy app. The app counts 20 million active customers, he said.

Chewy and Bark Inc. Collaborate

Not mentioned in the earnings call was another recent addition from the world of pet supplies retail. Bark Inc. launched a collection of its best-selling toys on Chewy, marking the first time Chewy will carry Bark products.  The initial launch includes popular items like Grey Bear Hugger and Steve Squeaky Plush Snake.  The company plans to expand its offerings on Chewy in the coming months, including toys, consumables, and its dental line, Bark Bright.

Bark is No. 204 in the Top 1000.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. 

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