Online pharmacy boasts $55.4 million in sales

PetMed Express' financial statements reveal the online/mail-order pet pharmacy's revenues rose 91 percent to top out at $55.4 million from April to September last year, the Security and Exchange Commission (SEC) reports.

That compares to $29.1 million for the same fiscal period in 2002. Net income totaled $3.3 million, up from $1.1 million - a reflection of increased retail orders, SEC filings claim.

"The increase was primarily due to increased reorders and increased advertising, which was boosted by our free shipping promotion," company Chief Executive Officer Menderes Akdag explained to investors during a November telephone conference.

During the last six months, the pharmacy also has acquired 400,000 new customers, reports show. PetMed Express officials speculate that's largely due to the company's $4.8 million advertising campaign.

PetMed combats DVM competition

Still, veterinarians, not other pet pharmacies, continue to be PetMed Express' main competition, Akdag says.

"That's what we hear from our customer base or potential customers that contact us," he tells investors. "…There's no major competition in our category at this time. We're competing with veterinarians."

When an investor raises concerns about veterinarians matching PetMed Express prices, Akdag points to convenience and price control as customer draws. It's also why the company enacted the free shipping promotion for orders exceeding $49, he adds.

Taking fines in stride

As for litigation and fines concerning the alleged illegal distribution of prescription drugs that have plagued the company since its 1996 inception, PetMed Express officials claim that's routine and incidental to the business.

"The company's management does not believe that the resolution of any or all of such routine litigation and regulatory complaints are likely to have a material adverse effect on the company's financial condition or results of operations," an SEC report says.

The company rallies around its "powerful" brand name and "dramatic growth model," Akdag says.

PetMed Express' next move is to gain a NASDAQ listing, he adds.