4xing Chewy to the Pet-Everything Brand

🧠 The Takeaways

Today, we’re taking Chewy private at $20B to transform the pet industry.

1. Sell off the farm biz and focus on pets.

2. Acquire a vet chain to accelerate growth.

3. Launch the No-Kill campaign.

+ What’s your best Holiday hack to balance your life.

LBAB! Community - How have you found balance?

This week, I’m flipping the community section on its head + asking you for advice.

How are you balancing life with the insane Q4 workload?

+ what’s your best hack to deal with everything that’s going on in life in addition to the holiday craze?

I’ve been going through it recently with the dog, household chores, and other stuff that needs to get done.

Drop a reply here or comment below with one hack that helps you survive the madness. 

I’ll collect the best ones for next week + share everyone’s great hacks.

Let’s Examine This Biz

Note: As always, none of what follows is legal, tax, investing, financial, or any other sort of advice. And I was never here.

Chewy (the beloved Pet-food-subscription-delivered-to-your-door biz) is still reeling from the enormous COVID pet adoption surge, surrenders, and now it’s trying to find its footing.

• Share price: $38

• Market Cap: $16B

• L5 Performance: -43%

• P/E Ratio: 109x

Chewy 10x’d their Net Income in 2024 vs. 2023, but the stock has been treading water since their 2023 earnings dropped. This biz is printing money, but there’s soooo much room for improvement.

Financial Summary

2024 Financial Statements (YoY Comparison)

Sales: $11.1B (+6%) 👍
Gross Profits: $3.1B (+10%) 💪
OPEX: $3.1B (+5%) 👍

Net Income: $392m (+890%)** 😻

Link to Company’s earnings

**While the Net income jump looks impressive, $241m out of the $392m is from a deferred 1-time tax incentive, so in real numbers the Net Income is +281% YoY. Still great, just not insane.

TLDR Analysis: Good but a tough biz model

• Rev outpaced COGS, so Gross Profits increased faster than rev.

• Kept OPEX in check on a slow growth year.

• Net Income had an enormous jump but still only 3% Net Income Margins

Chewy is performing very well and is an incredibly run biz. 

But Digital Retail (or call them a marketplace if you want) is a brutal model to run.

The best-in-class, scaled biz only operates at a 1% Net Income Margins.

Let’s Fix This Biz

Here are my 3 moves to turn Chewy into a $50B pawerhouse.

1) Carve out the Farm biz

I understand why Chewy got into this biz, but it’s the wrong direction. 

During COVID, when pet buying exploded, and everyone wanted to start a chicken coop, the “obvious” market expansion was for Chewy to expand their supply chain into other animals that could be considered pets (horses, livestock, chickens, wildlife).

But that isn’t the same market. 

Chewy’s special sauce is distributing pet food to lazy city/suburban people.

At a certain point, the delivery fees to get a 20lb bag of horse feed from a distribution center to a farm break the affordable unit economics. Chewy or the customer has to pay.

Also, you can’t really upsell the same benefits (Pet Insurance, vet visits) and all the other areas Chewy is expanding into.

It isn’t expanding how much their core customers spend with them.

Takeaway: Don’t expand into markets just because they look good.

2) Acquire a Vet Chain

Chewy has launched 8–10 Vet clinics as they continue to make a push into Pet care (+ insurance product started in 2022).

That’s a good test ground to learn how to run a vet biz, but it’s not a way to aggressively scale the biz.

Bond Vet (40–50 location chain in major US cities) is the first one that comes to mind, but there are other, bigger chains they could acquire, like Thrive Pet Healthcare (400 locations).

We are Chewy customers and recently had an emergency for our good boi, Pi Jio. 

1. We immediately went to Chewy’s online Vet chat. 

2. Talked with a specialist. Got direction.

3. I still had to research a local vet to see him.

Chewy’s obvious future state:

• Triage immediate requests 

• Collect the data online

• Fast-track us to a Chewy clinic nearby for emergencies when we need human help.

The retail footprint is the key.

