Dogness Reports Financial Results for Fiscal Year Ended June 30, 2024
PR Newswire
PLANO, Texas, Oct. 16, 2024
PLANO, Texas, Oct. 16, 2024 /PRNewswire/ -- Dogness (International) Corporation ("Dogness" or the "Company") $(DOGZ)$, a developer and manufacturer of a comprehensive line of Dogness-branded, OEM and private label pet products, today announced its financial results for the fiscal year ended June 30, 2024.
Silong Chen, Chief Executive Officer of Dogness, commented: "We continue to face challenges due to intense competition in the domestic market and the ongoing trade dispute between China and the United States, which are impacting and will likely continue impacting our domestic and export sales in the near future. In fiscal 2024, Dogness experienced intensified competition and a complex macro environment, which posed challenges to the Company resulting in a 15.6% revenue decline. Our gross profit for fiscal 2024 decreased to approximately $3.1 million, reflecting a 14.7% decline, primarily due to lower sales volumes in intelligent pet products. However, we effectively reduced our selling expenses by approximately $1.3 million and general and administrative expenses by $2.0 million, enhancing our operational efficiency. As a result, our overall gross profit margin improved slightly to 21.0%, up from 20.8% in fiscal 2023."
"Looking ahead, we are committed to leveraging our strengths in traditional pet products to capture additional market share, particularly in international markets where we see significant growth potential. We are also exploring new product lines and enhancements to our intelligent pet products, aiming to align them with consumer trends and preferences. Our commitment to sustainability will drive our research and development efforts, focusing on eco-friendly materials and advanced technologies that resonate with our customer base."
"Thanks to these strategic initiatives, our net loss improved by approximately $1.4 million, or 18.8%, decreasing from $7.5 million in fiscal 2023 to $6.1 million in fiscal 2024. We appreciate the continued support of our stakeholders as we strive for sustainable growth and profitability in the coming years, which we believe will position Dogness as a leader in the pet products industry."
Financial Results for The Fiscal Year Ended June 30, 2024
Revenues
Revenues decreased by approximately $2.7 million, or 15.6%, to approximately $14.8 million in fiscal 2024 from approximately $17.6 million in fiscal 2023. The decrease in revenue was primarily attributable to an approximately $3.0 million decrease in the sales of intelligent pet products and an approximately $0.5 million decrease in the sales of climbing hooks and others, offset by an approximately $0.7 million increase in the sales of traditional pet products.
The breakdown of our revenue by products and services categories is as follows:
2024 2023 Changes
Products and Amount Amount
services category (USD Million) (USD Million) %
Products
Traditional pet
products $ 9.0 $ 8.3 8.7%
Intelligent pet
products 4.4 7.4 (40.8)%
Climbing hooks and
others 1.4 1.8 (25.0)%
Total revenue from
products 14.8 17.5 (15.7)%
Services
Dyeing services 0.09 - -%
Other services - 0.07 (100.0)%
Total revenue from
services 0.09 0.07 22.5%
Total $ 14.8 $ 17.6 (15.6)%
Traditional Pet Products
Revenue from traditional pet products rose by approximately $0.7 million or 8.7%, from $8.3 million in fiscal 2023 to $9.0 million in fiscal 2024. This increase was primarily due to higher sales volume, with $1.2 million coming from overseas markets, offset by a $0.5 million decline in the Chinese domestic market.
Intelligent Pet Products
Revenue from intelligent pet products fell by approximately $3.0 million, or 40.8%, from $7.4 million in fiscal 2023 to $4.4 million in fiscal 2024. This decline was driven by a 33.1% drop in sales volume and a $2.3 decrease in average selling price per unit. The Chinese market accounted for a $0.8 million decrease, while overseas markets contributed to a $2.2 million decline, as the pet product industry is facing reduced consumer spending on non-essential intelligent pet products items.
Climbing Hooks and Others
Revenue from climbing hooks and other products decreased by approximately $0.5 million, or 25.0%, from $1.8 million in fiscal 2023 to $1.4 million in fiscal 2024, mainly due to lower sales volume.
Dyeing Services
The Company provides dyeing solutions using our manufacturing capabilities, applying dyes to textiles for desired quality and color. Revenue from dyeing services was $0.1 million in fiscal 2024, up from no revenue in 2023.
