PETMED EXPRESS INC Q4 FY2023 earnings call

• Brand Consolidation: Aim to streamline operations, lower cost structure, and enhance customer experience by uniting brands like PetMed and PetCareRx.
• Cash Flow Generation: Focus on deepening supplier relationships, optimizing inventory, reducing expenses, and improving operational efficiency through tech enablement and automation.
• Customer Retention/Loyalty: Advance customized technology for AutoShip, added a Chief Digital and Technology Officer and Chief Marketing Officer, and plan to personalize customer journeys using AI and integrated marketing.
• Technology Investment: Integrating systems, launching a new call center, enhancing pharmacy software, and implementing business intelligence and AI tools.
• Veterinary Advisory Board: Composed of expert veterinarians to shape initiatives, support educational content, and improve veterinary-facing portals.
• New Management Hires: Added a Chief Marketing Officer, Chief Operating Officer, Chief Digital and Technology Officer, and an independent director with tech expertise.

In the fourth quarter of fiscal 2024, net sales were $66.5 million, up 6.6% year-over-year compared to $62.4 million in the same period last year. The growth was due to incremental sales from the acquisition of PetCareRx. Consolidated reorder sales were $58.9 million for the quarter, an increase of 4.6% compared to the same period last year. Recurring revenue, including order ship and save sales and PetCareRx membership sales, made up 54% of total sales in the fourth quarter of fiscal 2024, up from 44% in the same quarter last year. Gross profit margin was 27.3%, down from 27.9% in the same quarter last year. Adjusted EBITDA was $500,000 for the fourth quarter, compared to $3.6 million in the same period last year. Net loss for the quarter was $5 million or $0.25 per diluted share, versus a net loss of $200,000 or $0.01 per diluted share in the prior year. As of March 31, 2024, PetMed Express had over $55 million of cash and equivalents and no debt.

• Focus on generating top line growth through marketing initiatives, technology advancements, improved supply chain/distribution, and enhanced customer experiences.
• Prioritize profitability by consolidating businesses to reduce redundancies and operating expenses, aiming for margin improvement through strategic product focus.
• Leverage initiatives like AutoShip subscriptions, seamless customer journeys, and optimized supply chain to drive sales and profitability.

Q: Given all the initiatives laid out, do you feel like you can generate top line growth this year?

A: Sandra Campos stated that initiatives are focused on generating top line growth, including marketing, technology, and supply chain improvements, and they believe they can increase sales through AutoShip subscriptions, better customer journeys, and improved supply chain efficiency.

Q: Have you seen any further stabilization in the core business? Besides consolidation, what else needs to be done to drive growth?

A: Sandra mentioned looking at top vendors and SKUs with the Veterinary Advisory Board, improving inventory management, seeing increasing returning customers, and improvements in conversion through customer care and online channels, and focusing on top products to improve margins.

Q: How should we think about the cost structure going forward and investments, and philosophy on growth versus profitability?

A: Sandra said they are focused on profitability, consolidating businesses to reduce redundancies and operating expenses, and finding efficiencies across all line items to synergize the businesses and improve profitability.

Q: Can you give metrics around organic growth across the base business excluding PetCareRx?

A: Christine Chambers responded that new customer number for the quarter was relatively flat to last year on a consolidated basis, and they focus on new customer acquisition, retention, and lifetime value of customers but don't split metrics separately between businesses.