Higher sales and cost containment efforts facilitated
), the specialty retailer of products, services and solutions for
pets, to post robust second-quarter 2012 earnings. The quarterly
earnings of 71 cents a share jumped 31% from 54 cents delivered in
the year-ago period. Moreover, the reported earnings surpassed the
Zacks Consensus Estimate of 65 cents.
The company's top line increased 9% year over year to $1,619.7
million, ahead of the Zacks Consensus Estimate of $1,602 million.
However, unfavorable foreign currency fluctuations negatively
impacted the sales by $4 million. Merchandise sales grew 9.1% to
$1,419.4 million, whereas service sales increased 7.3% to $190.9
million. Other revenue in the quarter came in at $9.4 million, up
3.1% year over year.
Phoenix-based pet retailer, PetSmart's comparable-store sales
increased 7% in the quarter, driven by a 2.9% 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 11.9% to $488.8 million. Moreover, gross margin
expanded 80 basis points to 30.2%, reflecting a decline in cost of
sales as a percentage of total revenue.
The company's operating income was strong, portraying growth of
23.4% to $136.1 million. Besides, operating margin expanded 100
basis points to 8.4%, indicating a decrease in operating, general
and administrative expenses as a percentage of total revenue.
During the quarter, PetSmart opened 11 stores and closed 3,
bringing the total store count to 1,249.
The company ended the quarter with cash and cash equivalents of
$282 million, capital lease obligations of $482.1 million and
shareholders' equity of $1,136.8 million. During the reported
quarter, PetSmart generated operating cash flow of $104 million,
and incurred capital expenditures of $35 million. The company
repurchased shares worth $47 million and distributed $15 million in
In June 2012, PetSmart increased its quarterly dividend to 16.5
cents per share, bringing its annualized dividend payout to 66
cents per share. The new dividend rate manifests an 18% growth over
the previous quarterly dividend.
Further, the company announced a new $525 million share buyback
plan, with its expiration date slated for January 2014. The new
authorization will be supplementing the existing plan, under which
there is $57 million remaining as of July 29,
Based on the healthy results, the company raised its fiscal year
guidance. Currently, the company expects earnings in the range of
$3.30 to $3.40 per share, while comparable store sales are
projected to increase in the mid-single-digit range, with total
sales growth of 10% to 11%. Gross margin is expected to
expand by 90 to 100 basis points.
Earlier, the company forecasted earnings to be in the range of
$3.19 to $3.31 for fiscal 2012, with total sales growth of 9% to
10%. Gross margin was expected to increase by 65 to 75 basis
For the third quarter of 2012, the company expects comparable
store sales to increase in the mid-single-digits range, while
earnings per share are expected to be in the range of 59 cents to
PetSmart holds a Zacks #2 Rank, which translates into a
short-term 'Buy' rating and signifies the consistent strong
performance of the company as well as its positive outlook.
MARTHA STWT LIV (MSO): Free Stock Analysis
PETSMART INC (PETM): Free Stock Analysis Report
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