Instead of my paying $100s for an in-person vet visit + some meds, I should pay an annual subscription to Chewy for:

1. Immediate Vet Concierge Service

2. Pet Insurance

3. Vet visits

4. Monthly food, treat, and medication delivery

5. Holistic, AI-driven plan to keep my good boi healthier for longer.

It’s the Apple ecosystem but for my fur son. Chewy has all Pi Jio’s data, what’s going on in/on his body, and his medical records.

And they have a storefront. When I need to pick up more food/toys/treats, it’s conveniently close.

My LTV explodes from hundreds/yr to 5 figures/yr. 

(The 5% cashback I get from Amazon to order the same products doesn’t look so appealing anymore.)

Takeaway: A holistic plan is how they defend my food + treat subscriptions against Amazon.

3)  Launch the No-Kill Campaign

1 of the worst parts of the pet industry in America is how overrun shelters are. When they are, animals are forced to be put down if they can’t find a home.

Over the last 10 yrs, this has been radically changing (in the US). 

• In 2016, only ~24% of US shelters were no-kill shelters. 

• By 2024, that number climbed to 63%. 

There’s significant momentum in the US to prevent the nearly ~500k shelter euthanizations /yr.

For a small % of Chewy’s ~$1B annual marketing budget, we’ll have them quarterback the enormous infrastructure among charities, celebrities, and grassroots movements working on solving this issue. 

Which will cement them as THE brand for Pet lovers.

I’m thinking:

1. PSAs + CTA Advertising w/ celebrities (I wonder what Sarah McLachlan is doing).

2. Sponsor state + federal government bills. 

3. Donate Product + coordinate customer donations to feed more pets.

Aligning other major players in the industry (Vets, Food Manufacturers, Pharmaceuticals, other retailers) would allow Chewy to be the leading name, without having to foot the whole bill.

The marketing and brand association alone would propel the company and elevate the brand that’s already well-known for their birthday cards and flowers when a customer churns. 

Takeaway: Invest continual resources in Community. The long-term ROI is always there.

Final Thought

We’ve lost the script a bit when it comes to brands doing good for their communities and building a better world for their customers.

Whether it’s any brand’s right or responsibility (or just something we’d like them to do), there is incredible opportunity to align everyone’s obvious benefits here.

Some basic facts (US data):

• The US pet industry is ~$157B (in 2025) growing at a 7–8% CAGR.

• ~4m pets get adopted every year.

• ~600k pets are euthanized in shelters every year.

• No-Kill Shelters are 1 of the fastest-growing trends in America. (Flipping from 25% of Shelters in 2016 -> 63% in 2024).

• There are ~14k Shelters + Rescues across the US

Let’s put aside the societal/moral piece of this argument for a second and make it a boardroom P&L decision:

• 600k fewer pets means 600k fewer customers for Chewy + the pet industry.

• 600k/4m = 15% growth of new customers to the industry.

• The whole industry is growing at 7–8%.

Saving all euthanized dogs' lives (whether they are in a shelter or not) would be 1 of the fastest-possible growth initiatives for the pet industry. 

Regardless of whether the pet gets adopted or not. The shelter rescue will still need food, medicine, treats, toys, and care.

A Claude analysis roughly estimates that the cost to stop euthanizing the 600k pets would roughly cost $1.2B to upgrade the Shelter/rescue infrastructure. This includes:

• Direct care costs

• Medical intervention

• Behavioral rehabilitation

• Facility expansion

• Transfer/transport programs

It’s a big, expensive project, so let’s give it a buffer and round up to $1.5B.

For 1% of the overall Pet market size, the collective Pet industry can fund (before we get into non-profits, govt subsidies/benefits etc):

1. The largest increase in their market size

2. Eliminate 1 of the most painful downsides of the entire system (that hardcore customers deeply care about)

3. Turn charities + crisis centers into stable customers

At the end of the day, every biz exists to solve a customer problem.

I can’t think of any worth solving more than preventing 600k pet deaths per year because of lack of resources. Especially when on the other side it’s such a big opportunity.