October 21, 2019 / 2:03 PM / a month ago

Shares of online pet store PetMed surge after profit beat

Oct 21 (Reuters) - Shares of PetMed Express Inc rise 29% on Monday as the online pet medicine retailer beat Wall Street expectations for quarterly profit after three straight quarters of missing estimates.

Quarterly gross profit margins, a key metric for investors, improved to 12% from 7.7% in the June quarter, boosted by a shift in PetMed’s strategy to directly procure medicine from manufacturers, instead of sourcing them from alternate channels.

Net income in the second quarter fell 38% to $6.7 million, or 33 cents, as aggressive pricing by other online players forced PetMed to lower prices.

The profit, however, beat analysts’ average estimate of 26 cents, according to IBES data from Refinitiv.

PetMed said it expects pricing to stabilize with the “minimal advertised pricing” policy in force now.

The policy allows the lowest cost retailers can sell a product for has to be agreed upon with manufacturers they source from.

Shares of the company rose 29% to $24.94 in early trading, erasing its 16% losses in the year. (Reporting by Manas Mishra and Tamara Mathias in Bengaluru; Editing by Shinjini Ganguli)

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