* Q1 EPS $0.32 vs est. $0.38
* Q1 sales $74.4 mln vs est. $81.1 mln
* Customer additions fall to 220,000
* Shares fall 15 percent
(Recasts; adds details from conference call, analyst comment;
updates share movement)
BANGALORE, July 19 Pet pharmacy PetMed Express
Inc's (PETS.O) first-quarter profit missed Wall Street
expectations, with sales posting a surprise fall as the company
grappled with lack of advertising slots and stiffer
competition, sending its shares down to a 52-week low.
Shares of the company fell 15 percent to $15 before paring
some losses to trade down 8 percent at $16.17 on Nasdaq.
The company, which heavily relies on advertising to grow
its customer base, was hit by lack of availability in the
television remnant space at affordable prices this quarter.
PetMed's customer additions fell by a quarter to 220,000
from a year ago.
PetMed typically buys television advertising space left
over after major advertisers have booked slots. However, during
the downturn major advertisers have been increasingly booking
in this remnant market, leaving less space available and
pushing up prices for companies like PetMed.
Advertising expenses in the quarter fell 11 percent to $8.8
million from last year but still accounted for more than half
the company's operating expenses.
General advertisers typically buy 80 percent of their
advertising in advance and about 20 percent in the remnant
market, Chief Executive Menderes Akdag said on a call with
"But In the last year or so they've been buying 60 percent
in advance and 40 percent in the scatter market and that's why
the remnant space is getting crowded."
Wedbush Securities analyst Edward Woo also said sales
suffered from stiffer competition particularly from Wal-Mart
Stores Inc (WMT.N), PetSmart Inc PETM.O and a lot of other
specialty retailers online.
The company was beaten by competition on prices as well as
availability of products, Woo, who has an "underperform" rating
on the stock, said.
For the quarter ended June 30, the company which retails
pet medications and health products online, through a toll-free
number and a website as well as a catalog of items, earned a
profit of $7.2 million, or 32 cents a share, compared with $8.1
million, or 36 cents a share, last year.
Sales in the quarter slipped 4 percent to $74.4 million.
Analysts on average were expecting the company to earn 38
cents a share on sales of $81.1 million, according to Thomson
(Reporting by Abhishek Takle in Bangalore; Editing by
Unnikrishnan Nair and Don Sebastian)