The management at OurPet’s Company (OTCQX: OPCO) is driven by animal spirits. They’ve taken the quite mundane business of pet care and turned it into a high tech, high touch enterprise. Products now range from the groundbreaking OurPets® Big Dog Feeder® (http://dtn.fm/hG4WS) to the Intelligent Pet Care™ line (http://dtn.fm/dK3Al), which uses digital technologies to enhance communication with pets. In an industry that is growing twice as fast as the economy, OurPet’s Company is racing ahead at double the industry pace. In its third quarter 10-K, published November 14, 2016, the company shows that this pace has not lessened. Revenues for 2016 through the first three quarters were about 10% greater than for the same period a year ago.
When, in 1936, John Maynard Keynes coined the term ‘animal spirits’ in his magnum opus “The General Theory of Employment, Interest and Money”, he was describing the ‘spontaneous optimism’ on which ‘a large proportion of our positive activities depend’. The great man opined that ‘if the animal spirits are dimmed and the spontaneous optimism falters, leaving us to depend on nothing but a mathematical expectation, enterprise will fade and die’. In other words, however businesslike we may consider ourselves to be, in the end, we are irrational creatures, moved by sentiment and plagued by lack of information.
The animal spirits driving OPCO are not just pie in the sky, however. They are grounded in ‘mathematical expectation’, as the company’s latest quarterly report indicates. Net revenue for the nine months to September 2016 was $18.9 million, increasing by about $1.7 million over same period sales the year before. Net revenue for the third quarter of 2016 was $7.3 million, 21 percent higher than third quarter 2015 revenue of $6.0 million. Income after taxes for the nine-month period was also about 21% higher than the year before, and diluted earnings per share rose from $0.04 to $0.05.
OPCO continues its marketing focus on the pet specialty; food, drug and mass retail; and e-commerce distribution channels. Third quarter sales to pet specialty customers accounted for 48 percent of the company’s total, while mass retail sales and e-commerce sales made up 39 percent and eight percent, respectively. The other five percent of sales took place mostly through the value and closeout channels.
The strategy to implement a renewed marketing push was set in motion last year, when OPCO initiated its dual-branding approach. The OurPets® brand is targeted at the pet specialty channel, while the Pet Zone brand is sold to the food, drug and mass retail channel. Both brands are sold online through the company’s e-commerce effort.
Pet care is becoming big business as Americans lavish care and attention on their animals. The industry is expected to grow to almost $63 billion by the end of 2016. If pet care were a country, it would rank around #70 in economic size out of 196 economies. That, maybe, accounts for the animal spirits at OurPet’s Company.
For more information, visit the company’s website at www.OurPets.com
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