Is Chewy Profitable 2024?

Chewy is the most significant player in the pet care and pharmacy industry, and if you are an investor who knows about this and wants to invest in this segment, then you might want to find out: Is Chewy profitable?

Simply being the biggest player in an industry is not reason enough to invest in a company. You must find out the financials of the company.

So keep on reading as we reveal to you the profit, revenue, and overall financial performance of the company, along with the challenges they are facing.

Is Chewy Profitable

Chewy Company Overview

Chewy is a popular American e-commerce retailer that sells pet supplies, pet food and treats, medications, etc.

The company was founded in June 2011 and has now partnered with 3,000 pet brands and offers over 100,000 products.

What’s interesting is that the Chewy has an extensive infrastructure, in that they can serve more than 80% of the U.S. population overnight. This also makes them the biggest pet care pharmacy in the world.

Apart from pet care products, the company also offers a unique subscription-based service where each month, customers receive products automatically until they cancel the subscription. Interestingly, most of their revenue (73%) comes from this service.

Chewy has seen rapid growth in the industry, and it even holds a 41% market share in the pet industry. Morgan Stanley estimates that the company will see 8% CAGR growth rate until 2030.

However, in spite of being this big, there are questions about the company’s profitability. So keep on reading to find out more information on this.


Financial Performance of Chewy

Financial Performance of Chewy

Over the past three years, Chewy’s revenue has increased consistently; however, its growth has slowed down a bit.

This is because Chewy managed to achieve only 13.6% growth in 2023 as compared to its growth of 24.4% in 2022 and 47.4% in 2021.

If we talk about the gross profit margin, then that has been increasing every year, and in 2023, it reached 28%.
2023 was also a significant year for Chewy as they saw a positive operating income. Although their operating income margin was quite low, 0.4%, it is still a positive growth.

Overall, the positive numbers tell us that Chewy is heading in the right direction.


Is Chewy Profitable?

Chewy became profitable for the first time in 2023. Chewy announced its Third Quarter 2023 Financial Results, as per which the company made an adjusted net income of $63.0 million, showing an increase of $14.6 million year over year. 

The company’s net sales also reached $2.74 billion, showing an 8.2% year-over-year increase. These figures tell us that, yes, Chewy is profitable, but there is still a long way for the company to go.


Annual Revenue of Chewy

YearAnnual RevenueChange
2019$4.58 B
2020$6.45 B40.99%
2021$8.54 B32.33%
2022$9.77 B14.45%
2023$11.00 B12.56%

Chewy Inc. Top Shareholders

Top Institutional HoldersShares% OutValue
Baillie Gifford and Company18,482,76415.37%312,913,200
Vanguard Group Inc9,604,6987.99%162,607,540
Voya Investment Management LLC6,564,2585.46%111,132,889
Morgan Stanley5,775,9444.80%97,786,733
Brown Advisory Inc.5,446,8974.53%92,215,967
Neuberger Berman Group, LLC4,080,6603.39%69,085,575
Wellington Management Group, LLP4,049,5703.37%68,559,221
Bank Of New York Mellon Corporation3,522,3192.93%59,632,861
Blackrock Inc.3,218,5842.68%54,490,628
Two Sigma Investments, LP1,839,2811.53%31,139,027

Should You Buy Chewy Stock?


Challenges That Chewy is Facing

Challenges That Chewy is Facing

We have already seen the positive growth and success that Chewy has been able to achieve. Let us now look at the challenges the company is facing:

1. Competition

The company mentioned in its financial report that the competition in the pet industry is pretty high, and it faces tough competition from different pet care brands.

In the report, they also mentioned that the competition within the e-commerce channel is even higher as consumer preferences are changing from in-store shopping to online shopping now.

So competition is a big challenge for the company.

2. Customer Growth

Another concerning thing to take note of is that Chewy’s customer base is not growing as quickly as it was before.

For three years, the company saw a growth in their customer base. However, from fiscal year 2021 to fiscal year 2022, Chewy saw a customer growth rate of only 0.6%.

While the numbers are not that high, it is still a bit concerning when a company fails to grow its customer base.

3. Low Profit Margin

E-commerce businesses are historically low-margin businesses and require a large operating scale to make good money.

As we mentioned before, Chewy hasn’t made a significant operating income yet; they have just turned positive by a low margin.

The bad news is even if Chewy manages to scale their business for leverage, their profit margins will still not be that high.

Amazon is a good example of this. In spite of being the world’s biggest e-commerce platform, Amazon makes most of its revenue from AWS.


Wrap Up

Although Chewy is the market leader in the pet industry and has been seeing consistent growth in revenue, there are still many challenges that the company has to overcome.

This includes stagnation in customer base and fierce competition from other companies in the industry. It will be exciting to see how the company comes up with new strategies to grow its profit margins and increase its customer base.

We hope you found this article on: Is Chewy Profitable useful.


FAQ’s

Who Owns Chewy?

In March 2015, BC Partners purchased Chewy for $8.7 billion, and two years later, PetSmart acquired Chewy, which went public in 2019. BC Partners, however, split Chewy and PetSmart, but PetSmart is still the biggest shareholder of Chewy.

What is the Future of Chewy?

The company is forecast to grow its earnings and revenue by 40.4% and 6.7%, respectively. However, these are just estimates, and only time will tell if the company will be able to achieve these figures or not. 

Was Chewy ever in a controversy?

The Food and Drug Administration gave a warning to 9 pet suppliers for carrying “illegally marketed” over-the-counter medicines, and Chewy was also on the list. 

Leave a Comment