SOURCE: PetSmart, Inc.

PetSmart, Inc.

August 19, 2009 16:02 ET

PetSmart Reports Results for the Second Quarter of 2009

Earnings of $0.31 per Share; Comp Sales Growth of 0.8 Percent; Net Sales Growth of 5.4 Percent; Services Sales Growth of 10.2 Percent

PHOENIX, AZ--(Marketwire - August 19, 2009) - PetSmart, Inc. (NASDAQ: PETM) today reported net income of $39.0 million, or $0.31 per share, for the second quarter of 2009. That compares with net income of $37.2 million, or $0.30 per share, for the second quarter of 2008.

Net sales for the second quarter of 2009 increased 5.4 percent to $1.31 billion, compared to the second quarter of 2008. The increase in net sales was partially impacted by $8.6 million in unfavorable foreign currency fluctuations. Comparable store sales -- or sales in stores open at least a year -- grew 0.8 percent in the second quarter. Pet services sales were $154.2 million, up 10.2 percent from the second quarter of last year.

"We continue to believe that we are well positioned to lead the pet specialty market given our core business strengths, commitment to fiscal discipline, and our solid leadership team. Our ability to provide pet parents with a uniquely engaged in-store experience, a differentiated assortment of products, services and solutions, and knowledgeable associates, creates an unmatched customer experience," said Bob Moran, Chief Executive Officer and President.

Guidance

"We expect third quarter earnings per share between $0.20 and $0.24 and comparable store sales to be flat," said Chip Molloy, Senior Vice President and Chief Financial Officer. "For the year, we are expecting earnings per share between $1.37 to $1.45 and comparable store sales growth of low single digits."

PetSmart increased cash, cash equivalents and restricted cash to $236 million and had zero borrowings on its credit facility at the end of the quarter. During the second quarter, the company purchased $25 million of PetSmart stock and distributed $3.8 million in dividend payments.

2009 Annual Guidance

-- Total sales growth: Mid-single digits
-- Comparable store sales growth: Low-single digits
-- Services sales growth: Mid- to high-single digits
-- Net interest expense: Approximately $60 million for the fiscal year
-- Income tax rate: 38.5 percent to 39 percent
-- Earnings per share: $1.37 to $1.45 per share
-- Capital expenditures: Between $115 million to $125 million
-- Net new store growth: 40 to 42
-- PetsHotel growth: 20

Conference call information

PetSmart management has scheduled a teleconference for 4:30 p.m. EDT today to discuss results for the second 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 third 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 1386766. A phone replay will be available through September 18, 2009, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1386766.

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 1,145 pet stores in the United States and Canada, 156 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 Balance Sheets
                     (in thousands, except par value)
                                Unaudited


                                      August 2,   February 1,   August 3,
                                         2009         2009         2008
                                     -----------  -----------  -----------

Assets
   Cash and cash equivalents         $   180,656  $   126,314  $    57,904
   Restricted cash                        55,250            -            -
   Receivables, net                       58,729       48,609       39,621
   Merchandise inventories               574,985      584,011      544,609
   Deferred income taxes                  29,334       28,223       28,895
   Prepaid expenses and other
    current assets                        89,680       87,677       77,262
                                     -----------  -----------  -----------

        Total current assets             988,634      874,834      748,291

   Property and equipment, net         1,262,458    1,302,245    1,318,573
   Equity investment in affiliate         28,591       25,938       25,283
   Deferred income taxes                  84,829       93,128      124,983
   Goodwill                               41,989       38,645       43,341
   Other noncurrent assets                24,257       22,863       28,279
                                     -----------  -----------  -----------

        Total assets                 $ 2,430,758  $ 2,357,653  $ 2,288,750
                                     ===========  ===========  ===========

Liabilities and Stockholders' Equity
   Accounts payable and bank
    overdraft                        $   189,242  $   194,630  $   184,281
   Accrued payroll bonus and
    employee benefits                     92,879       88,337       88,580
   Accrued occupancy expenses and
    deferred rents                        60,404       55,642       53,460
   Short-term debt                             -            -       32,000
   Current maturities of capital
    lease obligations                     34,930       32,233       30,833
   Other current liabilities             130,075      107,315      149,199
                                     -----------  -----------  -----------
        Total current liabilities        507,530      478,157      538,353

   Capital lease obligations             553,960      553,760      546,965
   Deferred rents                         92,587       92,155       90,572
   Other noncurrent liabilities           98,241       89,445       92,344
                                     -----------  -----------  -----------

        Total liabilities              1,252,318    1,213,517    1,268,234
                                     -----------  -----------  -----------

   Stockholders' Equity:
      Preferred stock; $.0001 par
       value                                   -            -            -
      Common stock; $.0001 par value          16           16           16
      Additional paid-in capital       1,127,947    1,117,557    1,093,585
      Retained earnings                1,005,050      936,100      829,519
      Accumulated other
       comprehensive income                2,178       (2,714)       4,219
      Treasury stock                    (956,751)    (906,823)    (906,823)
                                     -----------  -----------  -----------

