Welcome to the PetMed Express, Inc. conference call to review the financial results for the fourth fiscal quarter and year ended on March 31, 2020. For the company, this conference call is being recorded. Founded in 1996, 1-800-PetMeds is America's largest pet pharmacy, delivering prescription and non-prescription pet medication and other health products for cats and horses direct to the consumer. Through PetMeds markets its products through national advertising campaigns, which directs consumers to order by phone or on the internet, and to increase the recognition of the PetMeds family of brands. 1-800-PetMeds provides an attractive alternative for obtaining pet medication in terms of convenience, price, ease of ordering, and rapid home delivery. At this time, I would like to turn the call over to the company's Chief Financial Officer, Mr. Bruce Rosenbloom.
Thank you. I would like to welcome everybody here today. Before I turn the call over to Menderes Akdag, our President and Chief Executive Officer, I'd like to remind everyone that the first portion of this conference call will be listen only until the question and answer session, which will be later in the call. Also, certain information that will be included in this press conference 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 may 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. Now let me introduce today's speaker, Menderes Akdag, President and Chief Executive Officer of 1-800-PetMeds. Mendo.
Thank you, Bruce. Good morning. Welcome and thank you for joining us. First, we hope you're doing well and staying safe and healthy in these challenging times. Due to COVID-19, our consumer demand has been strong for e-commerce, with pet owners shifting their purchases to online. Our sales have been positively impacted due to this increased demand, combined with the start of our peak season. As an essential business, we have been open during our normal business hours without any material disruptions in our operations. We are dedicated to making every effort to ensure pets get the medications they need. We have also taken measures to ensure the health and safety of our employees. We have implemented working from home where possible and enhanced disinfection of our workplace. We have repeatedly been stressing to our employees the need for social distancing and proper hygiene practices at home and at work.
We transitioned in-person meetings to online, we have not been permitting any non-employees on our premises. So far, we have not seen any material disruptions in our supply chain. The situation has been fluid, changing day by day. We are monitoring and managing it closely. We will compare our fourth fiscal quarter ended on March 31st, 2020 to last year's quarter ended on March 31st, 2019. For the fourth fiscal quarter ended on March 31st, 2020, our sales were $74.3 million compared to sales of $64.6 million for the same period the prior year, an increase of 15%. The increase in sales for the quarter was due to increases in reorder and new order sales. The average order value was approximately $90 for the quarter, compared to $85 for the same quarter the prior year.
For the fourth fiscal quarter, net income was $7 million, or $0.35 diluted per share, compared to $6.6 million, or $0.32 diluted per share for the same quarter a year ago, an increase to diluted earnings per share of 8.4%. Reorder sales increased by 17% to $65.2 million for the quarter, compared to reorder sales of $55.9 million for the same quarter the prior year. New order sales increased by 5% to $9.1 million for the quarter, compared to $8.7 million for the same period the last year. We acquired approximately 107,000 new customers in our fourth fiscal quarter, compared to 101,000 for the same period the prior year. The seasonality in our business is due to the proportion of flea, tick, and heartworm medications in our product mix. Spring and summer are considered peak seasons, with fall and winter being the off-season.
For the fourth fiscal quarter, our gross profit as a percent of sales was 29.2%, compared to 32.1% for the same period a year ago. The percentage decrease for the quarter can mainly be attributed to increases in product costs and additional discounts given to customers in response to increased online competition. Our General and Administrative expenses as a percent of sales was 8.6% for the quarter, compared to 9% for the same quarter the prior year. We were able to leverage the G&A with increased sales. For the quarter, we spent about $6.2 million in advertising, compared to $6.5 million for the same quarter a year ago. The decrease for the quarter was primarily due to a reduction in television advertising.
Advertising cost of acquiring a customer for the quarter, defined as total advertising expenses divided by total new customers acquired, was approximately $58, compared to $65 for the same quarter the prior year. We had $103.8 million in cash and cash equivalents and $17.9 million in inventory, with no debt as of March 31st, 2020. Net cash from operations for the fiscal year was $38.8 million, compared to $45.1 million for the prior fiscal year. The decrease was due to lower net income, offset by decreases in inventories and increases in accounts payable compared to the prior fiscal year. Capital expenditures were approximately $2.3 million for the fiscal year. This ends the financial review. Operator, we are ready to take questions.
Thank you. We will now begin the question and answer portion of today's conference call. If you would like to ask a question, please unmute your phone, press star one, and record your first and last name and state your company to ask your question. If you would like to withdraw your question, you may use star two. Please stand by for our first question. First, we have Erin Wright from Credit Suisse. Your line is open.
Great, thanks. Based on the order mix, basket size, customer profile, other metrics that you tracked, how sticky would you think that this COVID-driven customer base will be?
We are assuming that it's going to be same as what it has been historically.
You don't anticipate that there was any outside stockpiling?
There could be. That's a possibility. We had campaigns encouraging buying higher volume and we were also cross-selling. Probably it's half and half, so there could be some stockpiling.
