PetMed Express, Inc. (PETS), America’s largest Pet Pharmacy, reported fourth-quarter fiscal 2010 results. The quarterly earnings of 27 cents per share was in line with the Zacks Consensus Estimate but 2 cents above earnings in the year-ago quarter.
Net sales in the quarter climbed 5% year-over-year to $50.3 million. Re-order sales jumped 9% year-over-year to $40.4 million. Gross profit for the reported quarter increased 3.6% year-over-year to $20.1 million. Total operating expenses in the fourth quarter of fiscal 2010 declined marginally year-over-year to $10.3 million.
For fiscal 2010 the company earned $1.14 per share, one cent below the Zacks Consensus Estimate and 16 cents above the fiscal 2009 earnings. The improved showing in the year was attributable to higher revenues in fiscal 2010.
Net sales in fiscal 2010 climbed 9% year-over-year to $238.3 million. Re-order sales jumped 13% year-over-year to $177.8 million.
New customer additions for fiscal 2010 came in at 815,000 compared to 802,000 in the previous fiscal year, up 1.6%. Advertising spending, which is the prime factor behind the addition of new customers, fell 3.7% year-over-year to $27.6 million, while general and administrative expenses climbed 3% to $22.3 million. Sales over the internet in fiscal 2010 climbed 14% year-over-year to $162.8 million. Approximately 68% of PetMed’s orders were placed online as against 65% last year.
Gross profit in fiscal 2010 increased 7.7% driven by an increase in net sales, partially mitigated by a rise of 9% in cost of sales. Total operating expenses increased marginally to $51.3 million. Operating income increased 18% to $40.5 million.
PetMed exited the year with cash and cash equivalents of $53.1 million, and shareholders’ equity of $96.8 million.
Our Take
Currently we are Neutral on PetMed Express, which delivers prescription and non-prescription pet medications and other health products for dogs, cats, and horses direct to the consumer at a compelling price.
We are pleased with the wide range of products offered by the company for cats, dogs and horses and its efforts to promote its brand name through various channels. However, the competition in the industry concerns us. Furthermore, the presence of a bulk of its customers in a few states is a weakness.
Our Neutral long-term outlook on the stock indicates that it will perform in line with the overall US equity market over the next six to twelve months. We advise investors to remain invested in the stock over this time period.
Read the full analyst report on “PETS”
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