PetMed Express (PETS) reported another disappointing quarter with EPS of $0.22, way below the Zacks Consensus Estimate of $0.26 and the year-ago quarter’s $0.28. Revenues continued to slide with decline in new order sales and fewer new customers.
Moreover, both gross and operating margins declined driven by higher product costs and advertising expenses. This is a big blow for the company as it depends on advertising to increase its customer base. Moreover, economic uncertainty is taking a toll on the company, forcing consumers to switch to cheaper alternatives.
We do not expect the situation to improve significantly in the near future. We reiterate our Underperform recommendation on the stock.