Release Date: August 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- New leadership team with experienced executives from top-tier retail backgrounds.
- Operational efficiency improved with a 20% improvement in inventory turns and an 11% reduction in ending inventory.
- Strategic partnerships and new product launches, including 350 SKUs of Hill's and Royal Canin Rx food.
- Strong balance sheet with $53 million in cash and no debt.
- Positive early indicators such as increased order values, reduced call wait times, and improved margins.
Negative Points
- Q1 financial results were below expectations with a 13% decline in sales compared to last year.
- Gross profit margin decreased by 230 basis points due to higher promotional activity.
- Adjusted EBITDA reflected a loss of $1.5 million compared to a gain of $3.1 million in the same period last year.
- Technology disruptions impacted customer experience, including order tracking and delivery delays.
- Lower prescription medication sales and fewer new customers compared to the same period last year.
Q & A Highlights
Q: Can you provide more detail on the macro pressures that drove a 13% revenue decline, and your confidence in driving growth despite these pressures?
A: Sandra Campos, CEO: The decline was due to fewer pet owners visiting veterinary clinics, leading to fewer prescriptions, and increased consumer demand for promotions and discounts. Despite these challenges, we are confident in our strategies to engage customers through improved technology, marketing, and customer service, which we believe will capture more customers and increase frequency of purchases.
Q: How should we think about revenue trends for the rest of the year given the stabilization seen towards the end of Q1?
A: Sandra Campos, CEO: We are seeing stabilization in revenue, conversion rates, and margins, with consistent month-over-month improvements. Our unique customer transactions and web visits have also increased, indicating positive trends.
Q: Can you provide more detail on the technology issues that impacted the quarter?
A: Sandra Campos, CEO: We implemented a new order management system earlier this year, which initially caused disruptions, including longer hold and wait times for customer service and pharmacy approvals. These issues have been addressed, and our call times and handling times are now back to normal.
Q: What steps are being taken to improve customer experience and operational efficiency?
A: Sandra Campos, CEO: We are modernizing our technology, improving our call center systems, and enhancing our pharmacy processes to expedite approvals and reduce friction. These efforts aim to provide a more seamless and efficient customer experience.
Q: How are you addressing the competitive landscape and market opportunities in the pet care industry?
A: Sandra Campos, CEO: We are expanding our product offerings, such as launching new SKUs of prescription food, and forming strategic partnerships to integrate grooming and wellness services. These initiatives aim to broaden our brand equity and capture a larger share of the $150 billion pet care market.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
