PETS - Earnings call transcript Q1 2019

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Operator

Welcome to the PetMed Express, Inc., doing business as 1-800-PetMeds, Conference Call to review the Financial Results for the First Fiscal Quarter Ended June 30, 2019. At the request of the company, this conference call is being recorded.

Founded in 1996, 1-800-PetMeds is America's largest pet pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs and cats direct to the consumer.

1-800-PetMeds markets its products through national advertising campaigns, which direct consumers to order by phone or on the Internet and aimed to increase the recognition of the PetMeds family of brand names. 1-800-PetMeds provides an attractive alternative for obtaining pet medications in terms of convenience, price, ease of ordering, and rapid home delivery.

would Chief turn Financial I to call time, company's the Officer, this like the to over At Mr. Bruce Rosenbloom.

You may begin.

Bruce Rosenbloom

morning. Thank here Good I to like you. welcome today. would everybody

our in would like which the remind the to call this Before portion the question-and-answer the will to Chief be conference I I Mendo session, call everyone turn will Akdag, call. Officer, Executive President first over later of that be and until listen-only

may included based Reform number Also, statements Commission include well or certain conference will statements this assumptions the forward-looking Litigation involve be have of the Securities to in us. the information uncertainties. as These information as we Act are of meaning a upon Exchange available and that may within currently press on that based beliefs used risks XXXX Securities Private and of our

concerning number reflect risks, on may future statements a current different uncertainties, our or by actual from that achievements or these events to assumptions. results, results implied these vary Actual and involve be statements. expressed Because events, results materially of cause may future views or these the performance statements based factors significantly future

various report and on our associated factors most recent the our annual We with Exchange identified and have with risk filings other operations Securities Commission.

today's Now, and Chief Akdag, introduce Mendo let Executive me Mendo? President speaker, Officer of X-XXX-PetMeds.

Menderes Akdag

results. joining we will Today, you review us. Bruce. of you for Thank highlights our everyone, and financial thank Welcome, the

quarter quarter first on compare will June XXXX XXXX. last fiscal our on ended We XX, to June XX, ended year's

period order sales. The to sales decrease $XX.X million due $XX decreases in June the XXXX, same were of compared ended was in million to on quarter fiscal the a decrease sales reorder new of prior year, first and XX, the For X.X%. for sales

the were that us impacted forced reduce market in the online pricing increased prices. and Sales to competition aggressive negatively by

reductions. due $XX quarter price to Our was the decrease year. The was value $XX average quarter to last compared for the order for the approximately same

quarter, per net compared decrease fiscal or XX%. first diluted diluted quarter the per $X.X $XX.X per diluted for to million of last a share share $X.XX same income For $X.XX was to the or earnings share million year,

In decrease gross due for reductions expenses. attributable margins the to mainly sales, income and decreases addition to was quarter lower profit higher the price to to in advertising net

New the if to of $XX.X XX% the sales million order decreased to $XX.X to for sales million last X% quarter the quarter by quarter reorder Reorder to decreased year. same compared the sales same million the million year. by for quarter prior $XX.X compared for $XX.X for

new for customers quarter in period first our to prior We XXX,XXX compared acquired XXX,XXX the fiscal approximately year. the same

of to Approximately XX% for generated were same period website year. compared on quarter XX% the last our the for our sales

is our and product in are with due peak The Spring business and seasons fall heartworm of considered tick, mix. to flee, and our medications the being seasonality in proportion winter summer off-season. the

competition. first compared attributed gross in can our a the was online profit percent for ago. decrease as quarter, a to sales fiscal mainly period same response to to For XX.X% year percentage be reductions the price increased The of XX.X%

quarter, made on help progress the further in manufacturers our improve relationships major direct margins the current which We having future. in the with gross may

year. approximately for the compared and the down $XXX,XXX expenses period same Our quarter administrative to general were last

due of same television of increase $X.X for the quarter for to was spent compared We million The quarter to year, about the million re-addition XX%. in the advertising increase $X.X prior the an advertising.

