SOURCE: PetSmart, Inc.

PetSmart, Inc.

November 18, 2009 16:02 ET

PetSmart Reports Results for the Third Quarter of 2009

Earnings of $0.31 per Share; Comp Sales Growth of 0.3 Percent; Net Sales Growth of 3.5 Percent; Services Sales Growth of 8.0 Percent

PHOENIX, AZ--(Marketwire - November 18, 2009) - PetSmart, Inc. (NASDAQ: PETM) today reported net income of $38.1 million, or $0.31 per share, for the third quarter of 2009. That compares with net income of $35.8 million, or $0.28 per share, for the third quarter of 2008.

Net sales for the third quarter of 2009 increased 3.5 percent to $1.29 billion, compared to the third quarter of 2008. Comparable store sales -- or sales in stores open at least a year -- grew 0.3 percent in the third quarter. Pet services sales were $136.7 million, up 8.0 percent from the third quarter of last year.

"I am pleased to report our results for the third quarter with strong EPS growth and positive comparable store sales. Our ability to deliver positive comp sales, while still battling a challenging retail environment and a difficult inflationary comparison, continues to show the strength of the PetSmart brand and the loyalty of our customers even in tough times," said Bob Moran, Chief Executive Officer and President.

Guidance

"We expect fourth quarter earnings per share between $0.52 and $0.56 and comparable store sales of flat to low single digits," said Chip Molloy, Senior Vice President and Chief Financial Officer. "For the year, we are expecting earnings per share between $1.50 and $1.54."

PetSmart increased cash, cash equivalents and restricted cash to $240 million and had zero borrowings on its credit facility at the end of the quarter. During the third quarter, the company purchased $35 million of PetSmart stock and distributed $12.5 million in dividend payments.

Conference call information

PetSmart management has scheduled a teleconference for 4:30 p.m. EST today to discuss results for the third quarter 2009. This teleconference will be webcast live for all investors at www.petm.com or www.streetevents.com. The webcast will be available until the company announces results for the fourth quarter of 2009. In addition, you can listen to the call live by dialing 866-818-1395 (within the United States and Canada) or 703-639-1379 (for international callers), code 1407089. A phone replay will be available through December 18, 2009, 11:59 p.m. EST, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1407089.

About PetSmart

PetSmart, Inc. is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company operates more than 1,149 pet stores in the United States and Canada, 161 in-store PetSmart PetsHotel® cat and dog boarding facilities, and is a leading online provider of pet supplies and pet care information (www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers complete pet training, pet grooming, pet boarding, Doggie Day Camp(SM) pet day care services and pet adoption services. Since 1994, PetSmart Charities, Inc., an independent 501(c)(3) non-profit animal welfare organization, has funded more than $87 million in grants and programs benefiting animal welfare organizations and, through its in-store pet adoption programs, has helped save the lives of more than 3.6 million pets.

Forward-looking statements

This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2009 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.

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                      PetSmart, Inc. and Subsidiaries
              Condensed Consolidated Statements of Operations
              (in thousands, except per share and store data)
                                (Unaudited)


                                      Thirteen Weeks      Thirteen Weeks
                                          Ended               Ended
                                    ------------------  ------------------
                                    November 1,  % of   November 2,  % of
                                        2009     Sales      2008     Sales
                                    -----------  -----  -----------  -----

Merchandise sales                   $ 1,157,647   89.4% $ 1,124,587   89.9%
Services sales                          136,703   10.6%     126,557   10.1%
                                    -----------  -----  -----------  -----
Net sales                             1,294,350  100.0%   1,251,144  100.0%
                                    -----------  -----  -----------  -----
Cost of merchandise sales               837,875   64.7%     798,513   63.8%
Cost of services sales                  100,299    7.7%      94,935    7.6%
                                    -----------  -----  -----------  -----
Total cost of sales                     938,174   72.5%     893,448   71.4%
                                    -----------  -----  -----------  -----
Gross profit                            356,176   27.5%     357,696   28.6%

Operating, general and
 administrative expenses                284,896   22.0%     285,571   22.8%
                                    -----------  -----  -----------  -----
Operating income                         71,280    5.5%      72,125    5.8%

Interest expense, net                   (15,031)  -1.2%     (14,769)  -1.2%
                                    -----------  -----  -----------  -----
Income before income tax
 expense and equity in income
 from investee                           56,249    4.3%      57,356    4.6%

Income tax expense                      (20,453)  -1.6%     (22,492)  -1.8%
Equity in income from investee            2,274    0.2%         959    0.1%
                                    -----------  -----  -----------  -----
Net income                          $    38,070    2.9% $    35,823    2.9%
                                    ===========  =====  ===========  =====

Earnings per common share:
  Basic                             $      0.31         $      0.29
                                    ===========         ===========
  Diluted                           $      0.31         $      0.28
                                    ===========         ===========

Weighted average shares
 outstanding:
  Basic                                 121,661             124,122
  Diluted                               123,781             126,795

                                    -----------  -----  -----------  -----
Stores open at beginning of each
 period                                   1,145               1,075
Stores opened during each period              7                  32
Stores closed during each period             (3)                  -
Stores open at end of each period         1,149               1,107
                                    -----------  -----  -----------  -----



