Online pet retailer Chewy saw its Q2 sales rise 26.8 percent, reaching $2.2 billion, as consumers’ adoption of online shopping and furry companions continued to drive sales.
The company benefitted from a 21 percent increase in active customers and a 13 percent improvement in net sales per customer.
“We have increased share of wallet from every cohort we’ve added to our platform over the past 10 years, and our long-term revenue retention levels from each cohort remain well above 100 percent,” CEO Sumit Singh told analysts. “As a result, our base of recurring revenues grows over time as the revenue produced by each cohort stacks on top of one another, like the layers of a cake.”
While the company did not hit profitability in the second quarter, it did manage to improve its margins. This was because stable promotions as well recurring purchases helped improve sales; however, the company saw an “unprecedented” hike in its marketing costs. Costs related to advertising and marketing went up by 80 basis points, according to Singh.
Advertising on Google, for example, cost 51 percent more, while ad prices on Facebook increased by 47 percent. Overall, the company’s cost-per-click increased by 80 percent in the pet category year to date.
While the boost in sales is good news for Chewy, it still has a long way to go before it can become a profitable company. The company saw a net loss of $92.5 million last year, half of the losses the company saw in 2019. These losses stem from the fact that the cost of acquiring and retaining customers continues to be very high for the company.