Chewy Benefits From Resilient Spending on Pets and an Expanding Total Addressable Market

The petcare industry is quite attractive, with brand loyalty, sticky purchase habits, pet humanization, and limited cyclicality representing just a handful of alluring structural features in a more than $150 billion US market (per the American Pet Products Association). While a slew of players jockey for manufacturing and retail market share, Chewy's service-intensive subscription-driven platform looks poised to capture a disproportionate share of online sales, with the firm building a strong brand around customer service and perceived quality. In recent quarters, Chewy has also prioritized its retail media network offering—Chewy Ads—and its higher-margin healthcare businesses, which represent key pillars in its effort to achieve 10%-plus long-term adjusted EBITDA margin.