PetMed Express, Inc. Earnings Cheat Sheet: Margins Shrink For Fifth Straight Quarter as Profit Falls

PetMed Express, Inc. (NASDAQ:PETS) reported its results for the second quarter. PetMed Express is a nationwide pet pharmacy. The company markets prescription and non-prescription pet medications and other health products for dogs, cats, and horses direct to the consumer.

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PetMed Express Earnings Cheat Sheet for the Second Quarter

Results: Net income for PetMed Express, Inc. fell to $3.9 million (19 cents per share) vs. $5 million (22 cents per share) a year earlier. This is a decline of 21% from the year earlier quarter.

Revenue: Fell 4.9% to $58.2 million from the year earlier quarter.

Actual vs. Wall St. Expectations: PETS beat the mean analyst estimate of 14 cents per share. It fell short of the average revenue estimate of $60.6 million.

Quoting Management: Menderes Akdag, CEO and President, commented: “Our results for the quarter have been impacted by our more aggressive flea & tick product pricing, which reduced our average order size, and our results were further impacted by the introduction of generic Frontline to the market. Due to pending patent litigation unrelated to the Company, against one of the generic Frontline products, we chose not to actively participate in the generic flea and tick market, which negatively impacted our sales. We intend to fully participate in the generic flea and tick market in 2012, which should improve our future results.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 2.2 percentage points to 34.2% from the year earlier quarter. Over that time, margins have contracted on average 2.9 percentage points per quarter on a year-over-year basis.

The company beat estimates last quarter after falling short in the previous two quarters. In the first quarter, it missed the mark by 2 cents, and in the fourth quarter of the last fiscal year, it fell short by 3 cents.

Net income has dropped 25.1% year over year on average across the last five quarters. Performance was hurt by a 33.1% decline in the first quarter from the year earlier quarter.

Revenue has fallen in the past two quarters. In the first quarter, revenue declined 1.1% to $73.6 million from the year earlier quarter.

Looking Forward: Expectations for the company’s next quarter results are lower than they have been. Over the past sixty days, the average estimate for third quarter has fallen from 16 cents per share to 15 cents. For the fiscal year, the average estimate has moved down from 71 cents a share to 69 cents over the last sixty days.

Competitors to Watch: Rite Aid Corporation (NYSE:RAD), Walgreen Company (NYSE:WAG), drugstore.com, inc. (NASDAQ:DSCM), China Nepstar Chain Drugstore Ltd. (NYSE:NPD), Graymark Healthcare Inc (NASDAQ:GRMH), CVS Caremark Corporation (NYSE:CVS), PetSmart, Inc (NASDAQ:PETM), Wal-Mart (NYSE:WMT) and Target (NYSE:TGT).

Investing Insights: Amazon.com has a Stock Chart Technical Analysts Dream About.

(Source: Xignite Financials)

 

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