Chewy rode the pandemic pet boom and built a huge subscription business

5/31/24 10:56AM

Autopilot

At some point in the last few years, you might have asked yourself: “why is everything a subscription these days?”

The success of software, cable, phone contracts, streaming, and other products in the 2000s inspired entrepreneurs to try just about anything as a subscription, chasing the holy grail of predictable ‘recurring revenue’. From razors to glasses, toilet paper to your entire wardrobe, if you’ve bought it in a store, it’s probably been tried as a subscription business (or at least a direct-to-consumer business). Most efforts, it must be said, have struggled to make the economics work, despite millions of dollars in VC funding. Pet supplier Chewy, however, has bucked the trend.

Indeed, shares in the company are up more than 30% this week after reporting a set of Q1 results that came in way ahead of expectations. Chewy’s “autoship” sales — an offering where customers can set up repeat deliveries for a discount — were up 6.4% year-on-year, and its revenue per active customer rose to a whopping $562. The market lapped up that progress, with autoship sales now more than 75% of Chewy’s business, driving almost all of its growth since 2021... and investors seemed to like the announcement of a $500M share buyback.

Pet project

The uptick for Chewy comes after a difficult few years. A pandemic darling, Chewy’s sales soared during the pet boom of COVID, and — like so many other “pandemic winners” — the reality never quite matched up to the expectation. From its peak, CHWY is down 82%... with the shares loosely tracking the volume of Google searches for the phrase “puppies for sale”, which boomed throughout 2020’s lockdown days.

But, while Chewy’s stock may have lost some of its bite, the pet product peddler remains a huge business, with revenues north of $10B. This makes it one of the most successful of a vintage of subscription / direct-to-consumer brands — such as Casper (mattresses), StitchFix (personal styling), Peloton (fitness), SmileDirectClub (oral care), Allbirds (shoes), Blue Apron (meal kits), and others — that have struggled, or even gone bankrupt since their Covid boom. Random consumer subscriptions may be for Christmas, but pet supply subscriptions are for life.

Go fetch: Chewy’s founder, Ryan Cohen, is none other than the CEO of GameStop.

Nia Warfield10h

Starbucks issues apology after viral “Bearista” cup meltdown

Holiday cheer turned into chaos this week for Starbucks after the coffee giant’s new “Bearista” holiday cup sent fans into a frenzy.

Dropped alongside its 2025 holiday menu, the $30 beanie-wearing glass bear tumbler sparked long lines, sellouts, and even in-store scuffles before Starbucks stepped in with an apology.

“The excitement for our merchandise exceeded even our biggest expectations,” the company said in a statement to People. “Despite shipping more Bearista cups to our coffeehouses than almost any other item this holiday season, the Bearista cup and some other items sold out fast.”

Within hours of launch, frustrated fans flooded Starbucks’ social media pages and even store hotlines. Some customers waited in line before dawn and others said their stores received only a handful of cups. In one Houston location, the craze even turned physical, with police reportedly called to break up a brawl. Meanwhile, the cup is already reselling on sites like eBay, with listings topping $600.

“We understand many customers were excited about the Bearista cup and apologize for the disappointment this may have caused,” Starbucks said. While in-store customers may be upset, investors seem happy about the viral hit, as the stock has risen over 3% on Friday.

If you’re still hoping for a Bearista at market price, that may not be on order: the chain didn’t disclose how many cups were made or whether a restock is planned.

Hyunsoo Rim11h

Target tells workers to smile, wave, and greet shoppers if they come within 10 feet of them

Target just rolled out a new rule for store employees: “smile, make eye contact, and greet or wave” when a shopper comes within 10 feet — and if they get closer, within four feet, “ask whether they need help or how their day is going,” according to a new Bloomberg report.

Dubbed the “10-4 program” internally, the rule mirrors rival Walmart’s own 10-foot policy, formalizing behavior Target had previously only encouraged.

Target Mandates Worker Smiles, Friendliness to Boost Sales

Hyunsoo Rim

LIMITED LIFE COMPANY

12h

Half of new US companies disappear within 5 years — and only 1 in 3 makes it to year 10

Survival depends on more than luck, from where it starts, to what it does, to when it’s born.

Millie Giles13h

Monster surges on energy drink buzz, while Celsius sinks on distribution concerns

Shares of Monster Beverage climbed 5% after the bell on Thursday, and held most of those gains into early trading on Friday, following strong Q3 results.

The energy drink giant topped market expectations, with quarterly sales up 17% year over year to $2.2 billion and adjusted net profits growing 41% to $524.5 million — 11% ahead of Wall Street’s estimates. In the report, Monster highlighted its zero-sugar line and new product launches, with a stack of novel flavors already released this year, as bright spots.

During a call with analysts, Chief Executive Hilton Schlosberg said that the global energy drink category “remains healthy with robust growth,” The Wall Street Journal reported, adding that demand for more affordable caffeinated drinks is rising as coffee has become “really expensive.”

Meanwhile, rival beverage business Celsius saw shares fall as much as 23% on its Q3 results yesterday — despite beating expectations, with revenue jumping 173% — largely due to concerns about a change in the company’s distribution channel, as its newly acquired Alani Nu brand joins the PepsiCo distribution network.

Millie Giles

UP-TO-DATE

11/6/25

Tinder taps AI that can analyze your camera roll to find better matches

As Tinder’s paid subscriber count dwindles, Match Group wants to fight “swipe fatigue” with new features.