Chewy CEO Sumit Singh Isn't Surprised With Company's Profitable Quarter

Online pet food and wellness company Chewy Inc CHWY reported a surprise fourth-quarter profit, but one person who isn't surprised is Chewy CEO Sumit Singh.

What Happened: On Tuesday afternoon, Chewy reported fourth-quarter results highlighted by sales topping $2 billion for the first time and a surprise $21 million quarterly profit versus a loss of nearly $61 million a year ago.

But the profit shouldn't have been a surprise as the profit is a direct result of the "journey that we have been talking about," Singh said on CNBC's "Closing Bell."

The company saw a lot of trends move in its favor, including consumers upgraded to premium verticals such as hard goods, healthcare and proprietary brands, the CEO said. A more "muted" promotional environment in the quarter also contributed to higher gross margins.

Related Link: Can Chewy's Earnings Beat Fuel GameStop Stock?

Why It's Important: The environment for online shopping for pet products remains "bright" and recent momentum can be sustained, Singh said. Chewy's customer count now stands at 19 million and a typical customer is spending more within the Chewy platform.

"We are bullish on these trends," he said. "So we believe there should be sustainable power moving forward here."

What's Next: The percentage of households that have a pet rose by around 5.6% in 2020 compared to a 0.6% compounded annual growth rate over the past five years. According to Morgan Stanley analysts, the total number of households that own a pet will hit 14% by the end of the decade.

CHWY Price Action: Shares of Chewy are trading up 11.40% at $89.54 Wednesday morning.

(Photo by Chewy on Unsplash)