Chewy, Inc. Goldman Sachs Global Consumer and Retail Conference

Thank you. Sure, Sumit. Most pleased with our focus on rebuilding the supply chain and technical infrastructure of the company, then layering the food and med side of the house on Autoship.

What that has done is it's given us the stability and the predictability to be able to invest those cash back into growing a very large health TAM, which we decided to enter in 2018. Health is $50 billion. $12 billion to $15 billion comes from products, merchandise, meds, diet, health and wellness supplements, flea and tick, et cetera. That's one. The second thing I guess I'm most excited about then is the health growth, given the large TAM and the need to step in and drive a much improved mousetrap in what the industry has been used to over the last several decades. There, we started with the product space.

We quickly became the number one pet pharmacy in the country. We currently continue that position of picking up $0.70 of every dollar that is moving online into the meds and product space. In 2024, we entered into the veterinary space more seriously, into the health services space by, A, building a software for veterinarians, which is now used by half the veterinarians in the country, then applying that technical capability into launching our own clinics, for which we have 60 now. They're performing better than the case that we laid out. I know we'll talk about them, so I won't go into this in detail. Broadly speaking, if you look at incremental growth on Chewy, over the last six years, we roughly added, I would say, $9 billion or so of incremental growth. Four out of the nine have come from Chewy Health.

If you look at the last seven years, or six or seven years of us going public, gross margins have gone from 18% to roughly 30%. A third came from Autoship, a third came from health, and a third came from us rebuilding our supply chains like we have.

Yeah. I think let us start a bit higher. Let us talk about consumer behavior and also attributing their intent towards the category in itself, because I feel this is an important one to address. It is true that the pet industry is seeing a little less enthusiasm in terms of customers actively voting to participate in discretionary categories. However, what is important to recall is that, go back to January and how this year started, right? The narrative that you heard from me on a stage like this was, "Hey, we are excited about coming into 2026. We are seeing normalization starting to occur.

We are seeing adoptions starting to run in front of relinquishments, and pet parents are leaning in with their wallets." We had estimated 150,000 to 250,000 net adds, and we had said, "Hey, if the year essentially turns out to be like 2025 was, we essentially expect a net add acceleration in the back half of the year." Right? What happened in March and April post the war, as soon as the war started, we started seeing some signs of customer pullback, particularly tied to fuel, tied to stress in the marketplace, and that impacted attachment rates. We essentially also came back and readjusted our forecast. The two changes that we made was we said, "Hey, it is April.

We don't yet know whether this is going to stabilize or not. We're going to leave it as the JPMorgan conference. We said, in Boston, we said, "Hey, we're going to leave it as we've seen trends worsening. We're going to readjust our forecast a bit." What you heard from us now is we've said, "Okay. We've seen this trend for a few months now. Trends have stabilized. We see adoptions and relinquishments roughly at parity.

We see food and meds at Chewy running strong, and we see our health services outperforming our forecast relative to what we had in April." Some part of the narrative that you're hearing about the dog population slowdown and the cost leading to slowdown in vet services visits, yes, the dog population has slowed down a little bit, but we're not seeing the second part of that equation come true on our side. That's one. Number two, when we go pulse shelters and rescues, in this country, shelters and rescues drive roughly two-thirds to 70% of the adoptions in pet. The rest come from breeders. We talk to both communities. Shelters and rescues, yes, dogs are slightly under-running, cats are over-running. Overall, it's a balance. But when they pulse consumer intent, the intent stands as strong as ever.

We view, and on the breeder side, breeders have seen no slowdown in these kind of elevated breeds that caught popularity in the last 10 years. All they've seen is their Goldendoodle that they used to be marketing for $2,200 a puppy is now selling for $4,500 a puppy. They're still producing an equal number of litters. What that tells you is that on the shelters and rescue side, it's what we consider a pent-up demand rather than any sort of specific fracture in the inputs of long-term trend in the industry.