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PETMED EXPRESS, INC.

QUARTER ENDED JUNE 30, 2006

CONFERENCE CALL TRANSCRIPT

JULY 24, 2006 AT 8:30 A.M. EDT

Coordinator: Welcome to the PetMed Express Inc. doing business as

1-800-PetMeds conference call to review the financial

results for the first quarter ended on July 30, 2006

(CORRECTION: June 30, 2006). At the request of 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 medications and other health products for dogs, cats,

and horses direct to the consumer. 1-800-PetMeds' markets

its products through national television, on-line, direct

mail, and print advertising campaigns, which direct

consumers to order by phone or on the internet and aim to

increase the recognition of the 1-800-PetMeds' brands

name. 1-800-PetMeds provides an attractive alternative

for obtaining pet medications 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. Sir, you

Bruce Rosenbloom: Thank you. Good morning. I'd like to welcome

everyone here today. Before I turn the call over to Mendo

Akdag, our Chief Executive Officer and President, 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 and

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 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, Mendo Akdag, the

Chief Executive Officer and President of 1-800-PetMeds.

Mendo Akdag: Thank you Bruce. Welcome everyone. Today we'll review the

highlights of our financial results; we'll compare our

first fiscal quarter ended on June 30, 2006 to last

year's quarter ended on June 30, 2005. For the first

fiscal quarter ended on June 30, 2006, sales were $50.7

million compared to sales of $43.6 million for the same

period the prior year; an increase of 16%. The increase

was primarily due to increased retail reorders offset by

a decrease to wholesale sales. For the first fiscal

quarter, net income was $4.8 million or $0.20 diluted per

share compared to $3.5 million or $0.15 diluted per share

for the same quarter last year; an increase to net income

Retail reorder sales increased by 32% to $33.9 million

for the quarter compared to reorder sales of $25.8

million for the same quarter the prior year. The increase

shows our continued success in building a loyal customer

base. Retail new orders slightly increased to $16.5

million for the quarter compared to $16.4 million for the

same quarter the prior year. Wholesale sales were

approximately $300,000 for the quarter compared to $1.4

million for the same quarter the prior year. The decrease

was due to our decision to reduce wholesale sales to

focus on retail business.

Excluding wholesale sales, the retail sales growth was

approximately 19% for the quarter, compared to 21% for

the same quarter last year. We acquired approximately

207,000 new customers in our first fiscal quarter

compared to 217,000 for the same period the prior year.

Our average retail order was approximately $84 for the

quarter, and approximately 59% of our sales were

generated on our website for the quarter.

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 seasons.

For the first fiscal quarter, our gross profit, as a

percent of sales, was 39.7% compared to 38.6% for the

same period a year ago. The percentage increase can

mainly be attributed to decreases in wholesale sales,

which have a lower gross profit margin, and lower than

anticipated product costs.

Our general and administrative expenses as a percent of

sales were 8.8% for both the first fiscal quarter and for

the same quarter the prior year. The company adopted

Financial Accounting Standard 123R during the quarter,

resulting in approximately $223,000 of stock option

compensation expense, which increased G&A as a percent of

sales by 40 basis points for the quarter.

We spent $8.3 million in advertising for the quarter

compared to $7.6 million for the same quarter the prior

year; an increase of 10%. Advertising cost of acquiring a