due acquired, of by to to acquiring ago. as advertising. the the $XX television customer of new The expenses defined the for quarter a compared advertising increase approximately re-addition customers cost was total same total for a year Advertising $XX quarter, divided was

an to the $XX.X we We the to increase cash no XXXX. as impacted intend the from debt result of and cash during $X.X operations million in for by million $XX.X June that Cash quarter. buys in quarters. in XX, of inventory return was cost-advantaged future with had inventory equivalents We normal in made million inventory, and inventory, negatively quarter levels

ready we take the questions. to ends are review. This financial Operator,

Operator

Instructions]. [Operator

first comes Kevin Craig-Hallum. question from Please proceed. Ellich from Our

Kevin Ellich

Thanks on Mendo, this year-over-year. front. gross lower basis do initiatives for expecting. margin you're were questions. place what points of the morning. bottom or my down Good in XXX the with out do Wondering taking putting could your that than bit the you almost marketing where think and you some changing we Little think bottom is

Menderes Akdag

may bottom this out. think be the We

stabilize which discipline minimum in the forward. have are markets a going manufacturers the that opening price the the expect We up. to allow the policies market. should pricing advertised is They in And reason pricing for general

Kevin Ellich

Got it. some do end they volume-based the it discounts. XX%. like you of these towards have How then, impact introduced And remain it's in math, our Got X% QX, it. on much By to we gross looks if noticed margins discounts place?

Menderes Akdag

will Again, a in think, I six get margins the we for feel that improve anticipate the in quarters months. should better you future the and it, next gross

Kevin Ellich

Okay.

next initiative from the about your And And that from purchase gross six your all will think major now? have manufacturers major answers And help of contacts questions. when not, do much you the to back comment That are If So, manufacturers, another one to that how of should margin? happen? in going place? months. do my buying you then, you

Menderes Akdag

happen and left, anticipating that's we the in only months. that manufacturer to going one two is next There are

or we the of direct all So, by year, the latest anticipate end the relationships the manufacturers. of with by having major end September

Kevin Ellich

PetMed much something this this industry with unique on or Okay. is the to And all across retailers e-commerce been going the is of yourself Express? that's pretty like

Menderes Akdag

They're opening pharmacies. the to pet all up

Kevin Ellich

talked in investments to investments I you Got make competitive. be press your about then, plan to how in long more you and it. e-commerce how platform will And much to year it. release, spend do those you take? guess, this the Got Okay. plan

Menderes Akdag

about budget $X current Our is million.

the November, to of XXXX, early the late improve goal it's on be We user and probably get of anticipating experience. December the to platform end our new year, are before is to the going

Kevin Ellich

there, color the what helpful. That's that customer functionality introduce? new Is little provide give platform plan it. like, will guess, to the increased I you to can as experience? you bit to got improve us a Okay, of

Menderes Akdag

personalization, hyper more speed… use, of ease personalization, Higher

Kevin Ellich

Okay.

Menderes Akdag

capabilities. also services, Upselling/cross-selling add will cetera. to et additional It be easier

Kevin Ellich

of I – got Is fiscal press in are TV talked planning still this think, it. about your do release, again, you last And it, to that is, this Got about said you guess, me optimizing the year. more expected still you sales be from the year? I more should advertising then K, you in advertising XX% marketing be about one target? be competitive. to to

Menderes Akdag

this advertising. We but a may than paused advertising television to we'll retest in intend you the it give time, we may be We be it, our color efficient At lower more with but XX-Q. better spending. XX%,

Kevin Ellich

in back jump I'll helpful. that's queue. Okay,

Operator

you. Thank

comes question from Anthony next Sidoti Our Company. proceed. & Please from Lebiedzinski

Anthony Lebiedzinski

Good morning thank you and taking the for questions.

So, you talked platform e-commerce about improvements. the planned

any to and you recapture customers some other customers if retain have site strategies past wondering e-commerce guys to aside current better the from try Just improvements?

