Pet supplies was all the rage as an investing theme last year, and it's easy to see why. We were adopting pets in droves during the early days of the pandemic, deciding to weather the storm with furry friends that we wouldn't have to leave behind during the day as workplaces and classrooms went virtual.
Chewy was an obvious winner as a fast-growing, customer-focused online retailer. Stocks in this niche may have gotten ahead of themselves last year, which would explain why they're trailing the market in 2021. Chewy enters the new week trading 27% below its February all-time high. It reports its fiscal second-quarter results after Wednesday's market close.
There's a lot to like here. Chewy is growing, with its active customer base expanding by 32% over the past year. It has a sticky platform where shoppers save money by placing subscription orders to be perpetually replenished with their pet faves. However, the first-quarter net sales of $2.14 billion that it posted in early June merely matched the 32% year-over-year increase in active customers. Earlier guidance calls for $2.15 billion to $2.17 billion on the top line for the quarter it will report this week, barely nudging higher on a sequential basis. We've seen other providers of pet supplies, food, and meds languish after reporting earlier this earnings season, and it's hard to be optimistic that Chewy will break the mold this week.
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