Will Chewy build on its current sales momentum once the COVID-19 threat has passed?
Chewy.com, the online pet retailer, has seen an acceleration in sales since late February as stay-at-home orders proliferate across the country. Despite this, CEO Sumit Singh said on the e-tailer’s fourth-quarter conference call last week that the crisis is creating both “headwinds and tailwinds” for the company.
Among the headwinds, Chewy has expanded health benefits and revised paid-time-off and sick-day policies. Between 6,000 to 10,000 new hires will be made to handle the “demand shock” being felt by fulfillment centers.
On its website, customers are being told deliveries are “running considerably longer” than usual. “We believe that being transparent with customers during this time is an important thing to do,” Mr. Singh told Yahoo Finance. He said customer sentiment towards the brand remains strong and “customers are understanding and forgiving during this time.”
Finally, Chewy has made investments in elevated sanitization and cleaning procedures. No any confirmed COVID-19 cases had been found across its worksites as of last week.
On the tailwinds side, the surge in orders is coming from both existing and new customers and isn’t concentrated in hard hit areas, such as New York City.
First-quarter growth is expected to accelerate in the 35-to-37 percent range. Even so, Chewy is not providing full-year guidance due to uncertainties in the marketplace. “In light of the unprecedented nature of the current pandemic, the steps being taken to mitigate the outbreak and the sheer number of other variables outside our control, we believe that this is the best course of action,” said Mr. Singh.
Chewy’s CEO still expects social distancing to change consumer behavior to his company’s benefit. Even before the coronavirus, Chewy was predicting online penetration in the pet category to reach between 20 to 25 percent over the next few years, and its CEO sees it eventually rising as high as 45 percent.
“Occurrences like the one that we’re in right now provide motivation and tailwinds to a shift in consumer pattern and behavior,” he said. “We are yet to obviously see how much of that is going to be sticky over the long term, but there’s definitely going to be an impact.”
- Chewy Announces Fourth Quarter and Full Year 2019 Financial Results – Chewy
- Chewy (CHWY) Q4 2019 Earnings Call Transcript – Motley Fool
- Chewy CEO: ‘We are seeing meaningful lift in new customers’ amid COVID-19 outbreak – Yahoo Finance
- Pet Retailer Chewy Sees Surge In Demand Due To Coronavirus Lockdown – Forbes
DISCUSSION QUESTIONS: What are the obvious and less obvious challenges Chewy faces as it executes amid the pandemic? Do you agree that online penetration in the pet category will accelerate due to the crisis?