At the end of July we noticed something brewing in Chewy's (CHWY) web data.

The web-based pet supply retailer was gaining serious traction as it expanded into a new domain: pet health.

(You can revisit the alert here if you'd like.)

Since that alert CHWY shares are up +40%.

More gains from here?

Here are 2 very telling charts ahead of earnings...

Chewy Health Adoption is Rocketing

This is a higher margin business vs. shipping dog or cat food.

On its last call, CHWY noted, "Though gross margin will fluctuate on a quarterly basis, we expect this metric to continue to expand over time as our higher-margin businesses become a larger portion of our total sales."

In fact, Net Sales Per Active Customer (NCPAC) hit a record last quarter, driven by premium product lines and Chewy Health.

Chewy's Autoship Service is also Setting New All-Time Highs

Autoship is very important for Chewy's sales. It creates lasting customers and dependable, recurring revenue streams -- and makes up 78% of net sales.

Consumer searches for Chewy's autoship service are hitting new all-time highs this holiday season.

Meanwhile, we detect no serious concerns over churn. The levels of customers service are simply unmatched.

Amazon would never...

Bottom line: Heading into earnings, the bar is certainly higher than it was last quarter. But based on...

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