Chewy's strong Q1: 'Increased demand levels we are experiencing are here to stay'
Pet supply marketplace Chewy crushed its first quarter earnings targets on Tuesday, posting revenue growth of 46% year over year. As a digital only brand, Chewy was well positioned to absorb the surge in order volume brought on by the novel coronavirus pandemic, which forced much of the world's daily commerce activities online.
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Notably, Chewy said its expects the sales boost to hold up post-pandemic, while many other brick-and-mortar chains do not.
"We believe the increased demand levels we are experiencing are here to stay and reflect an acceleration of e-commerce adoption that is not likely to return to pre-pandemic levels," Chewy said in a shareholder letter. "We further believe that this combination of scaled revenues and cost discipline will accelerate us along our path of sustainable profitability."
Looking at the numbers, Chewy said first quarter revenue rose to $1.62 billion, with an adjusted loss of 12 cents per share. Wall Street expected a loss of 18 cents on revenue of $1.53 billion.
The company said it ended the quarter with 15 million active customers, up from 11.3 million the year prior. Chewy's active customers are also spending more per order, the company said, and are likely to stick around even after lockdown restrictions ease.
"We examined the purchasing behavior of new customers that we acquired just after the COVID-19 outbreak and compared it to the purchasing behavior of customers that we acquired prior to the outbreak," Chewy noted in the shareholder letter. "The behavior shown so far by these new customers is promising. Initial orders were up to 11 percent larger in value than our pre-COVID-19 customers."
In terms of guidance, Chewy expects revenue for the year to range from $6.55 billion to $6.65 billion. Wall Street is expecting Chewy's fiscal year revenue to come in at $6.41 billion.