Chewy, Inc., the pet food and supplies retailer, continued to show growth in its latest quarterly earnings, achieving a 4.8% year-over-year increase in Q3 net sales, which totaled $2.88 billion.

The company has seen consistent year-over-year growth in its online sales, even as rates of growth have fallen.

Currently, Chewy is No. 10 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 close out 2024 at $11.59 billion.

Chewy web sales by year

Chewy quarterly sales highlights in Q3

Chewy’s CEO lauded the earnings report.

“Our third quarter results continued to build on the positive momentum we observed in Q2,” said Sumit Singh, Chewy’s CEO. “These results underscore the durability of our business model and our team’s relentless focus on high-quality execution and operational discipline.”

Aside from net sales figures, the company also reported the following:

• Gross margin of 29.3% increased 80 basis points year over year
• Net income of $3.9 million, including share-based compensation expense and related taxes of $80.4 million
• Adjusted EBITDA of $138.2 million, an increase of $55.7 million year over year
• Adjusted net income of $84.9 million, an increase of $21.5 million year over year

Areas of business growth for Chewy

The company’s auto-ship program (which sends pet food to regular customers on a schedule) has helped drive growth. Revenue from auto-ship was $2.3 million compared with $2.1 million during Q3 last year.

In an earnings call, Singh also pointed to the growth in the company’s clinics, Chewy Vet Care.

“Performance across our clinic footprint is promising,” Singh said

He added that the clinics are helping to acquire new customers and funnel them into the Chewy ecosystem.

“Broader ecosystem benefits, including cross-category shopping and post-clinic visit purchases on chewy.com, have strengthened since last quarter, indicating that our ability to seamlessly connect care with commerce is resonating with pet parents,” he explained.

Chewy’s success and expectations

Retail experts were more restrained in their praise of Chewy.

Michael Nemeroff, ecommerce expert and CEO and co-founder of RushOrderTees, told Digital Commerce 360 that Chewy has trained investors to expect big profits.

“Chewy is doing well with building consistent revenue growth, but their share value has actually dropped over the past few days because ‘good enough’ is no longer good enough,” Nemeroff assessed, adding that investors expect big growth in retail, but a 5% improvement doesn’t “wow” them. Nevertheless, Nemeroff said, projections of 13% growth from Chewy in the current quarter remained promising.

“Chewy has built a loyal customer base but faces competition from giants like Amazon,” he stated. “If they can find a way to manage costs and offer better value than price leaders, they’ll continue to stand out and increase their following even further.”

Challenges ahead for Chewy

Michael Zakkour, a retail-focused founder and chief strategist at the retail consultancy 5 New Digital, pointed out that the number of active customers declined by 0.5% to 20.2 million, while operating expenses rose by 3.3% year over year to $818.2 million.

“Despite the mixed results, I am forecasting healthy growth for the company in 2025, driven by several factors, including its commitment to adding services,” Zakkour said, citing the “Connect With a Vet” and insurance plans; the strength of its subscription model, “Autoship”; and the pet care digital commerce segment growing at a 12% compound annual growth rate.

Zakkour says Chewy will continue to have to innovate and evolve to fend off rivals.

“While Chewy is the market leader in pet care ecommerce, PetSmart and Amazon have stepped up their investment and focus on ecommerce, so Chewy will need to adjust to a more competitive landscape,” Zakkour said, pointing to the decrease in customers as a possible red flag.

“Chewy needs to improve customer retention rates and decrease operating expenses, as reflected in its earnings report,” Zakkour says.

Percentage changes may not align exactly with dollar figures due to rounding. Check back for more earnings reports. Here’s last quarter’s update on Chewy quarterly sales.

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