Is Chewy on the Cusp of Becoming the Next E-Commerce Powerhouse?

Last year we watched as the pandemic ushered in a huge wave of Americans flocking to scoop up new furry friends.

According to the Washington Post, dog adoptions and sales have soared in 2020, with shelters like Society for the Prevention of Cruelty to Animals Los Angeles seeing pet adoptions rates double over the summer.

Naturally, this was great news for companies like the online pet store, Chewy (CHWY), which saw a 45% jump in second-quarter revenue, along with stock prices that jumped more than 200%, year-to-date.

So, when the pet retailer reported fourth-quarter earnings on Tuesday, it should have come as no surprise that Chewy’s success has continued months later. Yet, because analysts underestimated just how much owners will spend on their pets, the company reported stronger-than-expected profits of $2.04 billion, beating estimates of $1.96 billion,

But the real story isn’t about how analysts failed to project Chewy’s strong quarter. It’s about the powerhouse potential Chewy has to truly become the Amazon (AMZN) of the pet market.

Just think about it. If the company just delivered its first quarter of positive net income, with net sales per active customer hitting $372 during a time when so many consumers were strapped for cash and traditional retailers were ailing, what could really stop them now?

As CEO Sumit Singh eluded to the company’s success during the pandemic:

“[During an] incredibly challenging [year] Chewy performed exceptionally well and made significant strategic and operational progress.”

On top of this incredibly promising quarter, we just witnessed both, a revolutionary shift to online shopping and a flood of Americans adding a pet to their homes. Sounds like the perfect storm for sustained success.

Doubling down on this potential, Singh highlighted this has a great opportunity to expand into healthcare and services: 

“Overall, we see 2020 and the impact of COVID as much more than just a one-time growth accelerator. We see it as a catalyst that sped up the secular shift towards e-commerce that was already underway.”

The company said it will also focus on acquiring new customers and expanding its assortment of brands, healthcare offerings, and launching services and expanding outside of the U.S. “when the time is right.”

Originally published by Yahoo Finance

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