What happened

Shares of Chewy (CHWY -1.88%) jumped 11.4% in November, according to data provided by S&P Global Market Intelligence. While that's a good gain for a single month, this return barely outperformed the 5% return for the S&P 500. But that's to be expected, considering Chewy didn't have any news to report. 

So what

For more context, Chewy stock was up about 35% in just two days -- Nov. 10 and 11. On Nov. 10, stocks soared after inflation data surprised the market. Consumer prices were only up 7.7% in October, compared with peak inflation of 9.1% in June. And with the rate of inflation coming down, stocks like Chewy skyrocketed.

Here's the relation between inflation and Chewy stock: Inflation is hurting consumers. As CEO Sumit Singh said, "Accelerating inflation placed incremental pressure on an already stressed consumer."

However, inflation tends to be disproportionately impacting the pet industry. Stressed consumers are less likely to bring new pets into their lives because of the added cost. In its conference call to discuss financial results for the second quarter, Chewy management noted, "Searches for pet are also down roughly 20%."

Moreover, inflation has been higher for pet owners. According to the official press release from the Bureau of Labor Statistics, inflation for pets and pet products was up a whopping 12.5% year over year in October. This included a 15% jump in pet food. 

In 2022, Chewy has raised prices to offset inflation. However, the higher cost of a pet is certainly impacting consumer decisions. This likely contributed to the loss of 100,000 active customers for Chewy from the first quarter to Q2.

However, if inflation finally starts dropping to more normal levels, perhaps this headwind will stop blowing and Chewy's business will perform better down the road. That's why the stock was up in November on inflation data.

Now what

Chewy is scheduled to report financial results for the third quarter of 2022 on Dec. 8 after the market closes. Management guided for Q3 net sales of $2.44 billion to $2.46 billion, which would be a 10% to 11% year-over-year gain.

Chewy management isn't expecting much, if any, growth in active customers for the rest of the year. Rather, it's relying on growth in spending per customer. And the company's growing range of services -- including its expanded partnership with Lemonade for pet health -- is expected to be the driver of that growth.

Eventually, investors will want to see more customer growth for Chewy. However, it's reasonable to accept a slowdown in customer acquisition for a time, given the macroeconomic circumstances. Therefore, when Chewy reports Q3 numbers, it may be more profitable to focus on spending per customer, since that's the more relevant metric right now. Ongoing growth there would be a good sign that Chewy is here to stay.