Competing pet retailers Chewy and Petco Health and Wellness Company Inc. both reported growing sales for the fourth quarter of 2022.

Chewy’s sales for its fiscal fourth quarter ended Jan. 29 were up 13.4% over the previous year to $2.71 billion. For Petco’s fiscal quarter ended Jan. 28, it reported sales were up 4% to $1.58 billion. 

Chewy ranks No. 14 and Petco ranks No. 96 in the Top 1000. The database is Digital Commerce 360’s ranking of the largest North American ecommerce retailers.

Autoship, food, and health are key for Chewy

Consumable and health care products were “pillars of strength” for Chewy in the fourth quarter, CEO Sumit Singh told investors. Sales of consumable and health products were up 18.5% over the year-ago period in the fourth quarter, and made up 82% of net sales. Their sales grew enough to offset declines in more discretionary categories, including dog beds and toys.

Food and health products are frequently sold as recurring shipments, which now make up the majority of Chewy’s sales. Autoship sales grew 18% in the fourth quarter, and made up nearly three-quarters (73%) of total sales in the quarter. $1.98 billion of sales in the fourth quarter came from autoship products, chief financial officer Mario Marte said.

Petco leverages its physical presence

Unlike Chewy, Petco has more than 1,500 North America stores in addition to ecommerce, and it is using them to its advantage.

More than 90% of customers who make online purchases through Petco choose same-day delivery or buy online, pick up in store (BOPIS) when given the option, CEO Ron Coughlin told investors. Petco uses its locations as “micro distribution centers” to get those products to customers quickly and with lower fulfillment costs than they’d otherwise require, Coughlin said. Petco did not share what percentage of total sales were digital.

The retailer also attracts customers to its stores with veterinarians and groomers. Petco hired 1,100 additional veterinarians in 2022, with a vet presence in 90% of stores, the company said. This is a valuable investment, the company said, because customers who use vet services are worth 2.3 times the lifetime spending of customers who do not.

Services, including vet and grooming, were up 15% in the quarter.

The pet market keeps growing

The pet care industry in the U.S. is massive, and both Chewy and Petco have plans to keep growing sales as people remain willing to spend money on their pets.

Singh told investors that the U.S. pet industry is valued at $130 billion, and that it continues to grow even during economic downturns. Morgan Stanley predicts the industry will be worth $230 billion by 2030. Pet care retailers in the Top 1000 collectively grew web sales 20.1% in 2021, reaching $12.34 billion.

Chewy earnings summary

For the fiscal fourth quarter ended Jan. 29, Chewy reported:

• Net sales grew 13.4% to $2.71 billion.
• Net income was $6.1 million, up from a $63.6 million loss in the year-ago period.
• Net sales per active customer grew 15% from $430 to “nearly” $500.

For the fiscal year ended Jan. 29, Chewy reported:

• Net sales grew 13.6% to $10.1 billion.
• Net income was $49.2 million, up from a $73,817 loss in 2021.
• Total active customers stayed steady at around 20.4 million.

Petco earnings summary

For the fiscal fourth quarter ended Jan. 28, Petco reported:

• Net sales grew 4% to $1.58 billion from $1.51 in the year-ago period.
• Net income increased 12.9% to $32.7 million.
• Active customer base grew by 70,000 to 25 million.
• The perks program launched and added 300,000 members.

For the fiscal year ended Jan. 28, Petco reported:

• Net sales grew 4% to $6.04 billion, from $5.81 billion in 2021.
• Net income was down 44.8% to $90.8 million.
• Veterinarians grew by 40% to 1,100.
• 50 vet hospitals added to total 247.

Percentage changes may not align exactly with dollar figures due to rounding.

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