Sales to Related Parties
During fiscal 2024, Dogness Network Technology Co., Ltd. ("Dogness Network") and Dogness Technology Co., Ltd ("Dogness Technology") were related parties of the Company. Dogness Technology ceased being a related party after December 31, 2023. Sales to Dogness Network and Dogness Technology Co., Ltd totaled $0.1 million and $1.7 million in fiscal 2024 and 2023, respectively, representing 0.7% and 9.7% of total revenue. Costs associated with these sales were $0.1 million in 2024 and $1.2 million in 2023.
International vs. Domestic sales
Total international sales dropped by approximately $1.2 million, or 10.6% to approximately $10.1 million in fiscal 2024, primarily due to 48.7% decline in intelligent pet product sales. Traditional pet product sales, however, rose by 21.6%.
Domestic sales decreased by approximately $1.5 million, or 24.4% to around $4.8 million, driven by reduced customer orders caused by intense competition in the domestic market. Domestic sales of traditional and intelligent pet products declined by 19.8% and 27.7% respectively in the domestic market.
Cost of revenues
Cost of revenues decreased by approximately $2.2 million or 15.8%, from approximately $13.9 million in fiscal 2023 to approximately $11.7 million in fiscal 2024. The decreased cost of revenues was the result of the decrease in average unit cost due to a shift toward lower cost traditional pet products.
Gross profit
Gross profit decreased by approximately $0.5 million or 14.7%, from approximately $3.7 million in fiscal 2023 to approximately $3.1 million in fiscal 2024, primarily attributable to the decreased sales volume of our intelligent pet products. Overall gross profit margin was 21.0% in fiscal 2024, an increase of 0.2 percentage points, as compared to 20.8% in fiscal 2023.
The breakdown of gross profit by products and services categories is as follows:
For the Year ended June 30,
2024 2023 Changes
Gross
Products and Gross Gross profit
services Amount profit Amount profit Pct.
category ($Million) % ($Million) % Pt.
Traditional
pet
products $ 1.4 16.0% $ 1.2 14.3% 1.7 pct.
Intelligent
pet
products 1.2 28.3% 1.8 24.4% 3.9 pct.
Climbing
hooks and
others 0.5 34.9% 0.6 34.2% 0.7 pct.
3.1 21.4% 3.6 20.6% 0.8 pct.
Services
Dyeing
services (0.03) (35.8)% - -% (35.8) pct.
Other
services - -% 0.06 86.5 (86.5) pct.
Total $ 3.1 21.0 %% $ 3.7 20.8% 0.2 pct.
Traditional pet products
Gross profit for traditional pet products rose by approximately $0.3 million in fiscal 2024, with the gross profit margin increasing by 1.7 percentage points from 14.3% to 16.0%, mainly due to a $0.15 reduction in average unit cost.
Intelligent pet products
For intelligent pet products, gross profit fell by approximately $0.6 million from $1.8 million to $1.2 million, largely due to a 33.1% drop in sales volume. However, gross profit margin improved by 3.9 percentage points from 24.4% to 28.3%, driven by a $2.42 decrease in average unit cost.
Climbing hooks and others
Gross profit for climbing hooks and others decreased by approximately $0.1 million from $0.6 million to $0.5 million, primarily due to a 25.2% decline in sales volume. The overall gross margin for this category increased by 0.7 percentage points from 34.2% to 34.9%. The increase was due a $0.02 reduction in average unit cost.
Expenses
Selling Expenses
Selling expenses decreased by approximately $1.3 million, or 54.4%, from $2.5 million in fiscal 2023 to $1.1 million in fiscal 2024, mainly due to reduced marketing research activities. As a percentage of sales, these expenses were 7.6% in fiscal 2024, down from 14.1% in 2023.
General and Administrative Expenses
General and administrative expenses decreased by approximately $2.0 million, or 20.0%, from $9.8 million in fiscal 2023 to $7.8 million in fiscal 2024, due to lower professional consulting and decoration costs. As a percentage of sales, these expenses were 52.8% in 2024, compared to 55.7% in 2023.
Research and Development Expenses
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