Specialist
Former senior executive at Chewy Inc
Agenda
- Competitive landscape – e-commerce vs bricks-and-mortar dynamics
- Demand pull-forward and impact of medium-term sales expansion
- Chewy's (NYSE: CHWY) Autoship subscription programme, platform stickiness and churn outlook
- Near-term risks and long-term growth outlook, including distribution expansion
Questions
1.
Could you share your expectations for the pet supplies industry over the next 12-18 months?
2.
Are there any proxies we should track to keep a pulse on where the industry trends are heading? Is there an index we could follow on pet adoption or abandonment rates?
3.
Can you give us a sense of Chewy’s TAM? What potential assumptions can we make based on some of the scenarios you called out?
4.
How would you describe consumer willingness to make purchases online vs directly via bricks-and-mortar? As you mentioned, the pandemic pulled it forward as people could only make some of these purchases online. Can you help us understand the historical trend here? What are your expectations?
5.
How would you frame CAC [customer acquisition cost]? You laid out convenience as the value proposition, but some consumers enjoy the in-store experience when taking their pet to a PetSmart or Petco. Are there any pre-coronavirus trends around CAC? What are your expectations? Do you think costs will rise, fall or stay flat?
6.
Do you find Chewy’s customer acquisition strategy to be any different from Amazon’s when considering its target demographic?
7.
What do you identify as a near- and long-term potential or upside to Chewy’s pharmacy/Rx business and why?
8.
How much more market share do you think Chewy can win from legacy bricks-and-mortar players when considering the pharmacy segment as an add-on or at least a cross-sell opportunity?
9.
Autoship is around 70% of Chewy’s sales. How do you think the company can continue to sustain that mix? How might it expand the Autoship portion?
10.
What are Chewy’s main challenges when converting customers to the Autoship segment?
11.
Does Chewy’s guidance of 25-26% FY21 revenue growth make sense to you?
12.
How encouraged are you by Chewy’s gross margin growth in Q1 2021? How do we assess the company’s potential to exceed gross margin of 28%?
13.
What is driving your confidence in Chewy’s gross margin expansion potential? Can you outline the underlying levers that you think are working for the company, such as private label? What assumptions are giving you confidence here?
14.
Where would you estimate the private label product mix to be? How do you think that will trend?
15.
You mentioned some supply chain issues impacting Chewy and the broader industry. When do you expect the supply chain challenges to dissipate, particularly around persistent out of stocks?
16.
What are your expectations for the aspects that Chewy can control around supply chain and distribution? How might the company invest in distribution centres in the near-to-medium term?
17.
How would you describe the relative health of M&A activity in the pet supplies industry, perhaps even considering Chewy as a potential buyer? Are there any capabilities or names that the company might consider to round out its portfolio or close the loop on tech?
