Pet retailers Chewy and Petco both reported earnings in late May. 

Chewy, which exclusively sells products online, reported net sales were up 14.7% year over year to $2.78 billion in the fiscal first quarter ended April 30, 2023. 

Petco Health and Wellness Company Inc., which operates both in stores and online, reported comparable sales grew 5.1% year over year for its fiscal first quarter ended April 29, 2023. Net revenue grew 5.4% over the same period to $1.56 billion.

Chewy ranks No. 13 in the Top 1000, and Petco ranks No. 92. The database is Digital Commerce 360’s ranking of the largest online retailers by web sales.

Chewy customers aren’t trading down

Chewy CEO Sumit Singh told investors that pet owners remain willing to spend on premium products. 

“Our customers continue to show durability and product loyalty in these non-discretionary categories with no discernible trade down behavior,” he said, referring to the consumable and health categories. Those two categories made up 84% of net sales in the first quarter. 

While customer acquisition slowed, net sales per active customer grew 15% year over year to $500. This is largely driven by autoship, Chewy’s subscription program, Singh said. Autoship drives nearly 75% of sales, and “recurring and predictable revenue and long-term customer loyalty,” Singh said.

Petco grew online

Petco’s online orders showed “double-digit sales growth,” CEO Ron Coughlin told investors. Petco did not share what percentage of revenue is made up of digital sales.

Growth was driven by returning customers, pharmacy, and same-day delivery. Same-day-delivery orders doubled year over year, “underscoring the significant competitive moat same-day delivery offers relative to our online-only competitors,” Coughlin said.

Both brands emphasize health

Petco has vet clinics in some stores, and it is one of the 10 largest veterinary providers in the U.S., Coughlin said. In Q1 this year, Petco clinics saw 20% more pets than Q1 last year. The pet retailer also operates more than 1,300 mobile pet clinics that serve lower-income customers.

Health care is important for Chewy, too, though it doesn’t operate any clinics. In the quarter, it added Lemonade pet insurance to its offerings of wellness plans. Chewy also operates the largest pet pharmacy in North America, and all pharmacy products are eligible for autoship, Singh said.

Both retailers mentioned flea and tick preventatives as a growing part of business.

“A healthy start to the flea and tick season further supported performance in our health care business,” Singh told investors. Petco marketed flea and tick medications when the weather warmed in the U.S. northwest recently, and sales “performed strongly,” Coughlin said.

For the first quarter ended April 30, 2023, Chewy reported:

• Net sales grew 14.7% year over year to $2.78 billion.
• Net income grew 20% to $22 million.
• Net sales per active customer increased 15% to over $500.

For the first quarter ended April 29, Petco reported:

• Net revenue grew 5.4% to $1.56 billion.
• Net loss was $1.9 billion, a decrease of $26.6 million from the year-ago period with net income of $24.7 million.
• Average basket grew 5% year over year.
• Active customers remained flat at 25 million.

Check back for more earnings reports.

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