So this is something that you will continue to see from us. If we signal any broad shifts, we’ll be transparent around that. For the most part, we’re liking some of the elasticity that we’re seeing around seasonal trends. On others, we’ve always been proud of the fact that customers build really healthy baskets with us. So what some other brands might feel as barriers are not always barriers when you interact with Chewy. So it’s a healthy set of learnings that we’re going through.
Steven Forbes: Thank you.
Operator: Our next question comes from Lee Horowitz with Deutsche Bank. Please proceed.
Lee Horowitz: Thanks for the question. A couple if I could. I guess with user pressures persisting longer than you guys would have thought entering the year, how do you get comfortable with the idea that Chewy can, in fact, grow users even if pet household formation remains under pressure for a sustained period of time? And then secondly, I know this is a topic that we will dive deeper on next week. But can you comment at all on how CarePlus adoption or customer adoption rates have materialized in the back half of this year? And perhaps how do you guys think about driving greater adoption of Chewy services broadly? Thanks so much.
Sumit Singh: Sure. The second part of your question around CarePlus and driving services adoption, we will answer more holistically next week. We promise to bring you a really engaging and comprehensive update there. So thank you for your patience on that. On the first part of your question around how do we get comfortable with the idea that Chewy can still grow active customers. So I will say two things. First of all, we’re a young player, right? We are a 12-year-old company. So we’re obviously learning through a lot of these trends. But we have the benefit of having strategic relationships with our vendor partners who’ve played through the pet category for decades. And so when we sit with them and understand historical data, times that the pet industry has been pressured and break down the components of pet growth, tonnage growth, ASP growth, et cetera, et cetera.
Everything points to the fact that pet ultimately comes out resilient. Right now, pet household formation is muted, and it’s muted because of the high kind of pressures that consumers are seeing from every direction. But it is expected that this will abate or no reason to believe why this will not abate. In fact, in 2006 recession, or 2006 to 2008, when overall CPT spending was down 2%, pet was actually up 6% during that time. And there’s this element of companionship that continues to play through. If you look at the last 10 years, premiumization has had a big impact. So the humanization and premiumization trends are expected to continue. The difference in 2006 versus — 2006 to 2008 versus now is that the level of inflation that have passed through the system have been unprecedented.
So it’s taking recovery that usually takes four to six quarters, has essentially taken a bit longer, but ultimately is expected to return back to normal levels. So that’s sort of one industry context. The second reason why we feel confident is because the structural value proposition that is fueled both by new customer acquisition but also growing share of wallet is highly, highly sound at Chewy. The way that we acquire and then build baskets with you, the complementarity of features that we put on top of consumables and getting you into health care and then selling you an insurance and building your share of wallet, which by the way, we will provide more intuition into next week when we see you for Investor Day. Allows us to sit back and evaluate the long-term trajectory of our consumer being highly recurring in nature and highly profit contributing to the bottom line.
So I think with the two flywheels, the acquisition and the share of wallet growth, it provides us a defensible moat around models that primarily have either fixed subscription service on one side or that must acquire customers to continue delivering topline algorithm growth.
Lee Horowitz: Helpful. Thank you so much.
Operator: Our last question today comes from Rupesh Parikh with Oppenheimer. Please proceed.
Rupesh Parikh: Good afternoon. Thanks for taking the question. Just going back to Canada. Your commentary there was very upbeat. Just any surprises thus far in terms of how that launch is going?
Sumit Singh: It’s a very good question. Our surprises are always around how could we have moved faster. So no particular surprises. It’s just learnings that we sort of internally ramp up to ourselves. How can we move faster, expanding regions? How do we double down on ramping more assortment up? How do we understand consumer behavior better. So it’s just all of those areas that we’re focused on, I would say, all the right things per se, but it’s a good one. I’ll give the surprise a little more thought and perhaps we can talk next week when we see each other.
Operator: Thank you for your questions.
Sumit Singh: We really appreciate your time, and we hope to see you all next week. Thank you.
Operator: That will conclude today’s conference call. Thank you all for your participation. You may now disconnect your line.
