Chewy Reports Sales Surge During COVID-19 Outbreak
Chewy experienced a surge in sales as concerns about the coronavirus (COVID-19) pandemic intensified in late February, officials said in an earnings conference call regarding its fourth quarter and year-to-date financial results on April 2.
“The disruption caused by the COVID-19 outbreak has altered consumer shopping behavior in recent weeks,” said Mario Marte, chief financial officer of Chewy. “We have seen this at Chewy as concerned pet parents stocked up on necessities, like food and other essentials, and as customers shifted their shopping from offline to online channels in support of social distancing efforts.
“Beginning late February, we saw an acceleration in sales which has continued through today and our first quarter guidance reflects these trends,” Marte added. “So, for the first quarter 2020, we are expecting net sales between $1.50 billion and $1.52 billion, representing year-over-year growth of between 35 percent and 37 percent.”
Before getting into Q4 numbers, Sumit Singh, CEO of the online retailer, took some time to address the coronavirus outbreak.
“While 2019 closed on a high note, and 2020 got off to a strong start, the world changed dramatically with the coronavirus outbreak,” Singh said. “In times like these, we know how special and comforting the bond is between humans and pets, and we devote ourselves every day to supporting those special relationships. We are here, 24/7, caring for the safety and well-being of our team members and meeting the increased shop-at-home needs of our customers, staying true to our mission of being the most trusted and convenient online destination for pet parents everywhere.”
Singh also explained how the company is moving forward during the pandemic.
“Taking care of our team members’ health and well-being is essential to all of us on the Chewy leadership team, and we are being highly proactive in our internal response to the COVID-19 outbreak,” Singh said. “We are in constant communication to plan and adapt as swiftly as possible to these rapidly evolving conditions and our COVID-19 response team is providing daily updates to our team members across the company.”
In addition, the Dania Beach, Fla.-company has expanded its health benefits and revised its part time off and sick day policies to “meet the evolving needs of this unique situation.” Chewy has instituted work from home at its corporate locations as well as for a proportion of its customer service teams.
Chewy has also increased cleaning and sanitizing procedures throughout its worksites, including its customer service sites and fulfillment centers, Singh said.
“Regarding our fulfillment centers and customer service centers, we have detailed contingency plans in place should we experience an on-site COVID-19 outbreak,” Singh added. “We have the ability to divert fulfillment and/or customer service contacts to other facilities while we isolate and restore the affected facility. We believe we can absorb a facility being offline for a short period of time with minimal incremental disruption to customer service levels.”
Q4, which ended Feb. 2, saw net sales of $1.35 billion, bringing the company’s total fiscal 2019 net sales to $4.85 billion. Removing the impact of the extra week in last year’s Q4, this represents 35 percent growth in the quarter and 40 percent growth for the year, Marte noted. The uptick was driven by continued growth in Chewy’s customer base and net sales per active customer, Marte added.
Chewy’s subscription-like Autoship customer sales growth outpaced overall net sales growth for both Q4 and full year 2019, according to Marte.
“Autoship customer sales for the fourth quarter 2019 were $954.2 million, representing 70.4 percent of total net sales and reflected 40.8 percent growth compared to the fourth quarter of 2018,” Marte said. “Autoship customer sales for the full year were $3.36 billion, 69.4 percent of total net sales reflecting 37.9 percent growth compared to 2018.”
As for active users, Chewy ended Q4 and year with 13.5 million active customers, an increase of 2.9 million customers versus the end of fiscal year 2018, according to Marte.
“The increase in active customers is new customers added in the period minus any customers who have not made a purchase in the last 364 days,” Marte said. “Net sales per active customer for fiscal 2019 increased 10.4 percent year-over-year to $360.”
Net loss for the quarter was $60.9 million, while year-to-date saw a net loss of $252.4 million, including share-based compensation expense of $136.2 million, according to Marte.
Due to the evolving situation with COVID-19, company officials declined to provide full year guidance at this time.