Between April 2021 and 2022, online pet food, treat and product retailer Chewy’s stock value declined by nearly 50% compared to the S&P500 index. While Chewy’s stock slid, the company’s revenues increased by 24% in 2021. Investment bank Cascadia Capital analysts explored Chewy’s performance in “Pet Industry Overview Spring 2022.” Cascadia follows Chewy in its index of publicly traded pet industry stocks, which includes Nestlé, J.M Smucker and FreshPet. Smucker and Purina’s stocks finished nearly on par with the S&P500 in 2021, while Chewy and FreshPet finished lower.
I want my free, daily news update from Petfood Industry.
Approximately 1.46 million new customers helped fuel Chewy’s revenue growth, according to Cascadia’s analysts. Nevertheless, Chewy faces challenges to pet product access, driven by manufacturing constraints and raw material availability, like many in the industry. The Russia-Ukraine War made this worse. Product access challenges are expected to continue in the first half of 2022. Likewise, labor challenges affected Chewy’s 14 fulfillment centers. In November and December of 2021 especially, the omicron variant of the coronavirus SARS-CoV-2, the virus that causes COVID-19. These labor challenges didn’t stop its economy of scale from benefiting Chewy as its margin line posted a gross profit of 26.7%. Chewy’s management may plan to offset labor headwinds by leveraging advertising and marketing expenses.
According to Cascadia analysts, pet food industry stocks reached higher peaks in 2021 than the year, but the performance wasn’t consistent throughout the year. However, 2021 revenues from an index of publicly traded pet food companies beat out figures from 2020. Yet, those pet food company revenues peaked in June 2021 at more than US$6 billion in the second quarter of 2021. Nevertheless, pet food industry stocks in Cascadia’s index grew by 16.2% in 2021, compared to 9.8% in the prior year. Overall, established pet food industry companies yielded higher earnings per share than emerging businesses.
The United States pet food industry continues growing atop the pandemic-fueled surge in pet ownership and premiumization, but Cascadia analysts warned that the good news may hide weaknesses in the dog, cat and other pet food markets. While the pet food industry grew through the lingering pandemic, they observed how the influence of the disease on society may have distorted the market, making long-term prediction complicated.
Overall consumer spending recovered for the pet food industry in 2021, but a scarcity of suitable comparisons may distort the meaning of the growth percentages. Along with that, pet food and treat market performance data form 2021 was boosted by new pet acquisitions that had yet to annualize or reach a point where data could go from allowing short-term versus long-term calculations. Those new pandemic pets and increased premium pet food purchases, especially among wealthier Americans, served as a bulwark against financial caution and concern among lower-income groups in early 2022. Those monetary worries may be less focused on the pandemic’s immediate effects now though.
Tim Wall covers the dog, cat and other pet food industries as senior reporter for WATT Global Media. His work has appeared in Live Science, Discovery News, Scientific American, Honduras Weekly, Global Journalist and other outlets. He holds a journalism master's degree from the University of Missouri - Columbia and a bachelor's degree in biology.
Wall served in the Peace Corps in Honduras from 2005 to 2007, where he coordinated with the town government of Moroceli to organize a municipal trash collection system, taught environmental science, translated for medical brigades and facilitated sustainable agriculture, along with other projects.
Contact Wall via https://www.wattglobalmedia.com/contact-us/
By Lindsay Beaton
Guideline revisions are necessary to bring the U.S. up-to-date with global trends.
By Lindsay Beaton
Premium pricing hasn’t stopped demand from pet owners looking for the highest-quality products for their animals.