updated 1/24/2011 8:18:32 AM ET 2011-01-24T13:18:32

POMPANO BEACH, Fla., Jan. 24, 2011 (GLOBE NEWSWIRE) -- PetMed Express, Inc. (Nasdaq:PETS) today announced its financial results for the quarter ended December 31, 2010. Net sales for the quarter ended December 31, 2010 were $45.1 million, compared to $48.4 million for the quarter ended December 31, 2009, a decrease of 6.7%. Net sales for the nine months ended December 31, 2010 were $180.7 million, compared to $188.0 million for the nine months ended December 31, 2009, a decrease of 3.9%. Net income was $4.5 million, or $0.20 diluted per share, for the quarter ended December 31, 2010, compared to net income of $5.6 million, or $0.25 diluted per share, for the quarter ended December 31, 2009, a 19% decrease to EPS. Net income was $16.7 million, or $0.74 diluted per share, for the nine months ended December 31, 2010, compared to net income of $19.9 million, or $0.88 diluted per share, for the nine months ended December 31, 2009, a 16% decrease to EPS.

Menderes Akdag, President and CEO, commented: "It has been another challenging quarter, due to reduced advertising as a result of tighter television advertising inventory combined with consumers giving greater consideration to price and a softer demand for some of the product categories we offer. Going forward we intend to implement a more aggressive pricing strategy combined with increased advertising, while continuing to expand our product offerings into pet supplies. During the quarter we bought back approximately 66,000 shares of our common stock for $1.0 million, and so far in January we have bought back approximately 101,000 shares of our common stock for $1.6 million. During the quarter we also paid our quarterly dividend of $0.125 per share, an increase of 25% from the prior year. Our cash flows from operations increased to $31.5 million for the nine months ended December 31, 2010 from $28.9 million for the same period the prior year. "

This morning at 8:30 A.M. Eastern Time, Mr. Akdag will host a conference call to review the quarter's financial results. To access the call, which is open to the public, please dial (888) 455-1758 (toll free) or (210) 234-0009. Callers will be required to supply PETMEDS as the passcode. For those unable to participate in the live event, the call will be available for replay from 10:00 A.M. on January 24, 2011 until February 7, 2011 at 11:59 P.M. To access the replay, call (800) 731-6039 (toll free) or (203) 369-3823, and enter passcode 5500.

Founded in 1996, PetMed Express is America's Largest Pet Pharmacy, delivering prescription and non-prescription pet medications and other health products for dogs, cats, and horses at competitive prices direct to the consumer through its 1-800-PetMeds toll free number and on the Internet through its website at www.1800petmeds.com .

This press release may contain "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995 or by the Securities and Exchange Commission, that involve a number of risks and uncertainties, including the Company's ability to meet the objectives included in its business plan. Important factors that could cause results to differ materially from those indicated by such "forward-looking" statements are set forth in Management's Discussion and Analysis of Financial Condition and Results of Operations in the PetMed Express Annual Report on Form 10-K for the year ended March 31, 2010. The Company's future results may also be impacted by other risk factors listed from time to time in its SEC filings, including, but not limited to, the Company's Form 10-Q and its Annual Report on Form 10-K.

PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
  December 31, March 31,
  2010 2010
  (Unaudited)  
ASSETS    
     
Current assets:    
 Cash and cash equivalents  $ 61,254  $ 53,143
 Short term investments - available for sale  10,077  -- 
 Accounts receivable, less allowance for doubtful    
 accounts of $2 and $5, respectively  802  2,097
 Inventories - finished goods  14,885  29,064
 Prepaid expenses and other current assets  1,848  610
 Deferred tax assets  1,543  1,255
 Prepaid income taxes  871  330
 Total current assets  91,280  86,499
     
 Long term investments  12,381  12,392
 Property and equipment, net  3,739  4,429
 Intangible asset  860  850
     
Total assets  $ 108,260  $ 104,170
     
LIABILITIES AND SHAREHOLDERS' EQUITY    
     
Current liabilities:    
 Accounts payable  $ 3,085  $ 4,776
 Accrued expenses and other current liabilities  2,144  2,312
 Total current liabilities  5,229  7,088
     
