from the losing-money-on-every-sale-but-will-make-it-up-with-volume dept.
Chewy raises $1 billion in IPO
It will rain cats and dogs on Wall Street Friday: Online pet supplies retailer Chewy is set to make its debut. And it should be a strong one. Chewy, which was bought by retailer PetSmart in 2017 for nearly $3.4 billion in 2017, priced its initial public offering Thursday at $22 a share. That's above the expected range and values Chewy at $8.8 billion. The company will raise $1 billion from the stock sale and will trade on the New York Stock Exchange under the ticker symbol CHWY.
Chewy is growing rapidly, despite competitive threats from Amazon (AMZN) as well as food giant General Mills (GIS), which recently acquired pet food seller Blue Buffalo.
Sales soared 68% last year to more than $3.5 billion. But the company is still losing money. It reported a net loss of $268 million in 2018, following a $338 million loss a year earlier.
Unicorn meat.
(Score: 3, Funny) by hemocyanin on Sunday June 16 2019, @03:09PM (1 child)
I'm sure I already read this story in the last couple decades.
(Score: 4, Insightful) by JoeMerchant on Sunday June 16 2019, @10:09PM
1999 called, pets.com wants another shot.
🌻🌻🌻 [google.com]
(Score: 5, Interesting) by Hyperturtle on Sunday June 16 2019, @03:15PM (3 children)
Chewy.com has sent me endless postal mailings and emails, trying to entice me to buy products for pets that... are of a different species than what I have.
All sorts of dogs and cat stuff, yet... they don't seem to have determined what type of pets I would actually buy stuff for. Heck, I even could be miscontrued as a lizard-keeper due to my needing to feed the carnivorous plants throughout the year.
But they do not--they relentlessly try to market dog toys, cat scratching posts, and scientifically balanced diets for elderly dogs and treats for kittens. It's like a shotgun approach where nothing hits.
Don't ask me if their inability to target part of the audience properly is going to affect them in the long run; it doesn't seem to matter to wall street that the spam they send is ineffectual and has angered me to the extent I am not likely to ever shop there. They even send coupons for dog and cat food; it reminds me of the old days when a company would plaster a community with coupons in the hope that half of the recipients are applicable and maybe half a percent of them would switch to their brand and redeem a coupon to do it, and have no real methods to determine the metrics of success.
We have an internet and multicore processors now. It is probably not a good sign that Chewy hasn't figured out how to market to an applicable audience yet. But maybe they just will blow the money on purpose and enrich the corporate staff and go out of business like pets.com did. It's not like the corporate staff had to pay much of anything back to wall street; money was almost free in the heady days of the dot com IPO rush... seems sort of familiar doesn't it?
(Score: 0) by Anonymous Coward on Sunday June 16 2019, @03:27PM
Those were my first thoughts too, it seems too obvious though.
(Score: 2) by SomeGuy on Sunday June 16 2019, @08:39PM
You misunderstand. They want you to buy a cat. And a dog. And a smart phone while you are at it. Then buy all of the crap that goes along with them. You will be assimilated.
(Score: 3, Insightful) by Joe Desertrat on Sunday June 16 2019, @09:13PM
Frankly, I'm happier when a company is not making efforts to target me for advertising. That hopefully means they are not collecting data on me. I do dislike the fact Chewy automatically save your payment information, once my order is charged I have to log in to delete the information, but it seems just about every company is pulling that crap these days. I can order from them and within two days receive my order, and it has not been wrong yet. If you search the site you'll find they have something for just about any pet, and the prices are better than any stores I've been in.
(Score: 2) by MrGuy on Sunday June 16 2019, @03:29PM
Now they can afford to have some really nice sock puppets for their super bowl ad.
(Score: 0) by Anonymous Coward on Sunday June 16 2019, @03:46PM (5 children)
How does a business lose HUNDREDS of millions and still stay viable? Yet another symptom of this modern day insanity.
(Score: 2, Interesting) by Anonymous Coward on Sunday June 16 2019, @03:58PM
Look at netflix, uber, lyft, etc... interest rates are so low that they can keep going into more and more debt.
