PetMed Express Inc. (NASDAQ: PETS) reported a 58% dip in earnings for the first quarter of 2020 due to higher online competition and aggressive pricing in the market. The results missed analysts’ expectations.
Net income fell by 58% to $5.3 million or $0.26 per share. Net sales decreased by 8.5% to $80 million.
The sales and gross margins were negatively impacted by increased online competition and aggressive pricing in the market that forced the company to reduce its prices.
The company’s average order value declined by 4% to $86 in the previous year quarter. During the quarter, PetMed bought back about 613,000 shares of its common stock for $11.5 million, with an average price of $18.73 per share. Cash from operations for the quarter was negatively impacted by an $8.8 million increase in inventory, the result of cost-advantaged inventory buys that the company made during the quarter.
The company’s board of directors declared a quarterly dividend of $0.27 per share on its common stock. The dividend will be payable on August 9, 2019, to shareholders of record at the close of business on August 2, 2019.
PetMed intends to return to normal inventory levels in future quarters. One of the company’s long-term strategic initiatives and primary goals has always been to have direct purchasing relationships with the major manufacturers. PetMed makes further progress on this initiative in the current quarter, which may help improve its gross margins in the future.
Also read: Chewy Q1 earnings
In fiscal 2020, the company will continue to be price competitive and will focus on optimizing its marketing in this more competitive environment and being more efficient with its advertising spending. Also, PetMed will be investing in its e-commerce platform to better serve its customers. This platform will enable us to improve upon its already strong net promoter score of 83%.
Shares of PetMed Express ended Friday’s regular session down 0.31% at $16.23 on the Nasdaq. Following the earnings release, the stock fell over 7% in the premarket session.
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