PetMed Express sets new trends in distribution!
While PetsMart and Petco battle for leadership in the burgeoning pet-supply business, PetMed Express has found an overlooked and lucrative niche: It sells discounted pet medications by mail order and over the Internet. As noted in July, Americans spent $32 billion last year caring for their personal menageries. Targeting a small piece of that pie, the $3-billion market for dog and cat medications, PetMed saw its revenues rise 71% last year, to $94 million. And those revenues have increased ninefold over the past four years. Profits at the Pompano Beach, Fla., company, which operates under the 1-800-PetMeds brand name, rose 79% last year, and its customer list grew by 572,000, to 1.1 million. PetMed offers a carefully selected, 600-item inventory of over-the-counter and prescription drugs, and health and nutrition items that are likely to generate repeat business. Its best-selling treatments are for flea and tick control, heartworm, and bone and joint care. Last year, 55% of revenues came from repeat customers.
Analyst Frank Gristina of investment bank Avondale Partners estimates that PetMed has 40% of the market for pet medications sold via mail order or over the Internet. PetMed, which went public in 2000, competes with some two-dozen private firms. Its biggest competitors, though, are veterinarians, who have bitterly fought the company's incursions. "They have had a monopoly historically and, naturally, they don't like to have competition," says PetMed chief executive officer Mendo Akdag. The stock, at $8, trades at 25 times the 31 cents per share that analysts, on average, expect the company to earn in calendar 2004.