PetMed Express(US:PETS)2020-10-26 14:36Financial Data and Key Metrics Changes - For Q2 2020, sales increased to $75.4 million from $69.9 million in Q2 2019, representing a 7.9% increase [10] - Net income rose to $8.4 million or $0.42 diluted per share, compared to $6.7 million or $0.33 diluted per share in the prior year, marking a 26% increase [11] - Gross profit as a percentage of sales improved to 30.5% from 28.6% year-over-year [15] Business Line Data and Key Metrics Changes - Reorder sales increased by 9.6% to $67.8 million for the quarter, while new order sales decreased by 5% to $7.7 million [12][13] - The average order value was approximately $87 for the quarter, up from $85 in the same period last year [10] Market Data and Key Metrics Changes - Consumer demand settled down due to the reopening of vet clinics and pet retailers, along with consumers having stocked up in the previous quarter [8] - The company acquired approximately 96,000 new customers in Q2 2020, slightly down from 98,000 in Q2 2019 [13] Company Strategy and Development Direction - The company is focusing on redesigning its website and mobile app to enhance the digital experience for customers [70] - There is a shift towards higher-margin prescription medications, which now account for more than half of total sales [22][24] Management's Comments on Operating Environment and Future Outlook - Management noted that the demand has settled down with the reopening of clinics and stores, but reorder sales remain strong [28] - The impact of COVID-19 on future demand is uncertain, with management monitoring trends closely [28] Other Important Information - The company had $106.3 million in cash and cash equivalents and $21.5 million in inventory with no debt as of September 30, 2020 [18] - Advertising expenses increased to $5.1 million for the quarter, up from $4.8 million in the same quarter last year [17] Q&A Session Summary Question: What is the mix of over-the-counter versus prescription medications now? - Management indicated that prescription medications have increased and now account for over half of total sales [22][24] Question: How has COVID-19 affected customer behavior? - Management noted a shift in demand due to the reopening of vet clinics and stores, along with a temporary negative impact from the new website platform [26][28] Question: What is the expected completion date for the website improvements? - The target date for the completion of the website redesign is during the third quarter of the fiscal year [33] Question: What is driving the increase in advertising spending? - The increase in advertising spending is attributed to normalized increases in keyword search costs and competition [34] Question: Will gross margins continue to improve in the second half of the year? - Management expects modest year-over-year margin improvements, but noted that margins are assessed on an annual basis rather than quarterly [36][59]