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Chewy CEO: Retail Pet Trends Are Jumping

The pandemic pet-adoption trend and easier online ordering has benefited Chewy, the company’s CEO told Jim Cramer.

The pandemic pet-adoption trend and easier online ordering has benefited Chewy  (CHWY) - Get Chewy Inc. Class A Report, the company’s CEO told Jim Cramer on recent Mad Money show

Chewy CEO Sumit Singh told Cramer that the increase in pet adoption is not just a pandemic event. The online pet retailer works with over 6,000 pet shelters across the nation that report adoptions are still growing by double digits.

Chewy surprised Wall Street Thursday, swinging to a fiscal-first-quarter profit from a year-earlier loss on 32% higher revenue. The company reported, however, that supply constraints left it out of stock of some products, hurting the quarter's revenue.

Chewy shares are down year-to-date as investors favor the reopening stocks, but are up nearly 60% in the past 12 months.

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Looking at pet-related stocks, Real Money contributor Chris Versace says spending on pets has been steadily increasing, rising over 500% between 1994 and 2020. The question now is whether Chewy or PetMed Express is better for dividend seekers. Versace says Chewy is a digital pet play for sure, but not one that dividend investors will find appealing. For that he turns to PetMed Express. Read more of Versace’s insights on the pet sector and profit from his investing strategies.

When asked about Chewy's growth, Singh told Cramer that 69% of Chewy's volume stems from their auto-ship subscription programs, which delivers supplies without customers even having to think about it. The company, he said, is working hard to reduce the barriers to attaining quality pet health visits and medications to ensure that all pets lead long, healthy lives.

In its quarterly report, the company said its base of active customers rose 32% from a year earlier, giving Chewy 19.8 million of them at the end of the quarter. More broadly, over the past two years the active-customer base is up by 75%, or by 8.4 million customers.

Chewy has also built a culture that supports a great customer experience, Singh added. Items like surprise birthday cards not only delights their customers, it also builds trust, he said. That's why they make an effort to give back to their communities wherever they can.

Read more from Cramer and the other Real Money investing experts.