        Total stockholders' equity     1,178,440    1,144,136    1,020,516
                                     -----------  -----------  -----------

        Total liabilities and
         stockholders' equity        $ 2,430,758  $ 2,357,653  $ 2,288,750
                                     ===========  ===========  ===========





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


                          Thirteen Weeks Ended      Thirteen Weeks Ended
                        ------------------------  ------------------------
                         August 2,                 August 3,
                            2009     % of Sales       2008     % of Sales
                        -----------  -----------  -----------  -----------

Merchandise sales       $ 1,154,593         88.2% $ 1,101,984         88.7%
Services sales              154,192         11.8%     139,964         11.3%
                        -----------  -----------  -----------  -----------
Net sales                 1,308,785        100.0%   1,241,948        100.0%
                        -----------  -----------  -----------  -----------
Cost of merchandise
 sales                      830,629         63.5%     775,275         62.4%
Cost of services sales      108,744          8.3%     100,267          8.1%
                        -----------  -----------  -----------  -----------
Total cost of sales         939,373         71.8%     875,542         70.5%
                        -----------  -----------  -----------  -----------
Gross profit                369,412         28.2%     366,406         29.5%

Operating, general and
 administrative
 expenses                   295,623         22.6%     291,007         23.4%
                        -----------  -----------  -----------  -----------
Operating income             73,789          5.6%      75,399          6.1%

Interest expense, net       (14,970)        -1.1%     (15,211)        -1.2%
                        -----------  -----------  -----------  -----------
Income before income
 tax expense and equity
 in income from investee     58,819          4.5%      60,188          4.8%

Income tax expense          (21,392)        -1.6%     (24,294)        -2.0%

Equity in income from
 investee                     1,537          0.1%       1,354          0.1%
                        -----------  -----------  -----------  -----------
Net income              $    38,964          3.0% $    37,248          3.0%
                        ===========  ===========  ===========  ===========

Earnings per common
 share:
   Basic                $      0.32               $      0.30
                        ===========               ===========
   Diluted              $      0.31               $      0.30
                        ===========               ===========

Weighted average shares
 outstanding:
   Basic                    123,474                   123,751
   Diluted                  125,504                   126,210

                        -----------  -----------  -----------  -----------
Stores open at
 beginning of each
 period                       1,137                     1,043
Stores opened during
 each period                     10                        37
Stores closed during
 each period                     (2)                       (5)
Stores open at end of
 each period                  1,145                     1,075
                        -----------  -----------  -----------  -----------




                         Twenty-Six Weeks Ended    Twenty-Six Weeks Ended
                        ------------------------  ------------------------
                         August 2,                 August 3,
                            2009     % of Sales       2008     % of Sales
                        -----------  -----------  -----------  -----------

Merchandise sales       $ 2,339,348         88.7% $ 2,185,435         89.0%
Services sales              297,011         11.3%     269,444         11.0%
                        -----------  -----------  -----------  -----------
Net sales                 2,636,359        100.0%   2,454,879        100.0%
                        -----------  -----------  -----------  -----------
Cost of merchandise
 sales                    1,678,503         63.7%   1,537,274         62.6%
Cost of services sales      211,192          8.0%     194,831          7.9%
                        -----------  -----------  -----------  -----------
Total cost of sales       1,889,695         71.7%   1,732,105         70.6%
                        -----------  -----------  -----------  -----------
Gross profit                746,664         28.3%     722,774         29.4%

Operating, general and
 administrative
 expenses                   583,006         22.1%     567,106         23.1%
                        -----------  -----------  -----------  -----------
Operating income            163,658          6.2%     155,668          6.3%

Interest expense, net       (29,944)        -1.1%     (28,953)        -1.2%
                        -----------  -----------  -----------  -----------

Income before income
 tax expense and equity
 in income from investee    133,714          5.1%     126,715          5.2%

Income tax expense          (51,141)        -1.9%     (50,193)        -2.0%

Equity in income from
 investee                     2,653          0.1%       1,937          0.1%
                        -----------  -----------  -----------  -----------
Net income              $    85,226          3.2% $    78,459          3.2%
                        ===========  ===========  ===========  ===========

Earnings per common
 share:
   Basic                $      0.69               $      0.63
                        ===========               ===========
   Diluted              $      0.68               $      0.62
                        ===========               ===========

Weighted average shares
 outstanding:
   Basic                    123,914                   124,401
   Diluted                  126,102                   126,814

                        -----------  -----------  -----------  -----------
Stores open at
 beginning of each
 period                       1,112                     1,008
Stores opened during
 each period                     36                        72
Stores closed during
 each period                     (3)                       (5)
Stores open at end of
 each period                  1,145                     1,075
                        -----------  -----------  -----------  -----------

Contact Information

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