Okay. All right, thanks. Then have you seen any changes in the parasitic side ordering patterns, whether it's across OTC or prescription products? Do you anticipate a change in ordering patterns maybe because of COVID or because of the flea and tick season in general this year? If you could provide any sort of color there, that'd be great. Thanks.
I would say flea and tick season started a little earlier this year, probably end of February, beginning of March. The weather was warmer, so that might have positively impacted the numbers also.
Okay. All right, thank you so much.
You're welcome.
Thank you. Kevin Ellich from Ace Research, your line is open.
Good morning. Mendo, new customer sales increased about 6% this quarter, first time in about eight quarters. Clearly, as Erin pointed out, maybe some stockpiling going on, do you think that's also a sign that the competitive environment's finally leveling off?
Prices stabilize in the markets, with manufacturers enforcing MAP policies. We've been price competitive, and that probably helped. Also demand for e-commerce, as we pointed out, has been strong.
Okay, that's helpful. Gross margin, you made the comment about I think you said there's been some of the campaigns and also increase in product costs. Do you expect gross margin will continue to ramp in fiscal 2021, especially as you have some new parasitic products online? I see some parasiticides now available on your website. I'm just curious if you can give us any color how it's been doing in the first two days or the first few weeks as you've been offering it.
It depends really on the product mix. The OTC sales have been going up too lately. It's really going to depend on the product mix. We'll know in a couple of quarters where the gross margins will end up.
Okay. I know this might be a tough one, but with new customer sales increasing, have you guys taken a look, is there any specific geography where you're seeing an increase or a surge in sales? What about customers that used 1-800-PetMeds three, four years ago, stopped, and now are you seeing any of those people come back?
Yeah, we're seeing some of our customers that has not purchased from us in a while has been coming back. We have seen that. The big states, the top seven, eight states has been strong. I would not say there's a material difference between states.
Lastly, it looks like, clearly we've seen increased pet adoptions. Animal shelters are pretty empty now. Just wondering how you think that's going to affect your business going forward. I would imagine it's got to be a positive for the industry and your business. Just wondering if you guys have noticed that as well.
It should be a positive for us, we'll see what happens.
Okay. Thank you. Have a good day.
You're welcome.
Thank you. Next, we have Anthony Lebiedzinski from Sidoti & Company. Your line is open.
Yes, good morning, and thank you for taking the question. I joined the call late, so maybe you already addressed this, but I just wanted to get a sense, maybe if you could give us a little bit more color as to the sales acceleration that you saw. I guess, if you could just step back and look at your business before the COVID-19 outbreak and afterwards, if you could just give us a sense as to the magnitude of the change in your sales.
Right. Increased demand for e-commerce and the start of our peak season coinciding positively impacted our sales.
Got it. Okay. Just wondering if with more states opening up their economies now, how should we think about the impact on your business from the demand perspective? Obviously, during March, and I guess most of April, there was this big surge in demand for anything e-commerce related. As things start to get back to normal, what kind of impact would you foresee on your business?
Well, demand is still strong so far for e-commerce. We'll see what happens when the country opens up.
Got it. Okay. As far as your advertising strategy, how should we think about that as far as how aggressive you want to be with promoting the brand? I know you are doing some TV ads now. Just wanted to get a sense as to how should we think about your advertising strategy, new customer acquisition costs. That would be very helpful. Thank you.
We'll be aggressive during peak season. We're working on optimizing our marketing, and our budget is flexible depending on ROI. As far as the demand is strong, we'll be aggressive.
Got it. All right. Thank you, and best of luck.
Thank you.
Thank you. Again, that is star one if you have a question on the phone. Next we have Ben Rose from Battle Road Research. Your line is open.
Yes. Good morning, and glad to hear everything is going well for PetMeds. Couple of questions. Firstly, for Mendo, I understand that this may have been the first quarter that you have rolled out your new e-commerce platform, and was just curious to know if there are any comments you could make relative to how the platform is helping the business.
We still have not rolled out the new platform, actually, due to the COVID-19, and we got busy, and we postponed it at this time.
Okay. Is that an indefinite postponement, or?
No, it's not an indefinite, but we would not like doing it while we are very busy.
Sure. Also, wanted to ask you a little bit more about, you had mentioned monitoring the supply chain. Was just curious if that is just kind of a generic concern around being able to be properly stocked by your medication suppliers, or are there any other potential issues there?
It's generic concern, and there are sometimes delays to the lead times by a week or two, so we're taking that into consideration at this time. It is a generic concern.
Okay. If I may, has the current environment necessitated any additional fulfillment workers, or have you essentially been working with your current staff through the crisis?
We did increase our staff. We're using some temporary employees in the distribution center.
Okay. All right. Thank you very much.
You're welcome.
Thank you. There are no further questions in the queue.
Thank you. In fiscal 2021, we'll continue focusing on optimizing our marketing in this more competitive environment and being more efficient with our advertising spending. In addition, we'll continue investing in our e-commerce platform to better service our customers. This wraps up today's conference call. Thank you for joining us. Operator, dismiss the conference call.
Thank you for participating. You may now disconnect.