Menderes Akdag

Right. the marketing Price was and effective. negatively we as impacted reductions campaign the reorders, not ran

should better we current with be do able So, our to customers.

year. Our promoter net score actually last It XX%. improved is at from

So, we to be should do better. able

Anthony Lebiedzinski

that directly so of from in the another And okay. also mentioned you inventory, then, are buying you it, terms now increased vendor. Got

to of or purchase clarify, wanted the this separate? the that relationship inventory is is now-direct is – So, increase just in because

Menderes Akdag

Separate.

Anthony Lebiedzinski

as then, allocation priorities your strategies. and as your right. far cash as as capital wanted your – All And thoughts far flow get just to

You repurchases the were in your during share doing quarter. certainly active

wanted as you thinking just flow So, are guys an about get to usage? update how cash to

Menderes Akdag

investing, And approximately have, dividends, we're still $XX our $X.XX We in e-commerce believe, quarter. paying about we are buyback per out, remaining our pointed stock as I million on plan, and platform. we

Anthony Lebiedzinski

Got it.

very Okay, thank you much.

Menderes Akdag

welcome. You're

Operator

Instructions]. [Operator Thank you.

comes Erin Please Suisse. question Wright Credit next proceed. from of Our

Erin Wright

Great. Thanks.

can First want is Is the chewy.com side? versus it competitive both? speak categories more Choice of on platforms or prescription Vetsource to get you're landscape. So, the it sense And competition or is the Vets where it a it all Thanks. OTC seeing is the and you across to Just product of most or from?

Menderes Akdag

The [indiscernible] is both And our competition competitors. – Yeah. much coming impact all and really online pretty OTC. to way is the prescription it's from across biggest coming the

Erin Wright

you offerings instance, leverage OTC Does there view? initiatives drive that aren't in as And then, and based for of offerings that such promotions customer to new on your existing that really could products? priced solely types sense are make or growth, AutoShip, Okay. or other

Menderes Akdag

of We easy which very to instead is AutoShip, it's similar program option, negative a do a refill have an option. positive

would So, the we order the AutoShip ship, very consumer it's similar program, before to an but option. to has confirm it's positive except

Erin Wright

spoke is anticipate secured then, it Okay. it as sort Do be you soon your or [ph]? of will that all direct manufacturers model much grain from procure products better you able market, keep the to to versus you you'll third-party guess, through to you And Thanks. have this distributors from of hybrid today, manufacturers? I other relationship. product, And, your how direct stands the as manufacturer

Menderes Akdag

direct. we believe, will in anticipating next to are in months. – It the we XXX% two XXX%, next the three

Erin Wright

Thank you.

Menderes Akdag

You're welcome.

Operator

you. Thank

from Craig-Hallum. comes question next Kevin of Our Please Ellich proceed

Kevin Ellich

Hey, Mendo.

ask to couple a of things. Forgot

So, your first, X-K of filed that agreement. guys I guess, modified couple employment you ago weeks an

Just wondering what driver was that. the behind

Menderes Akdag

going Yeah. I'm comment on that. not to

Kevin Ellich

about white know if with retailers. had providing of wondering, then, thoughts Wondering sort label the And the that any other is some or any we of there Okay. in working companies discussions services. industry have you major guys

Menderes Akdag

all time. We this retailers, to did have I'm conversations that's going but with at say

Kevin Ellich

Okay.

Sounds good. Thank you.

Menderes Akdag

welcome. You're

Operator

you Mr. questions. Mendo you, Akdag. for your Back to Thank

Menderes Akdag

being competitive and marketing on will more in be focus fiscal In environment price and our we this our spending. more efficient advertising with you. Thank competitive XXXX, continue to we optimizing will

we In be addition, investing our better will customers. service platform our e-commerce to in

you today's conference conference call. for joining ends This this Operator, Thank wraps the call. up us.

Operator

today's you Thank in for participating conference.

this time. disconnect may at You

PetMed Express (PETS) 22 Jul 192019 Q1 Earnings call transcript