June, 2021

Can Chewy (CHWY) Keep Clearing a High Bar?

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Can Chewy (CHWY) Keep Clearing a High Bar?

Last quarter, CHWY shares popped +8% post-earnings after delivering a report that beat expectations: Net sales increased more than 50% YoY, driven by active customer growth and increased purchasing behavior.
Translation: Chewy is very good at engaging its customer base and encouraging repeat purchases.
This loyalty is apparent in Chewy’s Consumer Happiness levels: 80% positive and rising (+4% YoY), and far exceeding retail peers. 
Another key driver of Chewy success is its Autoship feature: Autoship net sales represent more than 68% of total net sales.
LikeFolio data shows that Autoship subscription mentions increased +16% in 21Q1 vs. 2019.
The Caveat?
Total Mention growth is slowing down.
While mentions are +13% higher vs. 2019, this represents a pretty steep slow down in growth compared to last year and 2019, when mentions grew by +44% YoY.
Chewy has elevated levels of short interest heading into earnings (24%), so if you do play this to the downside, stay risk defined.
Long-term, it’s clear Chewy is the gold standard when it comes to Pet supplies.

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