PetMed Tops Q4 Earnings And Revenue Expectations

Leading pet pharmacy in the Americas, PetMed Express, Inc. (PETS – Analyst Report) announced earnings per share (EPS) of 27 cents in the fourth quarter of fiscal 2016, up 8% from the year-ago quarter. Earnings also cruised ahead of the Zacks Consensus Estimate of 24 cents. Adjusted earnings for the fiscal year came in at $1.02 per share, up 10.9% from the year-ago period.

Petmed Express Inc. – Earnings Surprise | FindTheCompany

Net sales in the reported quarter improved 11% year over year to $55.4 million, beating the Zacks Consensus Estimate of $50 million. According to the company, the improvement was driven by a solid increase in new order and reorder sales. For fiscal 2016, net sales were $234.7 million, an improvement of 2.3% from the previous fiscal.

In the reported quarter, reorder sales went up 8.4% year over year to $46 million, while new order sales increased 24% to $9.4 million.

Average order was approximately $83 for the quarter compared to $81 for the year-ago quarter. The rise in average order value was mainly due to a change in product mix to higher priced items and increased doses.

According to the company, the seasonality in the business is due to the proportion of flea, tick and heartworm medications in the product mix. This is because spring and summer are considered peak seasons in this regard as against fall and winter, which represent off-seasons.

During the quarter under review, PetMed acquired 116,000 new customers, up from 97,000 in the fourth quarter of fiscal 2015. Roughly 82% of all orders were generated from its website (versus 81% in the prior-year quarter).

Gross margin contracted 199 basis points (bps) year over year to 31.9% in the reported quarter. General and administrative expenses were up 4.9% year over year at $5.1 million, while there was an 8.2% decline in advertising expenses to $3.7 million. This led to a 1.1% reduction in adjusted operating expenses (without depreciation and discontinued project costs), which amounted to $8.9 million. Despite the fall, adjusted operating margin in the quarter contracted 8 bps to 15.9%.