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Summary of Significant Accounting Policies | 12 Months Ended
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Mar. 31, 2023
Accounting Policies [Abstract] |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Organization PetMed Express, Inc. and subsidiaries, d/b/a PetMeds® (collectively, the "Company"), is a leading nationwide direct-to-consumer pet pharmacy and online provider of prescription and non-prescription medications, food, supplements, supplies and vet services for dogs, cats, and horses. The Company markets and sells directly to consumers through its websites, toll-free numbers, and mobile applications. The Company offers consumers an attractive alternative for obtaining pet medications, foods, and supplies in terms of convenience, price, speed of delivery, and valued customer service. Founded in 1996, the Company's executive headquarters offices are currently located in Delray Beach, Florida. The Company has a March 31 fiscal year and references herein to fiscal 2023, 2022, or 2021 refer to the Company's fiscal years ended March 31, 2023, 2022, and 2021, respectively. Principles of Consolidation The Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("U.S. GAAP") and include PetMed Express, Inc. and its wholly owned subsidiaries. All significant intercompany transactions have been eliminated in consolidation. Revenue Recognition The Company generates revenue by selling pet medication products and pet supplies. Certain pet supplies offered on the Company’s website are drop shipped to customers. The Company considers itself the principal in the arrangement because the Company controls the specified good before it is transferred to the customer. Revenue contracts contain one performance obligation, which is delivery of the product. Customer care and support is deemed not to be a material right to the contract. The transaction price is adjusted at the date of sale for any applicable sales discounts and an estimate of product returns, which are estimated based on historical patterns; however, this is not considered a key judgment. Revenue is recognized when control transfers to the customer at the point in time in which shipment of the product occurs. This key judgment is determined as the shipping point represents the point in time in which the Company has a present right to payment, title has transferred to the customer, and the customer has assumed the risks and rewards of ownership. Outbound shipping and handling fees are an accounting policy election and are included in sales as the Company considers itself the principal in the arrangement given responsibility for supplier selection and discretion over pricing. Shipping costs associated with outbound freight after control over a product has transferred to a customer are an accounting policy election and are accounted for as fulfillment costs and are included in cost of sales. The Company disaggregates sales in the following two categories: (1) reorder sales vs new order sales, and (2) internet sales vs call center sales. The following table illustrates sales by various classifications:
| Year Ended March 31, |  |  |  |
Sales (In thousands) | 2023 |  | % |  | 2022 |  | % |  | $ Variance |  | % Variance
Reorder sales | $ | 232,633 |  |  | 90.6 | % |  | $ | 244,505 |  |  | 89.4 | % |  | $ | (11,872) |  |  | (4.9) | %
New order sales | $ | 24,225 |  |  | 9.4 | % |  | $ | 28,912 |  |  | 10.6 | % |  | $ | (4,687) |  |  | (16.2) | %
Total net sales | $ | 256,858 |  |  | 100.0 | % |  | $ | 273,417 |  |  | 100.0 | % |  | $ | (16,559) |  |  | (6.1) | %
Internet sales | $ | 221,894 |  |  | 86.4 | % |  | $ | 230,263 |  |  | 84.2 | % |  | $ | (8,369) |  |  | (3.6) | %
Call center sales | $ | 34,964 |  |  | 13.6 | % |  | $ | 43,154 |  |  | 15.8 | % |  | $ | (8,190) |  |  | (19.0) | %
Total net sales | $ | 256,858 |  |  | 100.0 | % |  | $ | 273,417 |  |  | 100.0 | % |  | $ | (16,559) |  |  | (6.1) | %
| Year Ended March 31, |  |  |  |
Sales (In thousands) | 2022 |  | % |  | 2021 |  | % |  | $ Variance |  | % Variance
Reorder sales | $ | 244,505 |  |  | 89.4 | % |  | $ | 263,152 |  |  | 85.1 | % |  | $ | (18,647) |  |  | (7.1) | %
New order sales | $ | 28,912 |  |  | 10.6 | % |  | $ | 46,063 |  |  | 14.9 | % |  | $ | (17,151) |  |  | (37.2) | %
Total net sales | $ | 273,417 |  |  | 100.0 | % |  | $ | 309,215 |  |  | 100.0 | % |  | $ | (35,798) |  |  | (11.6) | %
Internet sales | $ | 230,263 |  |  | 84.2 | % |  | $ | 259,404 |  |  | 83.9 | % |  | $ | (29,141) |  |  | (11.2) | %
Call center sales | $ | 43,154 |  |  | 15.8 | % |  | $ | 49,811 |  |  | 16.1 | % |  | $ | (6,657) |  |  | (13.4) | %
Total net sales | $ | 273,417 |  |  | 100.0 | % |  | $ | 309,215 |  |  | 100.0 | % |  | $ | (35,798) |  |  | (11.6) | %
