Customer Service Measurements - PetMeds ® Investor Relations

Cautionary Statement Regarding
Forward-Looking Information
Certain information that is included in this investor presentation may include
forward-looking statements within the meaning of the Private Securities Litigation
Reform Act of 1995 or the Securities and Exchange Commission that may involve a
number of risks and uncertainties. These statements are based on our beliefs, as well
as assumptions we have used based upon information currently available to us.
Because these statements reflect our current views concerning future events, these
statements involve risks, uncertainties and assumptions. Actual future results may
vary significantly based on a number of factors that may cause the actual results or
events to be materially different from future results, performance or achievements
expressed or implied by these statements. We have identified various risk factors
associated with our operations in our most recent annual report and other filings
with the Securities and Exchange Commission.
Company Overview
• Formed in 1996
• Leading marketer of prescription and non-prescription
medications and other health products for dogs and cats
direct to the consumer.
• Markets its products through national television, on-line and
direct mail/print advertising campaigns, which direct the
consumer to order by phone or on the internet, and aim to
increase recognition of the "1-800-PetMeds" brand name.
• Provides an attractive alternative for obtaining pet
medications in terms of convenience, price, ease of ordering
and rapid home delivery.
The Leading Direct Marketer of Pet
Medications Annual Sales (in millions)
E-Commerce Annual Sales (in millions)
$200.0
$162.8
$175.0
$178.8
$176.0
FY 2012
FY 2013
$165.5
$143.3
$150.0
$122.5
$125.0
$100.0
$75.0
$50.0
$25.0
$0.0
FY 2008
FY 2009
FY 2010
FY 2011
Fast, Easy, Helpful Service
With Great Savings
• Consumers generally save money from
veterinarians' prices.
• Consumers enjoy the convenience of
rapid home or office delivery. 80% of all
orders are shipped within 24 hours.
• Exceptional customer care and support
is our top priority.
Exceptional customer service & support
• Net Promoter Score = 77%, which is within the top 2% of
Companies that use this measurement.
• OpinionLab score = 859 / 1,000 (average online retailer score
458) which is a website satisfaction benchmark
• Google seller rating = 4.9 / 5.0
• Average email response time is less than 10 minutes vs. 24
hours
• 100% happy or your money back with free returns
Customer Service Measurements
Net Promoter Score
OpinionLab Score
1000
100%
PETS
77.0%
AMZN
76.0%
(1)
75%
AVG
47.0%
(1)(2)
50%
PETS
859 (3)
750
AVG
458
(2)(3)
500
250
25%
(1)NPS Benchmark Charts, Feb 2013,
www.netpromoter.com
(2)Average for online shopping
(3)Opinionlab, Inc. trend data, March 2013,
www.opinionlab.com
ar
-1
3
M
-1
2
D
ec
p12
Se
n12
Ju
AMZN
ar
-1
2
AVG
M
3
ar
-1
M
-1
2
D
ec
12
pSe
Ju
n1
2
PETS
PETS
AVG
Non-Prescription
Non-Prescription
Medications
(OTC)
Non-PrescriptionMedications
Medications(OTC)
(OTC)
Prescription Medications (Rx)
Sales by Category
Fiscal Year Ended March 31, 2013
OTC
1%
Rx
Shipping
40%
59%
Compared to 59% OTC, 40% RX and 1%
Shipping for the year ended March 31, 2012.
$53.3 Billion Pet Market in U.S.
4.7% Growth in 2012
Food
4.0 % Growth
$2.2
$4.2
Vet Care
2.2% Growth
$20.6
$12.6
Supplies/
Medicine
6.8% Growth
Grooming/
Boarding
10.5% Growth
$13.7
According to American Pet
Products Manufacturers
Association (APPMA).
Animal
Purchases
4.8% Growth
Pet Medications Market Share
$4.0 Billion (Estimated)
Veterinarians
Retailers
25%
1-800-PetMeds
6%
63%
According to IMS Health and
NACDS Economics Dept., in
human pharmaceuticals, 19%
of the market is serviced by
mail order/on-line channel.
6%
Other Mail Order
Sales Seasonality Trends
Fiscal Year Ended March 31, 2013
1st Q Ending
June 30,
$69.0 million
22%
22%
2nd Q Ending
September 30,
$58.1 million
3rd Q Ending
December 31,
$49.6 million
26%
30%
4th Q Ending
March 31,
$51.1 million
Advertising & Marketing
Print Ads
Print
Ads
B
Web Banner
Banner
Ads
Banner
Web Banner Ads
Ads Ads
Print Ads
New Customers Acquired & Total
Accumulated (in thousands)
7,460
8,000
6,830
7,000
6,108
6,000
5,463
4,648
5,000
New
Customers
4,000
Total
Accumulated
3,000
2,000
1,000
802
815
645
722
630
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
0
Note: As of FY 2013, 2.7 million customers
purchased in the last 24 months.
Customer Acquisition Cost Trend
$50.0
$42
$40.0
$36
$42
$44
$34
$30.0
$20.0
$10.0
$0.0
FY 2009
FY 2010
FY 2011
FY 2012
FY 2013
Summary Financial Data
Fiscal Year Ended March 31st (in millions)
2013
2012
2011
New Order Revenue
Reorder Revenue
Total Net Revenue
$ 43.0
$ 184.8
$ 227.8
18.9%
81.1%
$ 51.3
$ 187.0
$ 238.3
21.5%
78.5%
$ 47.3
$ 184.3
$ 231.6
20.4%
79.6%
Gross Profit
$ 77.1
33.9%
$ 80.2
33.7%
$ 84.0
36.2%
G&A Expenses
$ 21.6
Advertising Expenses $ 27.4
Depreciation Expenses $ 1.1
9.5%
12.0%
0.5%
$ 22.4
$ 30.4
$ 1.4
9.4%
12.8%
0.6%
$ 22.2
$ 27.4
$ 1.4
9.6%
11.8%
0.6%
Operating Income
$ 27.0
11.9%
$ 26.0
10.9%
$ 33.0
14.2%
Net Income
$ 17.2
7.5%
$ 16.7
7.0%
$ 20.9
9.0%
EPS - Diluted
$ 0.86
$ 0.80
$ 0.92
Current Financial Trends
GROSS PROFIT
EPS
Why did Sales Decline?
• The unavailability of Novartis brands.
• Average order value declined from $76 to $73.
- Change in product mix to lower priced items.
- Additional discounts.
• The 2012 Presidential elections negatively impacted
our advertising spending by crowding the TV
Adverting market.
• The colder weather impact.
Competitive Strengths
• Channel leader
• “1-800-PetMeds” brand name
• Licensed pharmacy to do business in 50 states – Vet
VIPPS certified
• Superior service – Fast, Easy and Helpful – Most
consumers do not have hard copy prescriptions. We
do the work for them.
• 1,000 SKUs in stock, and 2,000 SKUs via third party
Response to Sales Decline
• More aggressive advertising strategy.
• Generics & private label to improve margins.
• Continue to expand product offerings to pet
supplies.
• Compete by providing superior service.
(Content, Comparison, Q&A)
4 Compelling Reasons
To invest in 1-800-PetMeds
1. Leader in its channel in an estimated $4.0 billion industry
2. 1-800-PetMeds brand name
3. Licensed pharmacy to conduct business in 50 states
4. Exceptional customer service and support