                                    Thirty-Nine Weeks   Thirty-Nine Weeks
                                          Ended               Ended
                                    ------------------  ------------------
                                    November 1,  % of   November 2,  % of
                                        2009     Sales      2008     Sales
                                    -----------  -----  -----------  -----

Merchandise sales                   $ 3,496,995   89.0% $ 3,310,021   89.3%
Services sales                          433,714   11.0%     396,002   10.7%
                                    -----------  -----  -----------  -----
Net sales                             3,930,709  100.0%   3,706,023  100.0%
                                    -----------  -----  -----------  -----
Cost of merchandise sales             2,516,378   64.0%   2,335,780   63.0%
Cost of services sales                  311,491    7.9%     289,773    7.8%
                                    -----------  -----  -----------  -----
Total cost of sales                   2,827,869   71.9%   2,625,553   70.8%
                                    -----------  -----  -----------  -----
Gross profit                          1,102,840   28.1%   1,080,470   29.2%

Operating, general and
 administrative expenses                867,902   22.1%     852,678   23.0%
                                    -----------  -----  -----------  -----
Operating income                        234,938    6.0%     227,792    6.1%

Interest expense, net                   (44,975)  -1.1%     (43,722)  -1.2%
                                    -----------  -----  -----------  -----
Income before income tax
 expense and equity in income
 from investee                          189,963    4.8%     184,070    5.0%

Income tax expense                      (71,594)  -1.8%     (72,684)  -2.0%
Equity in income from investee            4,927    0.1%       2,896    0.1%
                                    -----------  -----  -----------  -----
Net income                          $   123,296    3.1% $   114,282    3.1%
                                    ===========  =====  ===========  =====

Earnings per common share:
  Basic                             $      1.00         $      0.92
                                    ===========         ===========
  Diluted                           $      0.98         $      0.90
                                    ===========         ===========

Weighted average shares
 outstanding:
  Basic                                 123,163             124,308
  Diluted                               125,396             126,761

                                    -----------  -----  -----------  -----
Stores open at beginning of each
 period                                   1,112               1,008
Stores opened during each period             43                 104
Stores closed during each period             (6)                 (5)
Stores open at end of each period         1,149               1,107
                                    -----------  -----  -----------  -----



                      PetSmart, Inc. and Subsidiaries
                  Condensed Consolidated Balance Sheets
                     (In thousands, except par value)
                                Unaudited


                                     November 1,  February 1,  November 2,
                                         2009         2009         2008
                                     -----------  -----------  -----------

Assets
  Cash and cash equivalents          $   185,215  $   126,314  $    54,317
  Restricted cash                         55,250            -            -
  Receivables, net                        52,144       48,609       39,352
  Merchandise inventories                608,274      584,011      612,246
  Deferred income taxes                   29,333       28,223       28,826
  Prepaid expenses and other current
   assets                                 88,126       87,677       77,787
                                     -----------  -----------  -----------

      Total current assets             1,018,342      874,834      812,528

  Property and equipment, net          1,225,116    1,302,245    1,328,554
  Equity investment in affiliate          30,865       25,938       26,242
  Deferred income taxes                   83,631       93,128      129,958
  Goodwill                                41,882       38,645       39,057
  Other noncurrent assets                 24,192       22,863       24,091
                                     -----------  -----------  -----------

      Total assets                   $ 2,424,028  $ 2,357,653  $ 2,360,430
                                     ===========  ===========  ===========

Liabilities and Stockholders' Equity
  Accounts payable and bank
   overdraft                         $   179,709  $   194,630  $   196,903
  Accrued payroll, bonus and
   employee benefits                     103,526       88,337       93,484
  Accrued occupancy expenses and
   deferred rents                         65,495       55,642       58,718
  Short-term debt                              -            -       50,000
  Current maturities of capital
   lease obligations                      36,151       32,233       30,873
  Other current liabilities              126,745      107,315      126,120
                                     -----------  -----------  -----------
      Total current liabilities          511,626      478,157      556,098

  Capital lease obligations              545,226      553,760      558,518
  Deferred rents                          91,695       92,155       92,071
  Other noncurrent liabilities            97,225       89,445       92,980
                                     -----------  -----------  -----------

      Total liabilities                1,245,772    1,213,517    1,299,667
                                     -----------  -----------  -----------

  Stockholders' Equity:
    Preferred stock; $.0001 par
     value                                     -            -            -
    Common stock; $.0001 par value            16           16           16
    Additional paid-in capital         1,137,132    1,117,557    1,108,260
    Retained earnings                  1,030,753      936,100      861,527
    Accumulated other comprehensive
     income (loss)                         2,053       (2,714)      (2,217)
    Treasury stock                      (991,698)    (906,823)    (906,823)
                                     -----------  -----------  -----------

      Total stockholders' equity       1,178,256    1,144,136    1,060,763
                                     -----------  -----------  -----------

      Total liabilities and
       stockholders' equity          $ 2,424,028  $ 2,357,653  $ 2,360,430
                                     ===========  ===========  ===========

Contact Information

  • CONTACT:
    PetSmart Investor Relations
    (623) 587-2025