PetMed quarterly sales suffer from slow start to flea-and-tick season but subscription business grows

PetMed Express Inc. says its fiscal fourth-quarter sales suffered from a slow start to the flea-and-tick season, but the company expects that part of the business to bounce back as the warm weather sets in. “[A] cooler March in much of the country delayed the start of the flea-and-tick season, a season which normally represents a ramp up in customer demand for us, leading to a slower than expected final month of the quarter,” said Matthew Hulett, chief executive of the company, on the late Monday earnings call. “We expect sales in this category to rebound as higher temperatures return to much of the country and stimulate a more normal flea and tick and heartworm medication demand from pet parents. Based on historic customer purchase patterns, we expect that the sales impact for this year will be a delay to the start of the seasonal sales, rather than a compression or loss of sales over the course of this summer.” As of March, subscriptions account for 37% of the company’s business, a sharp increase of 41% from the previous quarter. PetMed reported fiscal fourth-quarter net income of $6.1 million, or 30 cents per share, down from $6.8 million, or 34 cents per share, the previous year. Sales of $66.0 million were down from $71.7 million last year. The FactSet consensus was for EPS of 27 cents and sales of $68.3 million. Pet adoption soared during the pandemic, and so has competition in the pet care space. Hulett says its core business is beginning to stabilize and “the significant revenue declines we’ve experienced over the past year have begun to moderate.” The U.S. pet market is expected to grow to $120 billion by 2024, according to Hulett. PetMed stock jumped nearly 7% in Tuesday trading and is down 12% for the year to date.

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