) posted better-than-expected fourth-quarter and fiscal 2013
earnings. Quarterly earnings of $1.28 per share easily surpassed
the Zacks Consensus Estimate of $1.21 per share and rose 3.2%
year over year. Further, on an equivalent basis (13 versus 13
weeks comparison) earnings grew 19.6% year over year.
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PETSMART INC (PETM): Free Stock Analysis
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However, the market seemed skeptical as stock fell nearly 2%
following the results announcement.
For the full year, earnings came in at $4.02 per share, ahead of
the Zacks Consensus Estimate of $3.96 per share and increased
13.2% year over year. Further, on an equivalent basis, full-year
earnings grew 18.9% year over year.
This Zacks Rank #3 (Hold) company's innovative and differentiated
products, along with its sustained efforts to expand the
portfolio of brands and assortments aided results.
Strong bottom-line performance prompted the company to raise its
earnings guidance. PetSmart now projects earnings in the range of
$4.42-$4.54 per share for fiscal 2014. Moreover, the company
expects first-quarter fiscal 2014 earnings per share between 99
cents to $1.03. The Zacks Consensus Estimate currently stands at
$1.07 for the first quarter and $4.47 for fiscal 2014.
During the quarter, the top line fell nearly 4.0% to $1,804.9
million and missed the Zacks Consensus Estimate of $1,829
million. On an equivalent basis, the top line improved 2.9% year
For fiscal 2013, the top line rose 2.3% to $6,916.6 million but
lagged the Zacks Consensus Estimate of $6,958 million. On an
equivalent basis, revenues grew 4.3% year over year. For
fiscal 2014, PetSmart expects sales to increase by 4%-6%.
By categories, Merchandise sales fell nearly 4.0% to $1,609.4
million while Services sales decreased 4.2% to $185.5 million.
Other revenues in the quarter came in at $9.9 million, up 3.0%
year over year.
PetSmart registered 1.2% growth in comparable-store sales
(comps), with a 1.8% fall in comparable transactions. The company
expects comps to increase in low single digits in the first
quarter and 2%-4% in fiscal 2014.
Lower revenues led the gross profit to decline 4.6% and amount to
nearly $566.0 million. Moreover, gross margin decreased 20 basis
points (bps) to 31.4%. PetSmart's operating income declined 2.1%
to $216.9 million. However, operating margin expanded
approximately 20 bps to 12.0%.
Going forward, PetSmart expects earnings before tax (EBT) to grow
in the low to mid-single digit range in the first quarter while
it expects 7%-10% growth in EBT in fiscal 2014.
During the year, PetSmart opened 60 stores (19 stores in the
fourth quarter) and shuttered 5 outlets, thereby bringing the
total store count to 1,333. Moreover, it currently operates 199
The company ended the year with cash and cash equivalents of
$285.6 million, capital lease obligations of $451.6 million and
shareholders' equity of $1,093.8 million.
During the year, PetSmart generated operating cash flow of $615
million and incurred capital expenditures of $147 million.
Furthermore, the company repurchased shares worth $464 million in
the year ($230 million worth of shares bought back in the fourth
quarter) and had no borrowings under its credit facility.
For fiscal 2014, operating cash flow is anticipated to be between
$625-$650 million while capital expenditure is expected to be
around $150-$160 million.
Other Stocks to Consider
Other stocks in the retail-sector that warrant a look include
Barnes & Noble, Inc.
). While Barnes & Noble and ITOCHU Corporation sport a Zacks
Rank #1 (Strong Buy), Kingfisher has a Zacks Rank #2 (Buy).