PetSmart Announces Second Quarter 2013 Results

PetSmart Announces Second Quarter 2013 Results

Total Sales up 5.3%; Comp Sales of 3.4%; Earnings up 25% to $0.89 per Share

PHOENIX--(BUSINESS WIRE)-- PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.89 per share, up 25% compared to $0.71 per share in the second quarter of 2012. Net income totaled $93 million in the second quarter of 2013, compared to $79 million in the second quarter of 2012.


Total sales for the second quarter of 2013 increased 5.3% to $1.7 billion. Comparable store sales, or sales in stores open at least a year, grew 3.4%, benefitting from comparable transactions growth of 1.0%. Services sales, which are included in total sales, grew 7.3% to $205 million.

During the second quarter, the company generated $87 million in cash flows from operating activities, spent $26 million in capital expenditures, and repurchased $24 million of PetSmart stock. The company ended the quarter with $353 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility.

"We are pleased with our results and level of execution in the second quarter," said David Lenhardt, Chief Executive Officer. "Our performance demonstrates the continued strength and stability of our business model, and what we can achieve when we focus on caring for our customers."

"As a reminder, the annual guidance for 2013 is for 52 weeks versus 53 weeks in 2012. For fiscal year 2013, we anticipate comparable store sales growth of 3% to 4%, and total sales growth of 3% to 4%. We are raising our earnings per share guidance from a previous range of $3.82 to $3.94, to our current expectations of $3.88 to $3.98," said Carrie Teffner, Senior Vice President and Chief Financial Officer. "For the third quarter of 2013, we are expecting comparable store sales growth in the 3% to 4% range, and earnings per share between $0.83 to $0.87."

Conference call information

PetSmart management has scheduled a teleconference for 10:00 a.m. EDT on August 21, 2013 to discuss results for the second quarter 2013. This teleconference will be webcast live for all investors at www.petm.com. The webcast will be available until the company announces results for the third quarter of 2013. In addition, you can listen to the call live by dialing 866-219-5631 (within the United States and Canada) or 703-639-1122 (for international callers), code 1621111.

A phone replay will be available through September 21, 2013, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1621111.

About PetSmart

PetSmart, Inc. (NAS: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 53,000 associates and operates more than 1,301 pet stores in the United States, Canada and Puerto Rico, over 196 in-store PetSmart® PetsHotel® dog and cat boarding facilities and is a leading online provider of pet supplies and pet care information (http://www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet grooming, pet boarding, PetSmart Doggie Day CampSM day care services and pet adoption services. Through its in-store pet adoption partnership with PetSmart Charities®, PetSmart has helped save the lives of more than 5 million pets since 1994. PetSmart Charities, Inc. and PetSmart Charities of Canada, Inc. ("PetSmart Charities") are independent, nonprofit organizations that save the lives of homeless pets and reduce shelter intake through spay/neuter efforts. In 2012, nearly 450,000 dogs and cats found homes through the organization's adoption centers in all PetSmart stores and by sponsoring community adoption events. PetSmart Charities is the leader in granting money to help pets in need, with more than $28 million given in 2012 throughout North America.

Forward-looking statements

This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2013 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.

 
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share and store data)
(Unaudited)
                                       
Thirteen Weeks Ended Thirteen Weeks Ended Twenty-Six Weeks Ended Twenty-Six Weeks Ended
August 4, 2013     % of Sales July 29, 2012     % of Sales August 4, 2013     % of Sales July 29, 2012     % of Sales
 
Merchandise sales $ 1,492,457 87.5 % $ 1,419,383 87.6 % $ 3,001,829 87.9 % $ 2,858,942 88.0 %
Services sales 204,707 12.0 % 190,867 11.8 % 396,284 11.6 % 371,881 11.4 %
Other revenue   8,833       0.5 %   9,417       0.6 %   18,480       0.5 %   18,737       0.6 %
 
Net sales   1,705,997       100.0 %   1,619,667       100.0 %   3,416,593       100.0 %   3,249,560       100.0 %
 
Cost of merchandise sales 1,040,814 61.0 % 986,885 60.9 % 2,077,928 60.8 % 1,981,393 61.0 %
Cost of services sales 141,130 8.3 % 134,550 8.3 % 275,219 8.1 % 263,241 8.1 %
Cost of other revenue   8,833       0.5 %   9,417       0.6 %   18,480       0.5 %   18,737       0.6 %
 
Total cost of sales   1,190,777       69.8 %     1,130,852       69.8 %   2,371,627       69.4 %     2,263,371       69.7 %
 
Gross profit 515,220 30.2 % 488,815 30.2 % 1,044,966 30.6 % 986,189 30.3 %
 
Operating, general and administrative expenses   358,670       21.0 %   352,755       21.8 %   720,898       21.1 %   695,778       21.4 %
 
Operating income 156,550 9.2 % 136,060 8.4 % 324,068 9.5 % 290,411 8.9 %
 
Interest expense, net   (12,828 )     -0.8 %   (13,550 )     -0.8 %   (25,996 )     -0.8 %   (27,679 )     -0.9 %
 

Income before income tax expense and equity income from Banfield

143,722 8.4 % 122,510 7.6 % 298,072 8.7 % 262,732 8.1 %
 
Income tax expense (54,493 ) -3.2 % (48,333 ) -3.0 % (110,040 ) -3.2 % (96,505 ) -3.0 %
 
Equity income from Banfield   4,139       0.2 %   4,343       0.3 %   7,751       0.2 %   6,976       0.2 %
 
Net income $ 93,368       5.5 % $ 78,520       4.8 % $ 195,783       5.7 % $ 173,203       5.3 %
 
Earnings per common share:
Basic $ 0.90   $ 0.73   $ 1.89   $ 1.59  
Diluted $ 0.89   $ 0.71   $ 1.87   $ 1.57  
 
Weighted average shares outstanding:
Basic 103,474 108,260 103,390 108,595
Diluted 104,512 109,934 104,547 110,507
                                                         
Stores open at beginning of each period 1,289 1,241 1,278 1,232
Stores opened during each period 12 11 25 25

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