PetMed's EPS of $0.24 in the third quarter of fiscal 2015 was up
4.3% year over year but fell short of the Zacks Consensus Estimate
by $0.01. Net sales dropped 1.6% to $49.3 million but exceed the
benchmark of $49 million. Although we are encouraged by the
company's efforts to revive the top line, lower new order and
re-order sales was a drag. However, we are encouraged by the margin
improvement in the quarter. The company continues to face
competition which may increase further with the impending
acquisition of Novartis' animal health by Eli Lilly. The dearth of
any near-term catalyst might make it difficult for PetMed to
overcome these challenges. Accordingly, we are Neutral on PetMed.
PetMed Express, operating as 1-800-PetMeds, is a leading
nationwide pet pharmacy. The company, founded in 1996, is
headquartered at Pompano Beach, FL. PetMed Express' product line
contains approximately 750 SKUs catering to dogs, cats, and horses.
These products include brands of medication such as Frontline Plus,
K9 Advantix, Advantage, Heartgard Plus, Sentinel and
The company offers two types of products:
Non-prescription medications (over-the-counter or OTC): These
include flea and tick control, bone and joint care, vitamins,
nutritional supplements, and hygiene products.
Prescription medications: These include heartworm treatments,
thyroid and arthritis medications and antibiotics in addition to
other specialty medications as well as generic substitutes.
These two product types accounted for 59% and 40% of total sales
in fiscal 2013, respectively, while 1% was derived from shipping
and handling fees.
PetMed Express markets its health products directly to consumers
through national television, online, and direct mail/print
advertising campaigns in order to increase the awareness of the
1-800-PetMeds brand name. These efforts are aimed at increasing
traffic to its website, maximizing repeat customers and acquiring
new customers. The company has been successful in increasing its
sales over the Internet. During the first quarter of fiscal 2015,
80% of the sales were generated through its website compared with
79% in the year-ago period.
PetMed Express, Inc. (PETS): Read the Full Research
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