PetMed Express, Inc. (NASDAQ:PETS) Q2 2020 Earnings Conference Call - Final Transcript

Oct 26, 2020 • 08:00 am ET

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PetMed Express, Inc. (NASDAQ:PETS) Q2 2020 Earnings Conference Call - Final Transcript

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Q & A
Operator
Operator

Thank you, Mr. Rosenbloom. [Operator Instructions] Our first question is from Erin Wright with Credit Suisse. Your line is open.

Analyst
Erin Wright

Hi. Thanks. What's your mix of over-the-counter versus prescription medications now? Has it meaningfully changed here? And can you remind us of the profit profile, OTC versus prescription, and particularly given this MAPP pricing strategy that has been implemented? Thanks.

Executive
Bruce S. Rosenbloom

Sure thing. If you remember the call in the June quarter, we saw an uptick in OTC. a bit -- a little bit more uncharacteristic, the increase is little bit -- it was different from our normal mix. The September quarter was more of a normalized mix, although we did see a bit of an increase in Rx over OTC. And, obviously, as we mentioned previously, prescription medications have a higher margin profile than the OTC products.

Analyst
Erin Wright

Would you say that prescription is over half now in terms of...

Executive
Bruce S. Rosenbloom

Over half of our total sales?

Analyst
Erin Wright

Yeah.

Executive
Bruce S. Rosenbloom

Oh, yes, definitely much more than half.

Analyst
Erin Wright

Okay, great. And then on the stickiness of the COVID-driven customer base, I guess, how much, if there, is a paradigm shift to online versus just some stockpiling given COVID? I'm curious kind of how we should be thinking about sort of new customer growth over the balance of the year and what you're seeing in terms of that COVID-driven customer base.

Executive
Bruce S. Rosenbloom

Right. Overall demand has settled down with a combination of vet clinics and brick and mortar pet stores opening up, and also, as you mentioned, consumers stocking up in the June quarter. Also our new website platform might have had a temporary negative effect on our natural search during the quarter, which may have negatively impacted our new orders sales in the short-term and what we saw in the September quarter. We are now in the second phase of our e-commerce platform. We are now focusing on redesigning our website and mobile app to optimize our customers' digital experience, which should improve our new customer conversion in the future.

As far as COVID, I mean, it's really an unknown right now. Obviously, we're seeing cases increasing overall in majority of the states in the U.S. So we'll just have to see how that -- how those trends, overall, affect our business. As of right now, we did see demand settle down with the opening of those clinics in the retail stores. But overall, we've seen reorders become extremely strong and it may also be because of the increased new customers that we were able to take in for the six -- for the first six months of our fiscal year.

Analyst
Erin Wright

Okay, great. Thank you.

Operator
Operator

Thank you for your question. Our next question is from Anthony Lebiedzinski with Sidoti & Company. Your line is open, sir.

Analyst
Anthony Lebiedzinski

Yes. Good morning, Bruce, and thanks for taking the questions. So...

Executive
Bruce S. Rosenbloom

Good morning.

Analyst
Anthony Lebiedzinski

I guess my first question. So kind of looking back now at the first half of the fiscal year, you mentioned that there was some -- it sounds