• by Sarah Mahoney , Yesterday

Chewy’s latest results came in above expectations, and the company credited much of the strength to a two-year overhaul of its marketing engine — a rebuild of SEO, CRM and the mobile app that CEO Sumit Singh said is finally showing up in traffic and conversions. That sharper focus is helping Chewy gain market share and deepen loyalty, especially in Chewy Vet Care and membership channels.

Third-quarter sales rose 8.3% to $3.12 billion, topping the high end of guidance. Adjusted earnings climbed 31% to $181 million. Active customers rose by 249,000 in the quarter, bringing the total to 21.2 million, well ahead of expectations.

Singh used an earnings call to walk analysts back through the incremental work behind those numbers. “I came to this call two years ago and said, ‘We’re going to be mobile first.’ And we have continued to see the mobile app become stronger in terms of the percentage of traffic, percentage of orders and overall metrics of retention.”

He said Chewy has also rebuilt its CRM engines, changing how the company thinks about channel mix and ad spending. The goal is to push more customers into higher-value autoship and membership relationships while relying less on blunt-force paid marketing. “Next year, it is going to look even better,” Singh said. “We expect continued improved conversion…Signals are more clear to us.”

Some analysts, who expect the company to continue to outpace competitors, welcome the proof points, noting that the improvements in the marketing plumbing are helping. Morningstar’s Jaime Katz writes that initiatives including Chewy Vet Care, Chewy Ads, Chewy+ and new private-label offerings should also continue to lift customer engagement, and she forecasts “an average of 2.3% annual growth in active customers over the next decade.”

Wedbush analyst Scott Devitt said Chewy’s profitability gives it room to reinvest in “strategic priorities that should bolster Chewy's competitive positioning and support more sustainable revenue growth over time,” adding that he remains “constructive on the company's longer-term opportunity” and sees Chewy as “a category-leading online retailer with a strong record of execution.”