A rush to stock up on pet supplies during the early days of the COVID-19 pandemic drove first-quarter sales growth higher than it otherwise would have been for online pet retailer Chewy, Inc. (NYSE: CHWY). But it didn't result in a profitable quarter, as the company still reported negative free cash flow and a net loss for the quarter.
The company said the addition of 1.6 million active customers in the quarter was more than double the average quarterly pace seen in 2019. It also said that the customers added after the start of the COVID-19 outbreak spent 11% more per order than pre-COVID-19 customers. While this may imply customers were stockpiling pet supplies in response to the pandemic, Chewy said those customers returned for a second purchase within a month, and still spent more per order.
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Chewy said it was encouraged by the results from the first quarter, with 15 million active customers representing 33% growth versus one year ago, and growth in gross margins. Though costs increased due to the volume demands, the company said it believes those costs will moderate, and it will retain the added volume. "We do not view our strong first-quarter results as a one-off event," the company said in its shareholder letter.
Net loss for the quarter was $47.9 million, almost 62% greater than net loss in the year-ago quarter. Much of the added loss was due to significantly higher "share-based compensation and related tax expense," the company said. Excluding those, the company said losses decreased by 75% year over year.
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