To My Fellow Stockholders:
Despite fiscal 2015 presenting several challenges – including a weakness in demand for flea and tick topicals and unseasonably colder weather – the Company was able to increase operating margin levels by maintaining gross margins and decreasing operational expenses to improve our bottom line results. For the fiscal year, excluding a one-time charge of $1.7 million for an IT-related discontinued project in the September quarter, net income was $18.5 million, or $0.92 diluted per share, compared to $18.0 million, or $0.90 diluted per share in the prior fiscal year, an increase to net income of 3.1%. The after-tax net impact of this discontinued project charge was $1.1 million, or $0.05 diluted per share. For the fiscal year ended on March 31, 2015, sales were $229.4 million compared to $233.4 million for the prior fiscal year, a decrease of 1.7%. Online sales for the fiscal year grew to approximately 80% of all sales compared to 79% of all sales for the prior fiscal year and our average order size also grew to $77 for the fiscal year compared to $75 for the prior fiscal year. Cash flow from operations was $32.0 million for the fiscal year ended March 31, 2015, compared to $13.5 million for the year ended March 31, 2014, with a majority of the increase due to a reduction in inventory. The Company has taken steps to address the decline in sales and for fiscal 2016 we are focusing on improving our marketing efforts to increase sales and profitability.
1-800-PetMeds remains committed to returning capital to our stockholders. During the fiscal year, we paid a quarterly dividend of $0.17 per share and in the first quarter of fiscal 2016, the quarterly dividend was raised to $0.18 per share. While the Company intends to continue to pay regular quarterly dividends, the declaration and payment of future dividends is discretionary and will be subject to a determination by our Board of Directors each quarter, following its review of the Company’s financial performance. Since fiscal 2010 the Company has paid a cumulative total of $4.41 per share in dividends.
As the national brand leader and America’s Largest Pet Pharmacy, we continue to make it the goal of everyone at 1-800-PetMeds to provide “Fast, Easy, Helpful Service with Great Savings!” We have served over 8.0 million satisfied customers, with approximately 2.5 million having purchased from us within the last two years. We are proud that our customer service satisfaction rating, as measured by independent companies, continues to well exceed other online participants.
We are a licensed pharmacy to dispense prescription and certain controlled medications in all 50 states. We offer a wide selection of products, over 3,000 SKUs, including a variety of private label products, including our new Flea5X Plus, which has the same active ingredients as Frontline Plus. We are always looking to expand our selection of products so that we can offer 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 online at our top-rated website www.1800petmeds.com, or over the telephone, where they can experience 1-800-PetMeds’ exceptional customer care.
As always, we remain thankful to our loyal customers, dedicated employees, and, you, our stockholders, for your ongoing support of 1-800-PetMeds.
President, Chief Executive Officer, Director
June 12, 2015
PetMed Express, Inc., d/b/a 1-800-PetMeds