Earnings Preview: PetMed Express Inc. (NASDAQ: PETS) Second Quarter 2010
Thursday, October 07, 2010 9:50 AM

PetMed Express Inc. (NASDAQ: PETS), the largest US pet pharmacy, is scheduled to release fiscal second quarter earnings before the opening bell on Tuesday, October 19, 2010. Analysts, on average, expect the company to report earnings of 26 cents per share on revenue of $62.89 million. In the year-ago quarter, the company reported earnings of 28 cents per share on revenue of $62.45 million.

PetMed Express, Inc. and its subsidiaries, doing business as 1-800-PetMeds, is a pet pharmacy. The company markets prescription and non-prescription pet medications, and other health products for dogs, cats, and horses direct to the consumer. The company markets its health products for dogs, cats, and horses direct to the consumer through national television, online, and direct mail advertising campaigns in an effort to increase the recognition of its 1-800-PetMeds brand name, increase traffic to its website www.1800petmeds.com, acquire new customers, and maximize repeat customers.

In the preceding first quarter, the Pompano Beach Florida-based company's net income was $7.22 million, or 32 cents per share, compared to $8.07 million, or 36 cents per share, in the prior-year quarter. Revenue slipped to $74.37 million from $77.17 million in the same quarter last year. Analysts, on average, expected the company to report earnings of 38 cents per share on revenue of $81.10 million. Reorder sales increased by 7%, from $54.0 million to $57.6 million for the quarters ended June 30, 2009 and 2010, respectively. PetMed's customer additions declined by a quarter to 220,000 from a year ago. Advertising expenses in the quarter dropped 11 percent to $8.8 million from last year. The company blamed the poor results on reduction in its advertising exposure, which it attributed to the lack of availability of television remnant space at affordable prices. The company is heavily dependent upon advertising to expand its customer base. The results were also negatively impacted by reduced spending on pet products and consumer preference for lower-priced brands.

Looking ahead, the company is likely to benefit from long-term internet retail trend, improvement in consumer spending and growing American fondness for pets.

Among other developments, PetMed Express in August announced that its Board of Directors increased the quarterly dividend by 25% to $0.125 per share on its common stock, compared to the $0.10 per share dividend that has been paid in prior quarters. The increase in dividend is tangible evidence of management's confidence in future earnings growth.

In terms of stock performance, shares of the company have gained nearly 1% since the beginning of the year.

Disclosure: Author doesn't own any of the stocks discussed here.



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