Earnings of PetMed Express Inc. (NASDAQ: PETS) decreased in the third quarter even as net sales remained unchanged. The bottom line, however, exceeded the market’s expectations.
Net income dropped to $6.8 million or $0.34 per share in the third quarter from $7.7 million or $0.38 per share a year earlier. Earnings, however, exceeded analysts’ forecast. At $59.9 million, net sales were broadly flat year-over-year but below the market’s expectations.
During the three-month period, the average order size edged up to $85 from $84 last year. Reorder sales increased 1% annually to $53.8 million.
The management’s successful efforts to establish direct purchasing relationships with leading manufacturers and the implementation of minimum advertised price policy have translated into margin growth. Total operating expenses decreased 2% to $9.8 million.
Of late, the company has been focused on marketing and promotional activities as it continues to face stiff competition from rival pet pharmacy Chewy (CHWY). Last month, Chewy reported a net loss for its third quarter, despite an increase in sales. The bottom line was impacted by higher operating expenses.
“In 2020, we will focus on optimizing our marketing in this more competitive environment and being more efficient with our advertising spending. In addition, we will continue investing in our e-commerce platform to better service our customers. This platform will enable us to improve upon our already strong net promoter score of 84.0%.“ said PetMed’s CEO Menderes Akdag.
In the third quarter, PetMed’s board of directors declared a quarterly cash dividend of $0.27 per share, which will be paid on February 14, 2020, to shareholders of record on February 3, 2020.
Last week, PetMed shares climbed to the highest level in twelve months. The stock closed the last trading session notably higher but traded lower during Tuesday’s premarket trading hours. Since the beginning of the year, it gained about 17%.