PetMed Express Reports 18.9% Decline in Q3 Sales, Net Loss Improves

PetMed Express, Inc. reported a decline in financial performance for the third quarter of fiscal 2025, with net sales of $52.98 million, down 18.9% from $65.32 million in the same period last year. For the nine months ending December 31, 2024, total revenue was $180.51 million, a decrease of 15.9% compared to $214.56 million for the prior year. The company experienced a net loss of $707,000 for the quarter, improving from a loss of $2.03 million in the same quarter of the previous year. However, for the nine-month period, PetMed reported a net income of $5.37 million, a significant turnaround from a loss of $2.45 million in the prior year.

The decrease in sales was attributed to a strategic reduction in advertising expenses, which fell by 48.2% to $2.99 million for the quarter, as the company aims to reset its marketing foundation for sustainable profitability. The company acquired approximately 63,000 new customers during the quarter, down from 97,000 in the same period last year. The decline in both reorder and new order sales was primarily driven by a decrease in prescription medication sales and broader macroeconomic factors affecting consumer behavior.

Operationally, PetMed Express has made significant changes, including the acquisition of PetCareRx, which was completed in April 2023. This acquisition has influenced the company's financials, particularly in terms of tax implications and the valuation of deferred tax assets. The company also reported a decrease in general and administrative expenses, which fell by 19.7% to $10.79 million for the quarter, largely due to reduced stock-based compensation and payroll expenses. The total employee headcount remains stable, with no significant changes reported.

Looking ahead, PetMed Express anticipates continued challenges due to increased competition and changing consumer behaviors influenced by macroeconomic conditions. The company has suspended its quarterly dividend to focus on growth initiatives and improve its cash flow management. The management remains cautious about future sales growth, acknowledging that the current economic environment may impact revenue projections. The company is actively working on enhancing its internal controls and addressing material weaknesses identified in its financial reporting processes.