Time for Pet ETF on Upbeat Earnings from Chewy?

Chewy Inc. CHWY, the renowned online retailer for pet products, has left investors and pet enthusiasts delighted with its latest earnings report. Shares surged 17.4% in the pre-market session on Jun 1, 2023. This remarkable performance was fueled by Chewy's exceptional sales figures, driven by its recurring-purchase program and strong customer loyalty.

Chewy reported earnings of $0.20 per share in Q1, beating the Zacks Consensus Estimate of a loss of $0.04 per share. This compares to earnings of $0.04 per share a year ago. Over the last four quarters, the company has surpassed consensus EPS estimates four times.

Chewy, which belongs to the Zacks Consumer Products - Staples industry, posted revenues of $2.78 billion for the quarter ended April 2023, surpassing the Zacks Consensus Estimate by 1.87%. This compares to year-ago revenues of $2.43 billion. The company has topped consensus revenue estimates three times over the last four quarters.

Chewy's success can be attributed to its ability to attract and retain customers through innovative strategies. The company reported record-breaking net sales per active customer, surpassing $500, representing a remarkable 15% increase compared to the previous year. Chewy's Autoship program, which offers prescription refills, discounts, and scheduled deliveries, has played a crucial role in boosting customer loyalty and driving sales growth.

The pet industry has been growing by leaps and bounds lately. According to a 2021 survey from the American Pet Products Association, 70% of U.S. households — roughly 90.5 million — own a pet, as quoted on Yahoo Finance. About 35% of owners spent more on pet supplies during the pandemic, and 51% are willing to pay more for "ethically sourced" and "eco-friendly" products.

According to PetSmart CEO J.K. Symancyk, the industry is seeing some of its strongest growth in years, quoted on Yahoo Finance. The pandemic and the lockdowns also led many households to adopt a pet. Additionally, millennials (32%), Gen Xers (24%), and Baby Boomers (27%) are the demographics with the highest percentage of pet ownership.

While Chewy celebrated its thriving sales, rival Petco Health & Wellness Co. WOOF faced a different fate. Petco experienced a significant decline in its stock value following disappointing results. PetMed PETS too missed earnings and revenue estimates released in late May.

The contrasting fortunes of Chewy and other players highlight Chewy's ability to adapt to market conditions. It also raises the question: Is now the right time for investors to play the industry in ETF form?

ProShares Pet Care ETF (PAWZ) in Focus

Given Chewy's stellar performance and optimistic outlook, investors might consider exploring the potential of the pure-play Pet ETF. Chewy has about 8.18% in the fund PAWZ.

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PetMed Express, Inc. (PETS) : Free Stock Analysis Report

Petco Health and Wellness Company, Inc. (WOOF) : Free Stock Analysis Report

ProShares Pet Care ETF (PAWZ): ETF Research Reports

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