PetSmart Q1 Profit Jumps 12%, Raises Full-Year Guidance (PETM)

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Pet products retailer PetSmart, Inc. (PETM) said late Wednesday that its first quarter profit rose 12% year-over-year, helped by higher merchandise and pet services sales.

The Phoenix, Arizona-based company reported first quarter net income of $46.3 million, or 37 cents per share, up 12% from $41.2 million, or 32 cents per share, in the year-ago period. Revenue rose 9% percent to $1.33 billion.

On average, Wall Street analysts expected profits of 30 cents per share on slightly higher revenue of $1.35 billion.

PetSmart intimated that its merchandise sales grew 9% in the quarter, while pet service sales grew 10%.

Same-store sales, which are considered a key indicator of a retailer’s health since they measure the performance of stores open at least one year, rose by 3.9%.

PetSmart said it expects second quarter profit to range between 26 cents and 30 cents per share, and raised its full-year 2009 profit forecast to a range of $1.42 to $1.52 per share. The company had previously forecast $1.40 to $1.50 per share.

On average, Wall Street analysts expect a second quarter profit of 29 cents per share, and a full-year 2009 profit of $1.47 per share.

PetSmart shares fell $1.85, or -8.3%, in morning trading Thursday.

The Bottom Line
We had removed shares of PETM from our “Recommended” list back on Sept.17, when the stock traded at $26.60. The company has a dividend yield of .54%, based on last night’s closing stock price of $22.30. The stock has technical support in the $16-17 price area. If the shares can rebound from today’s drop, we see overhead resistance around the $24 price level. We would remain on the sidelines for now.

PetSmart, Inc. (PETM) is not recommended at this time, holding a Dividend.com DARS™ Rating of 3.3 out of 5 stars.

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