How does Chewy's expense management compare year-over-year?

Chewy's operating expenses have shown a general upward trend over the past few years, reflecting the company's growth and strategic investments. Here's a detailed analysis: 1. **Growth in Operating Expenses**: Chewy's operating expenses increased from $3,801 million in 2019 to $11,749 million in 2023, and then to $11.340 billion in 2024. This indicates a general upward trajectory in expenses as the company scaled up its operations. 2. **Year-over-Year Variations**: The year-over-year growth rate for operating expenses has been fluctuating. For instance, there was a significant increase of 11.3% from 2022 to 2023, followed by a more modest increase of 2.76% from 2023 to 2024. This suggests that while Chewy has continued to invest in growth, the pace of expense increase has varied depending on the business needs and market conditions. 3. **Strategic Investments**: The increase in operating expenses can be attributed to strategic investments in areas such as marketing and fulfillment costs. For example, advertising and marketing expenses increased from $742.5 million in 2023 to $804.1 million in 2024. These investments are likely aimed at expanding the company's customer base and entering new markets, such as Canada. 4. **Efficiency Gains**: Despite the increase in expenses, Chewy has managed to improve its gross margin, which expanded to 29.2% for the full year 2024, reflecting supply chain efficiency gains. This indicates that the company's investments are yielding positive results in terms of operational efficiency. 5. **Cash Flow and Profitability**: Chewy's free cash flow improved significantly by 133.2% to $156.6 million in 2024, reflecting enhanced operational efficiency. The company's net income also saw a substantial increase, influenced by the release of a valuation allowance on deferred tax assets. In conclusion, Chewy's expense management has been effective in supporting the company's growth and strategic initiatives, despite the increase in operating expenses. The company's ability to improve gross margins and cash flow indicates a strong financial performance and a capacity for continued investment in growth opportunities.