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PetMed Express, Inc.

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In the past three months, PetMed is trading below the broader Electronic Commerce industry. Despite the last four quarters saw a turnaround in the number on the back of more aggressive pricing, we are disappointed with a series of continued drag in new order sales. We are also apprehensive about the pressure on margins despite the company’s cost-reduction initiatives. Furthermore, the drop in advertising cost raises concerns. The company is presently trying to implement several strategies to revive its top line. These include focus on advertising efficiency to improve new order sales and shifting sales to higher margin items. On a positive note, PetMed exhibited a better-than-expected revenue performance in the third quarter of fiscal 2017. We are also impressed with re-order sales that have risen significantly in this quarter.

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