Strong sales and operating efficiencies facilitated
), the specialty retailer of products, services and solutions for
pets, to post robust third-quarter 2012 earnings. The quarterly
earnings of 75 cents a share jumped 50% from 50 cents delivered
in the year-ago period. Moreover, the reported earnings surpassed
the Zacks Consensus Estimate of 63 cents.
The company's top line increased 9% year over year to $1,629.5
million, ahead of the Zacks Consensus Estimate of $1,619 million.
The company witnessed strong sales across all categories.
Merchandise sales grew 8.9% to $1,444.7 million, whereas service
sales increased 8% to $175 million. Other revenue in the quarter
came in at $9.8 million, up 4.4% year over year.
Phoenix-based pet retailer, PetSmart's comparable-store sales
advanced 6.5% in the quarter, driven by 2.3% growth in comparable
The company's innovative and differentiated products and its
sustained efforts to expand its portfolio of brands and
assortments facilitate it to deliver healthy results. In a move
to boost sales, PetSmart has collaborated with
Martha Stewart Living Omnimedia Inc
), to launch assorted lines of pet products.
Benefiting from its top-line growth, gross profit marked an
increase of 12.7% to $482.5 million. Moreover, gross margin
expanded 100 basis points to 29.6%, reflecting operating
The company's operating income remains strong, portraying
growth of 37.9% to $139.6 million. Besides, operating margin
expanded 180 basis points to 8.6%, indicating a decrease in
operating, general and administrative expenses as a percentage of
During the quarter, PetSmart opened 24 stores and closed 4,
bringing the total store count to 1,269. Moreover, the company
opened 1 PetsHotel, ending the quarter with 195 hotels.
The company ended the quarter with cash and cash equivalents
of $298.1 million, capital lease obligations of $475.6 million
and shareholders' equity of $1,157 million. During the reported
quarter, PetSmart generated operating cash flow of $133 million,
and incurred capital expenditures of $40 million. The company
repurchased shares worth $60 million and distributed $18 million
Based on the healthy results, the company raised its fiscal
year guidance. Currently, the company expects earnings in the
range of $3.47 to $3.51 per share, while comparable store sales
are projected to increase in 6% to 7% range, with total sales
growth of 10% to 11%. Gross margin is expected to expand by
95 to 105 basis points.
Earlier, the company forecasted earnings to be in the range of
$3.30 to $3.40 for fiscal 2012, while, gross margin was expected
to increase by 90 to 100 basis points.
For the fourth quarter of 2012, the company expects comparable
store sales to augment in the mid-single-digit range, while
earnings per share are expected to be in the range of $1.16 to
$1.20. The Zacks Consensus Estimate stands at $1.19 for the
PetSmart holds a Zacks #2 Rank, which translates into a
short-term 'Buy' rating, signifying the consistently strong
performance of the company as well as its positive outlook.
MARTHA STWT LIV (MSO): Free Stock Analysis
PETSMART INC (PETM): Free Stock Analysis
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