Sales reached $2.04 billion, a surge of 135%, and Chewy in North America is growing rapidly

Chewy reported a 51% increase in fourth-quarter net sales to $2.04 billion , helped by growing demand in the pet category .

The online pet retailer achieved its first quarterly profit, with net income increasing 135% year-over-year to $21 million from a net loss of $60.9 million last year, according to a company press release.

For the full year, Chewy's net sales increased 47% year-over-year to $7.2 billion, while its net loss narrowed to $92.5 million from $252.4 million in the same period last year.

With Chewy's latest earnings results, the pet sector continues to prove to be one of the few categories that can benefit from the pandemic .

As the epidemic has changed people's previous lifestyles , people have begun to use pets as a way to relax . CEO Sumit Singh said that the number of households with pets increased by 5.7% in 2020 .

In addition to product categories that are performing particularly well right now, Chewy has the added advantage of selling primarily online , and in some places consumers have recently begun to gravitate toward buying on its platform .

However, even before the pandemic boosted e-commerce , the trend toward e-commerce in shopping was already evident , especially in the pet sector, where consumers were more willing to shop online, especially for frequently purchased heavy items such as pet food .

To this end, Singh believes that “ these shifts in e-commerce channels are durable and largely permanent. ”

However , operating exclusively online has limitations. For some brands, the marketing and advertising costs associated with acquiring customers online can become prohibitive, cutting into profits.

Although Chewy's fourth-quarter net sales soared about 51%, its advertising and marketing expenses continued to soar, increasing 47.4% to $150.1 million, which could put future profitability at risk if consumers return to their previous spending habits after the outbreak subsides.

Chewy still hasn't achieved positive net income as of this quarter, echoing the challenges Wayfair has experienced. Until the second quarter of last year, the retailer that primarily sells home goods (another product that has benefited from pandemic trends) reported losses quarter after quarter.

To combat this, brands can gain value from having some form of physical presence, whether it’s a pop-up, owned rental or partnership with traditional retailers like Walmart, Target and Nordstrom.

While Chewy isn't physical yet, it has expanded into adjacent categories. Chewy is placing a greater emphasis on pet health care through its telemedicine and pharmacy services.

Chewy's active customer base grew 43% year over year to 19.2 million in the fourth quarter , and Singh said its pace of customer acquisition accelerated relative to the third quarter. Sales from its Autoship subscriptions grew 46.1% to $1.4 billion in the quarter , accounting for 68.2% of total net sales.

Singh also noted that puppy and kitten pet profiles grew 35% last year over the same period last year , while newly adopted pet profiles grew about 40%. As these pets grow, it provides the potential for lifelong customers for Chewy .

North America

Pet e-commerce

chewy