Deferred tax liabilities  715  225
     
Total liabilities:  5,944  7,313
     
Commitments and contingencies    
     
Shareholders' equity:    
 Preferred stock, $.001 par value, 5,000 shares authorized;    
 3 convertible shares issued and outstanding with a    
 liquidation preference of $4 per share  9  9
 Common stock, $.001 par value, 40,000 shares authorized;    
 22,783 and 22,990 shares issued and outstanding, respectively  23  23
 Additional paid-in capital  --   2,628
 Retained earnings  102,431  94,305
 Accumulated other comprehensive loss  (147)  (108)
     
 Total shareholders' equity  102,316  96,857
     
Total liabilities and shareholders' equity  $ 108,260  $ 104,170
 
 
 PETMED EXPRESS, INC. AND SUBSIDIARIES 
 CONDENSED CONSOLIDATED STATEMENTS OF INCOME 
 (In thousands, except for per share amounts)(Unaudited) 
         
   Three Months Ended   Nine Months Ended 
   December 31,   December 31, 
  2010 2009 2010 2009
         
 Sales   $ 45,118  $ 48,353  $ 180,732  $ 187,969
 Cost of sales   28,193  29,525  114,251  116,173
         
 Gross profit   16,925  18,828  66,481  71,796
         
 Operating expenses:         
 General and administrative   5,096  4,929  17,017  17,199
 Advertising   4,444  5,177  21,859  22,801
 Depreciation and amortization   358  337  1,023  982
 Total operating expenses   9,898  10,443  39,899  40,982
         
 Income from operations   7,027  8,385  26,582  30,814
         
 Other income (expense):         
 Interest income, net   98  46  265  165
 Other, net   (144)  1  (111)  4
 Total other income (expense)   (46)  47  154  169
         
 Income before provision for income taxes   6,981  8,432  26,736  30,983
         
 Provision for income taxes   2,459  2,842  10,011  11,053
         
 Net income   $ 4,522  $ 5,590  $ 16,725  $ 19,930
         
 Net income per common share:         
 Basic   $ 0.20  $ 0.25  $ 0.74  $ 0.88
 Diluted   $ 0.20  $ 0.25  $ 0.74  $ 0.88
         
 Weighted average number of common shares outstanding:       
 Basic   22,506  22,649  22,614  22,596
 Diluted   22,655  22,790  22,755  22,742
         
 Cash dividends declared per common share   $ 0.125  $ 0.100  $ 0.350  $ 0.200
         
 
PETMED EXPRESS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (In thousands) (Unaudited) 
   Nine Months Ended 
   December 31, 
  2010 2009
 Cash flows from operating activities:     
 Net income   $ 16,725  $ 19,930
 Adjustments to reconcile net income to net cash     
 provided by operating activities:     
 Depreciation and amortization   1,023  982
 Share based compensation   1,606  1,158
 Deferred income taxes   202  118
 Bad debt expense   30  29
 (Increase) decrease in operating assets     
 and increase (decrease) in liabilities:     
 Accounts receivable   1,265  1,670
 Inventories - finished goods   14,179  7,753
 Prepaid income taxes   (541)  (1,440)
 Prepaid expenses and other current assets   (1,238)  (31)
 Accounts payable   (1,532)  (1,055)
 Accrued expenses and other current liabilities   (246)  (206)
 Net cash provided by operating activities   31,473  28,908
     
 Cash flows from investing activities:     
 Net change in investments   (10,104)  2,150
 Purchases of property and equipment   (491)  (853)
 Purchases of intangible asset   (10)  -- 
 Net cash (used in) provided by investing activities   (10,605)  1,297
     
 Cash flows from financing activities:     
 Dividends paid   (7,933)  (4,529)
 Purchases of treasury stock   (5,225)  -- 
 Proceeds from the exercise of stock options   252  574
 Tax benefit related to stock options exercised   124  226
 Deferred tax adjustment related to restricted stock   25  -- 
 Net cash used in financing activities   (12,757)  (3,729)
     
 Net increase in cash and cash equivalents   8,111  26,476
 Cash and cash equivalents, at beginning of period   53,143  30,126
     
 Cash and cash equivalents, at end of period   $ 61,254  $ 56,602
     
 Supplemental disclosure of cash flow information:     
     
 Cash paid for income taxes   $ 10,254  $ 12,149
     
 Property and equipment purchases in accounts payable   $ 259  $ 488
     
 Dividends payable in accrued expenses   $ 126  $ 38
CONTACT: For investment relations
         PetMed Express, Inc.
         Bruce S. Rosenbloom, CFO
         954-979-5995

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