Pet owners hit hard by inflation are not spoiling their dogs and cats with new toys and treats, online retailer Chewy said.
Instead, they are rationing their dollars on food and other pet essentials, the company added.
“We saw softer demand in the second quarter for discretionary products,” chief executive Sumit Singh said on an earnings call Tuesday in which the company slashed its sales guidance for the rest of the year.
Chewy shares plunged nearly 8% on Wednesday.
The company also said fewer people are getting new pets as inflation takes a bite out of household budgets.
The Dania Beach, Fla.-based company, founded by billionaire Ryan Cohen, ended the quarter with 20.5 million active customers, an increase of 2.1%.
That’s in contrast to the torrid growth during the pandemic when 23 million American households, or about 1 in 5, adopted a pet, according to the American Society for the Prevention of Cruelty to Animals.
Pet-focused companies were beneficiaries of the pandemic, but now the sector is bracing for belt-tightening as consumers stick to the basics.
Chewy said revenue grew 13% to $2.43 billion in the second quarter ended July 31 compared to a year ago, but the results were below Wall Street’s forecasts.
The company said it expects full-year revenue in the range of $9.9 billion to $10 billion, which is below estimates of $10.25 billion.
“Broadly speaking, the purchase cycle isn’t actually favorable now,” Singh said on the earnings call.
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