The Company changed the definition of a new customer on April 1, 2022, to include anyone who has not ordered over the past thirty-six months. The reorder and new order sales amounts for the years ended March 31, 2022 and March 31, 2021, respectively, reflect this new customer definition change. Under the previous definition of a new customer, reorder and new order sales were $250.4 million and $23.0 million, respectively, for the year ended March 31, 2022. Under the previous definition of a new customer, reorder and new order sales were $272.6 million and $36.6 million, respectively, for the year ended March 31, 2021. Virtually all of the Company’s sales are paid by credit cards and the Company usually receives the cash settlement in two to three banking days. Credit card sales minimize accounts receivable balances relative to sales. The Company had no material contract asset or liability balances as of March 31, 2023 and 2022. The Company maintains an allowance for doubtful accounts for losses that the Company estimates will arise from customers’ inability to make required payments, arising from either credit card chargebacks or insufficient funds checks. The Company determines its estimates of the uncollectability of accounts receivable by analyzing historical bad debts and current economic trends in compliance with the provisions of Accounting Standards Codification ("ASC") Topic 326 ("Financial Instruments - Credit Losses").. The allowance for doubtful accounts was approximately $35 thousand and $39 thousand at March 31, 2023 and March 31, 2022, respectively. Cash and Cash Equivalents The Company considers all highly liquid investments with maturity of three months or less when purchased to be cash equivalents. Cash and cash equivalents at March 31, 2023 and 2022 consisted of the Company’s cash accounts and money market accounts with a maturity of three months or less. The carrying amount of cash equivalents approximates fair value. The Company maintains its cash in bank deposit accounts which, at times, may exceed federally insured limits. The Company has not experienced any losses in such accounts. Use of Estimates The preparation of Consolidated Financial Statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Inventories Inventories consist of prescription and non-prescription pet medications and pet supplies that are available for sale and are priced at the lower of cost or net realizable value using a weighted average cost method. The Company writes down its inventory for estimated obsolescence. The inventory reserve was approximately $48 thousand and $81 thousand at March 31, 2023 and 2022, respectively. Property and Equipment Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Our building is being depreciated over a period of thirty years. The furniture, fixtures, equipment, and computer software are being depreciated over periods ranging from three to ten years. Long-lived Assets Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Recoverability of assets is measured by a comparison of the carrying amount of the asset to the undiscounted cash flows expected to be generated from the asset. Intangible Assets The intangible assets consist of a toll-free telephone number and internet domain names. In accordance with the ASC Topic 350 (“Goodwill and Other Intangible Assets”) the intangible assets are not being amortized and are subject to an annual review for impairment. Other Assets Other assets consist of the initial minority interest investment in Vetster. Details can be found in Note 12 below. Fair Value of Financial Instruments The carrying amounts of the Company's cash and cash equivalents, accounts receivable, and accounts payable approximate fair value due to the short-term nature of these instruments. Advertising The Company's advertising expense consists primarily of Internet marketing, direct mail/print, and television advertising. Internet costs are expensed in the month incurred and direct mail/print advertising costs are expensed when the related catalogs, brochures, and postcards are produced, distributed, or superseded. Television advertising costs are expensed as the advertisements are televised. Operating Leases Approximately 48% of our Delray Beach property, or approximately 88,000 square feet was leased to two tenants. At March 31, 2023, the leases with these two tenants had a remaining weighted average lease term of 2.0 years. The Company recorded approximately $710 thousand and $689 thousand in rental revenue in fiscal 2023 and 2022, respectively, which was included in other income. The Company expects to receive the following future lease payments, under the current lease agreements, over the next five years: $731 thousand in fiscal 2024; $566 thousand in fiscal 2025, $110 thousand in fiscal 2026, and $0 thousand in fiscal 2027 and 2028. Comprehensive Income The Company