Chewy's Healthcare and Ads Businesses Set to Drive Expanding Profitability

The pet care industry is quite attractive, with brand loyalty, sticky purchase habits, pet humanization, and limited cyclicality representing just a handful of alluring structural features in an $144 billion US market (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 the firm's effort to achieve 10%-plus long-term adjusted EBITDA margin.