New customer acquisition
PetMed Express (PETS) acquired 134,000 new customers in fiscal 1Q18[1. fiscal 1Q18 ended June 30, 2017] compared with 131,000 new customers for fiscal 1Q17. The company’s total customer base has increased from 7.5 million in 2013 to 9.6 million in 2017, a solid 28.0% increase.
PetMed Express’s primary focus of customer acquisition is through advertising. As a percentage of sales, the company’s advertising expenses totaled 7.9% for fiscal 1Q17 and fiscal 1Q18.
PetMed Express’s (PETS) advertising expenses rose 9.0% from $5.8 million in fiscal 1Q17 to $6.3 million in fiscal 1Q18. The advertising costs of acquiring a new customer, defined as total advertising costs divided by new customers acquired, totaled $34.00 for fiscal 2Q18.
The company expects its advertising costs to increase in the remaining part of fiscal 2018, reaching 7.0%–8.0% of its sales for fiscal 2018. This cost fluctuates from quarter to quarter due to seasonality and the advertising environment.
Revenue growth projections
Analysts expect PetMed Express to report revenues of $269.3 million for fiscal 2018, an increase of 8.1% over revenues of $249.2 million for fiscal 2017. In 2018, PetMed’s peers Zoetis (ZTS), Patterson (PDCO), and Rite Aid (RAD) are expected to report revenues of $5.1 billion, $5.6 billion, and $29.4 billion, respectively.
PetMed Express’s sales rose 9.7% year-over-year (or YoY) to $76.7 million in 2Q18. The increase in sales was primarily due to the rise in new orders and reorder sales. The company’s management noted that sales may have been affected during this period due to Hurricanes Harvey, Irma, and Maria.
In 2017, the PetMed Express (PETS) website attracted ~32.0 million visitors, ~8.0% of whom placed an order for a conversion ratio of ~25.0%. Approximately 84.0% of all sales were generated online for fiscal 2Q18 compared with 82.0% in fiscal 2Q17.
Sales consist of products sold mainly to retail customers. The average purchase value stands at ~$85.00 per order, a figure that has been steadily improving.
PetMed Express comprises ~0.04% of the iShares Russell 2000 ETF’s (IWM) total portfolio holdings.
In the next part of this series, we’ll take a look at the key factors affecting PetMed Express’s margins.
PetMed Express (PETS) stock has risen 77% in the last one-year period, reaching a high of $50.06 on July 26, 2017.
Broadcom (AVGO) stock fell ~8.5% after markets closed yesterday following the semiconductor giant's fiscal 2019 second-quarter earnings release. It missed analysts' revenue estimate and cut its fiscal 2019 revenue guidance by $2 billion to $22.5 billion due to sluggishness in its semiconductor solutions business.
The SPDR Gold Shares ETF (GLD), which tracks physical gold prices, has underperformed the broader markets year-to-date, rising just 4.4% compared to the S&P 500’s (SPY) gain of 15.9% as of June 14. The sentiment for gold, however, has been turning around.
Safe havens such as Treasuries and gold were back in favor on June 14 as stocks fell due to rising tensions in the Middle East, concerns over growth, and the looming threat of the US-China trade war. The tech-heavy Nasdaq Composite Index fell 0.67% in the first hour of trading.
Lululemon (LULU) stock rose 2.1% on June 13 in reaction to better-than-expected first-quarter results and an upgraded outlook for fiscal 2019 overall. The company's first-quarter adjusted EPS grew 34.5% to $0.74 on revenue growth of 20.4% to $782.32 million. Analysts had expected EPS of $0.70 and revenue of $755.31 million. Here's why the outlook got an upgrade.
As of 4:40 AM Eastern Time today, US crude oil active futures were at $51.83, ~4% below their closing level in the previous week. If US crude oil prices stay at those levels today, they'll mark their third week of decline in five weeks.
Amazon is discontinuing its Amazon Restaurants service, which has been delivering food for restaurants in parts of the United States. Amazon Restaurants launched in the United States in 2015 and entered the British market the following year. However, it met strong opposition in the British market.