applies ASC Topic 220 (“Reporting Comprehensive Income”) which requires that all items that are recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed with the same prominence as other financial statements. The items of other comprehensive income that are typically required to be displayed are foreign currency items, minimum pension liability adjustments, and unrealized gains and losses on certain investments in debt and equity securities. For the fiscal years ended March 31, 2023, 2022 and 2021, the Company had no components of comprehensive income and therefore does not report comprehensive income or Consolidated Statements of Comprehensive Income. Income Taxes The Company accounts for income taxes under the provisions of ASC Topic 740 (“Accounting for Income Taxes”) which generally requires the recognition of deferred tax assets and liabilities for the expected future tax benefits or consequences of events that have been included in the consolidated financial statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on differences between the financial reporting carrying values and the tax bases of assets and liabilities and are measured by applying enacted tax rates and laws for the taxable years in which those differences are expected to reverse. As required by “Accounting for Uncertainty in Income Taxes” guidance, which clarifies ASC Topic 740, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the Consolidated Financial Statements is the largest benefit that has a greater than 50 percent likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company applies “Accounting for Uncertainty in Income Taxes” guidance to all tax positions for which the statute of limitations remains open. The Company had no liabilities for uncertain tax positions for both fiscal 2023 and fiscal 2022. The Company files tax returns in the U.S. federal jurisdiction and Florida, Arizona, California, Connecticut, Idaho, Maryland, Michigan, Oklahoma, South Carolina, Virginia, Wisconsin, New Jersey, Georgia, Indiana, New York and the District of Columbia. With few exceptions, the Company is no longer subject to U.S. federal, state or local income tax examinations by tax authorities for years ending March 31, 2019, or earlier. Any interest and penalties related to income taxes will be recorded to other income (expenses). Business Concentrations The Company purchases its products from a variety of sources, including certain manufacturers, domestic distributors, and wholesalers. We have multiple suppliers for each of our product lines to obtain the lowest cost. There were six suppliers from which we purchased approximately 69% and 77% of all products in fiscal 2023 and 2022, respectively. Accounting for Share Based Compensation The Company records compensation expense associated with restricted stock in accordance with ASC Topic 718 (“Share Based Payment”). The compensation expense related to all of the Company’s stock-based compensation arrangements is recorded as a component of general and administrative expenses. Recent Accounting Pronouncements The Company does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, will have a material effect on the Company’s consolidated financial position, results of operations, or cash flows.

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- Definition The entire disclosure for the organization, consolidation and basis of presentation of financial statements disclosure, and significant accounting policies of the reporting entity. May be provided in more than one note to the financial statements, as long as users are provided with an understanding of (1) the significant judgments and assumptions made by an enterprise in determining whether it must consolidate a VIE and/or disclose information about its involvement with a VIE, (2) the nature of restrictions on a consolidated VIE's assets reported by an enterprise in its statement of financial position, including the carrying amounts of such assets, (3) the nature of, and changes in, the risks associated with an enterprise's involvement with the VIE, and (4) how an enterprise's involvement with the VIE affects the enterprise's financial position, financial performance, and cash flows. Describes procedure if disclosures are provided in more than one note to the financial statements. + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 205 -URI https://asc.fasb.org/topic&trid=2122149 Reference 2: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 810 -URI https://asc.fasb.org/topic&trid=2197479 Reference 3: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 235 -URI https://asc.fasb.org/topic&trid=2122369 Reference 4: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 275 -URI https://asc.fasb.org/topic&trid=2134479 + Details
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