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PetMeds® Investor Relations
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Welcome:
To My Fellow Stockholders:
Fiscal 2011 was a challenging year, which can be attributed to increased customer acquisition costs, decreased new order sales due to increased competition, and a softer demand for some of the product categories we offer. Net sales for the fiscal year were slightly down from the prior fiscal year, $231.6 million compared to $238.3 million, respectively, a decrease of 2.8%. To address this decline in sales we implemented a more aggressive pricing strategy in 2011 combined with increased advertising, while continuing to expand our product offerings into pet supplies. Net income was $20.9 million, or $0.92 diluted per share, for the year ended March 31, 2011, compared to net income of $26.0 million, or $1.14 diluted per share, for the year ended March 31, 2010, a decrease to earnings per share of 19%, which is mainly attributable to lower gross profit margins forced by increased competition in addition to lower sales.
Some positive highlights during the fiscal year were increases in cash flows from operations, reorder sales and internet sales. Our cash flows from operations increased to $30.1 million for fiscal 2011 from $27.7 million for the prior fiscal year. Reorder sales for the year ended March 31, 2011 were $184.3 million, compared to $177.8 million for the prior year, an increase of 3.7%. Approximately 71% of our sales were generated on our web site for the fiscal year, compared to 68% for the prior fiscal year.
1-800-PetMeds remains committed to returning capital to our stockholders with our quarterly dividend. During the fiscal year, the quarterly dividend was increased to $0.125 per share from $0.100 per share, an increase of 25% from the prior fiscal year. For the fiscal year, we paid approximately $10.7 million in quarterly dividends, while also buying back approximately 791,000 shares of our common stock for approximately $12.2 million.
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1-800-PetMeds continues to be America's Largest Pet Pharmacy, the national brand leader in pet medications and the most recognized in the pet industry as a result of spending over $200 million in advertising since fiscal 2001. Our advertising investment has helped us increase sales from $10.0 million in fiscal 2001 to $231.6 million in fiscal 2011. We offer a wide selection of products, and strive to bring our customers the best medications, supplements and pet supplies for dogs and cats at affordable prices. Our customers can enjoy either the convenience of ordering over the telephone and experience 1-800-PetMeds' exceptional customer care, or online at our top-rated web site www.1800petmeds.com.
According to the American Pet Products Manufacturers Association, spending on pets in the U.S. increased by 6.2% and reached $48.3 billion in 2010, and the pet medication market that we participate in is estimated to be approximately $3.8 billion, with expectations that pet spending will continue to grow. Our focus in fiscal 2012 will be to capture additional market share while working toward becoming the nation's authority on pet health information and pet products.
We continue to remain thankful to our loyal customers, dedicated employees, and, you, our stockholders, for your ongoing support of 1-800-PetMeds.
Sincerely,
Menderes Akdag
President, Chief Executive Officer, Director
June 17, 2011
PetMed Express, Inc., d/b/a 1-800-PetMeds
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