) posted better-than-expected second-quarter fiscal 2013
earnings. The quarterly earnings of 89 cents a share comfortably
surpassed the Zacks Consensus Estimate of 86 cents and came above
the company's earlier guidance range of 82 cents - 86 cents.
Moreover, earnings jumped 25% year over year.
This Zacks Rank #3 (Hold) company's innovative and
differentiated products and its sustained efforts to expand its
portfolio of brands and assortments facilitated it to deliver
Strong bottom-line performance enabled the company to raise
its earnings guidance. PetSmart now projects earnings in the
range of $3.88 - $3.98 per share for fiscal 2013, up from its
earlier guidance range of $3.82 - $3.94. Moreover, the
company expects third-quarter fiscal 2013 earnings between 83
cents - 87 cents. The Zacks Consensus Estimate currently stands
at $3.95 for fiscal 2013, while it is 87 cents for the third
During the quarter, top line improved 5.3% to $1,706 million.
However, the company's quarterly revenue fell marginally short of
the Zacks Consensus Estimate of $1,712 million. Going forward,
PetSmart expects sales to increase by 3%-4% in fiscal 2013.
By categories, Merchandise sales grew 5.1% to $1,492.5
million, whereas Services sales increased 7.3% to $204.7 million.
Other revenues in the quarter came in at $8.8 million, down 6.2%
year over year.
PetSmart registered 3.4% growth in comparable-store sales,
with a 1% rise in comparable transactions. The company expects
comparable-store sales to increase by 3%-4% in the third quarter
and fiscal 2013.
Benefiting from its top-line growth, gross profit increased
5.4% year over year to $515.2 million. However, gross margin
remained flat at 30.2%. PetSmart's operating income remains
strong, portraying growth of 15.1% to $156.6 million. Alongside,
operating margin expanded approximately 80 basis points to 9.2%,
reflecting improvement in operating, general and administrative
Going forward, PetSmart expects gross margins to expand in
fiscal 2013, resulting in 20 - 40 basis points improvement in EBT
margin. Moreover, EBT margin is expected to increase by 30 - 40
basis points during the third quarter.
During the quarter, PetSmart opened 12 stores, bringing the
total store count to 1,301. Moreover, it currently operates 196
The company ended the quarter with cash and cash equivalents
of $281.6 million, capital lease obligations of $454.7 million
and shareholders' equity of $1,147.3 million.
During the quarter, PetSmart generated operating cash flow of
$87 million and incurred capital expenditures of $26 million.
Furthermore, the company repurchased shares worth $24 million and
had no borrowings under its credit facility.
Other Stocks to Consider
Until any further upgrade in the Zacks Rank of PetSmart, other
stocks in the retail-wholesale industry worth considering include
Five Below, Inc
Tractor Supply Company
Steiner Leisure Ltd
), all of which hold a Zacks Rank #2 (Buy).
FIVE BELOW INC (FIVE): Free Stock Analysis
PETSMART INC (PETM): Free Stock Analysis
STEINER LEISURE (STNR): Free Stock Analysis
TRACTOR SUPPLY (TSCO): Free Stock Analysis
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