It is a combination of malinvestment, way too much money going to risky bets due to low interest rates, and big banks getting free money for parking it at the federal reserve: https://fred.stlouisfed.org/series/EXCSRESNS [stlouisfed.org]
(Score: 0) by Anonymous Coward on Sunday June 16 2019, @04:03PM
Keep in mind IOER rises with the federal funds rate: https://fred.stlouisfed.org/series/IOER/ [stlouisfed.org]
(Score: 3, Informative) by c0lo on Sunday June 16 2019, @10:55PM
The 0.1%-ers making a killing on your retirement fund, using a Ponzi in disguise.
https://www.youtube.com/@ProfSteveKeen https://soylentnews.org/~MichaelDavidCrawford
(Score: 2) by VanessaE on Monday June 17 2019, @01:45PM
Just the same old bullshit business math I'm sure...
You know: any profit you expected but didn't make is treated as a tangible loss, and so any profit you DID make doesn't count, whether or not it takes your bank accounts into the red.
So if you spend $50M a year on R&D, marketing, etc. and make $200M in profits in a given year, but your forecasts said to expect $300M, then you lost $100M, even though you are in fact $150M richer for the year (assuming your spending stayed near $50M).
(Score: 0) by Anonymous Coward on Monday June 17 2019, @05:48PM
They make it up in volume?
(Score: 0) by Anonymous Coward on Sunday June 16 2019, @04:08PM (4 children)
I have found Chewy to have a great selection and very competitive pricing. And their customer service is outstanding. Unfortunately in NJ they ship via Laser Ship, which is the worst of the worst of all delivery companies.
After two orders in a row being mis-delivered by Laser Ship - one to the wrong house on my street and one to a different town (only the address number of the delivery was the same, everything else was different) - Laser Ship's response was "We will recommenced to our drivers that they try harder to deliver to the correct address."
Unfortunately Chewy says their system selects the delivery service and they cannot override it. So I vote with my wallet and take my business elsewhere.
(Score: 2, Informative) by Anonymous Coward on Sunday June 16 2019, @05:09PM (3 children)
> very competitive pricing.
Just as well that you switched now, because that competitive pricing (predatory pricing), will not last. For now it's being subsidized by the vulture capital and next by the IPO proceeds.
(Score: 1, Informative) by Anonymous Coward on Sunday June 16 2019, @06:12PM (2 children)
News flash: when their prices go up people will look elsewhere. It's not like Chewy customers have to sign a long term contract, or anything of the sort. It's all transactional, and as consumers we have the choice to buy anywhere we want.
(Score: 0) by Anonymous Coward on Monday June 17 2019, @01:19AM (1 child)
orealy? Then why are sales at Amazon still going up? Their prices (in many cases) are not very good anymore. Most people (imo) aren't very good comparison shoppers (or aren't willing to take the time), even when it's easy on the internet.
(Score: 0) by Anonymous Coward on Monday June 17 2019, @09:27AM
Amazon is a cross between a giant department store and a convenience store. While you're there they try to push as much in front of you at once, and use their position - and free shipping - to get you to buy it from them to save time.
Most pet owners are much more selective and picky when shopping for their pets. And because pet food is a consumable it is much more price sensitive than one-time purchases.
(Score: 0) by Anonymous Coward on Sunday June 16 2019, @04:22PM (2 children)
Because you just love them...
(Score: 4, Informative) by stretch611 on Sunday June 16 2019, @07:17PM (1 child)
Obviously, you never had pets.
The reality is that we are human slaves to them.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 0) by Anonymous Coward on Monday June 17 2019, @10:10AM
I hope you write that from prison, otherwise you're a hypocrite. (in addition to being a slave driver)
(Score: 4, Interesting) by stretch611 on Sunday June 16 2019, @07:27PM (2 children)
https://www.marketwatch.com/story/chewy-is-going-public-5-things-to-know-about-the-pet-humanization-products-seller-2019-05-03 [marketwatch.com]
Chewy is also owned by PetSmart...
They are also pretty big... i.e. a bunch of sales/revenue.
Now with 5 covid vaccine shots/boosters altering my DNA :P
(Score: 3, Funny) by Anonymous Coward on Sunday June 16 2019, @11:37PM (1 child)
Yeah, they lose money per sale, but they make it up in volume.
(Score: 0) by Anonymous Coward on Monday June 17 2019, @09:32AM
Hey, don't knock it 'til you've tried it ... at least until you declare bankruptcy. ;-)