• by Sarah Mahoney  @mahoney_sarah, Yesterday

Chewy’s latest earnings show the pet e-tailer is reaping the rewards of a broader marketing strategy, with net sales climbing 8.3% to $3.12 billion in the first quarter — ahead of analyst forecasts.

While net income fell to $62.5 million from $66.9 million in the prior-year period, both top-line results beat expectations, thanks in part to what the company described as smarter customer acquisition spending.

On an earnings call, CEO Sumit Singh said the company continues to benefit from adjustments made to its marketing approach over the last year. “Internal efforts primarily point to the work that we've done in taking a broader marketing funnel and strategy to the market,” he said, emphasizing growth in higher-spending customers. “The quality of customer is what drives confidence in the retention and the future sort of revenue flywheel of these types of customers.”

Singh said Chewy expects marketing expenses to remain at roughly 6.7% of net sales. “The algorithm is essentially spinning out a nice cohort of customers which are higher quality in relative to what we have seen coming out of the pandemic.”

The company’s current brand campaign, “For life with pets, there’s Chewy,” focuses on the many problems the company can solve, from squirrel chasing to furniture chewing to picky eating.

Scott Devitt, an analyst at Wedbush, called the results healthy and said he continues to view Chewy as a standout in its category. The company added 240,000 active customers in the quarter, a 3.8% increase to 20.8 million — also ahead of expectations. Devitt noted improvements in churn and customer reactivation.

Morningstar’s Kristoffer Inton was similarly upbeat, crediting Chewy’s ability to “attract, retain, and upsell customers through rich consumer data and a broad product and service reach,” positioning the brand to gain share in online pet care.