Investing.com -- PetMed Express (NASDAQ: NASDAQ: PETS ) shares dropped 14% after the company reported third-quarter earnings that fell short of Wall Street expectations, highlighting ongoing competitive challenges. The company's earnings per share (EPS) for the quarter were reported at ($0.03), which was $0.02 below the analyst consensus of ($0.01). Revenue also came in lower than expected at $53 million, compared to the anticipated $65 million.

Despite the earnings miss, PetMed Express reported a gross margin rate of 28.1%, marking an 80 basis points improvement from the same quarter last year. Adjusted EBITDA saw an increase to $2.0 million, up from $0.9 million year-over-year (YoY), and the company made notable reductions in general and administrative expenses by $2.6 million compared to the previous year.

CEO & President Sandra Campos commented on the company's progress, stating, "In just nine months, we have made significant strides in our transformation journey... Our focused execution is already yielding results, validating our direction and setting the foundation for long-term success." The company emphasized its ongoing initiatives aimed at transforming the business and driving long-term shareholder value.

However, analysts remain cautious about the company's near-term prospects. Lake Street analyst Ryan Meyers provided his perspective, saying, "We think the company will continue to be under pressure in the near term and are therefore reiterating our Hold rating." He noted that PetMed Express has not seen organic growth for over 12 quarters, attributing the stagnation to competitive pressures. Meyers also pointed out that any growth currently relies on promotions and marketing, which could undermine profitability.

The analyst acknowledged the new management team's vision and the strategic steps being taken to consolidate brands, improve the supply chain, and focus on customer retention, among other initiatives. Yet, he also expressed that it would take time for the company's efforts to translate into financial improvement. "We think there is some value in the PetMeds platform but believe it will take time for that value to be recognized," Meyers added.

Investors are reacting to the immediate financials, which have led to a significant decline in the company's stock price during the trading session.

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