PetMed Express announced on Thursday that it cannot rely on certain past financial statements. The company, which provides prescription and non-prescription pet medications and supplies, stated that it had determined the need for an accrual for sales tax contingencies while preparing its 2023 annual report.
PetMed recorded a sales tax accrual in the second and fourth quarters of fiscal 2023 based on its determination. However, after a review, the company found that it had incorrectly applied generally accepted accounting principles to the sales tax liability in the affected financial statements. This led to an improper valuation of the deferred tax asset and goodwill reported in the first and second quarter of fiscal 2024.
The restatement is expected to have an impact on multiple periods, with the most significant effect being a decrease in general and administrative expenses for fiscal 2023, ranging from $6 million to $8 million. At the same time, there will be a corresponding increase in net income for the same period. The company clarified that this amount was originally recorded as a sales tax liability.
PetMed assures its stakeholders that the restatement will not affect its revenue or cost of goods sold for fiscal 2024. Furthermore, it states that there will be no impact on its day-to-day business operations or strategic priorities.
In light of these developments, PetMed’s Chief Financial Officer, Christine Chambers, commented, “The restatement, while unfortunate, is not expected to impact our day-to-day business operations or strategic priorities.”