PetMed Express(PETS) - 2026 Q2 - Quarterly Report

Financial Performance - Net sales decreased by approximately $15.0 million, or 22.7%, to approximately $51.2 million for the quarter ended June 30, 2025, compared to approximately $66.2 million for the quarter ended June 30, 2024[117]. - Adjusted EBITDA for the quarter ended June 30, 2025, was $(2.7) million, a decrease of $1.2 million or 75% compared to $(1.5) million for the same period in 2024[116]. - Gross profit decreased by approximately $4.6 million, or 24.3%, to approximately $14.4 million for the quarter ended June 30, 2025, primarily due to lower sales and higher cost of sales[125]. - Gross profit margin decreased to 28.1% for the quarter ended June 30, 2025, compared to 28.8% for the same quarter in 2024[110]. - Total operating expenses increased to 94.9% of sales for the quarter ended June 30, 2025, compared to 22.1% for the same quarter in 2024[110]. Sales Breakdown - Reorder sales decreased by approximately $11.5 million, or 21.8%, to approximately $41.3 million for the quarter ended June 30, 2025, primarily due to a decline in prescription medication sales[119]. - New order sales decreased by approximately $2.8 million, or 25.6%, to approximately $8.2 million for the quarter ended June 30, 2025, attributed to decreased and less efficient variable marketing spend[120]. - Recurring net sales, including AutoShip & Save subscriptions and membership revenue, accounted for 57.7% of total gross sales for the quarter ended June 30, 2025, up from 52.6% for the same period last year[122]. Customer Metrics - Average purchase per customer was approximately $99 for the quarter ended June 30, 2025, compared to $96 for the same quarter in 2024[101]. - The company acquired approximately 85,000 new customers for the quarter ended June 30, 2025, compared to approximately 120,000 new customers for the same period in 2024[121]. Expenses and Charges - General and administrative expenses increased by approximately $8.1 million, or 165.7%, to approximately $12.9 million for the quarter ended June 30, 2025, driven by an increase in stock-based compensation expense[126]. - The impairment of goodwill and intangible assets resulted in a charge of $26.7 million during the three months ended June 30, 2025[107]. - The fair value of the reporting unit was determined to be less than its carrying value, leading to a goodwill impairment charge[106]. - Cost of sales decreased by approximately $10.4 million, or 22.0%, to approximately $36.8 million for the quarter ended June 30, 2025, with cost of sales as a percentage of sales at 71.9%[124]. Macroeconomic Factors - The company expects macroeconomic factors, including inflation and rising interest rates, to continue impacting operations for the remainder of fiscal 2026[109]. Tax and Working Capital - The effective tax rate for the quarter ended June 30, 2025 was approximately 0.0%, compared to approximately 20.3% for the quarter ended June 30, 2024, due to the cancellation of performance stock units[131]. - Working capital decreased by $5.8 million to $10.3 million as of June 30, 2025, primarily due to a decrease in current assets[134]. Product Offering - The company has approximately 6,000 products in its line, including medications, health products, and supplies for pets[100]. - The company markets its products through national advertising campaigns to increase brand recognition and customer traffic[101].