DANIA BEACH, FLA. — Chewy, Inc., an e-commerce giant in the pet product industry, released its first quarter earnings for 2020, reporting a net loss of $47.9 million offset by net sales of $1.62 billion.

The company’s quarterly revenue was up 46% compared to year-ago sales. Sumit Singh, chief executive officer, described the last three months as “Chewy’s busiest quarter ever” in a conference call detailing the company’s earnings.

“We ended the quarter with 15 million active customers, an increase of 3.7 million compared to the end of first quarter 2019 and the fastest acceleration of new customer acquisition in the company's history,” Singh said.

Autoship sales, which represent the company’s subscription-based revenue, totaled $1.1 billion in the first quarter of 2020, representing 67.9% of the company’s overall quarterly sales. This is the first time Chewy’s autoship sales have exceeded $1 billion in a single quarter, Singh said.

“Net sales per active customer grew 6.6% to $357 when adjusting to exclude the extra week in 2018,” he added.

The COVID-19 pandemic seems to have boosted sales for the e-commerce pet platform, which reported 1.6 million active customers over the first quarter and first-time orders were up 11%. Singh said the company expects many of these customers to become “long-term Chewy customers.”

“Also, after the COVID-19 outbreak, our existing customers started creating bigger baskets,” he continued, referring to the number and variety of products in each order. “These baskets had a higher mix of consumables in them. We believe these larger baskets with a higher mix of consumables were evidence of pandemic-related pantry stocking, and we estimate this benefited first quarter net sales by approximately $70 million.”

This, on the other hand, is expected to be a one-time benefit for the company, Singh said.

However, the pandemic also caused strains on the company’s supply chain, resulting in “temporary stress points” on the timeliness of order deliveries, customer service and order fulfillment, Singh said.

“The surge in orders increased our shipping volume in March by over 50% compared to February,” he explained. “…The demand shock, which was also felt by our supplier network, caused elevated out-of-stock levels for certain product categories and led to some temporary conditions of suboptimal inventory placement across our fulfillment network.”

Freight and packaging costs in the first quarter cost the company an estimated $20 million.

Chewy opened its ninth United States fulfillment center in Salisbury, N.C. in April, and hired 4,600 new hourly employees to primarily man its fulfillment centers. The company says its 10^th fulfillment center is on track to open later in 2020.

“As part of our COVID-19 mitigation efforts, in the first quarter, we updated employee benefits and policies, invested in temporary pay raises and bonuses for our hourly team members and materially raised our cleaning and sanitation protocols to keep our network operational and our employees safe,” said Mario Marte, chief financial officer.

These employee benefits and protocols paired with the addition of 4,600 new fulfillment center employees came at an expense of approximately $10 million for the company, Marte said.

Looking forward, Marte said the company expects net sales to total between $1.62 billion and $1.64 billion in the second quarter of 2020. He also projected sales between $6.55 billion and $6.65 billion for the full fiscal year.

“…we expect to incur ongoing COVID-related expenses in the second quarter as we remain committed to safeguarding our team members' health and well-being and protecting the customer experience,” Marte concluded.

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