PetSmart's fiscal Q1 earnings rise 7.4% from a year ago to US$102M as sales climb 5% to US$1.7B, comparable-store sales grow 3.5%; company raises full-year EPS guidance

PHOENIX , May 23, 2013 (press release) –

Q1 Earnings up 15% to $0.98 per Share; Comp Sales of 3.5%; Total Sales up 5.0%; Comp Transactions up 0.8%
PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.98 per share, up 15% compared to $0.85 per share in the first quarter of 2012. Net income totaled $102 million in the first quarter of 2013, compared to $95 million in the first quarter of 2012.

Total sales for the first quarter of 2013 increased 5.0% to $1.7 billion. The increase in net sales was partially impacted by $2 million in unfavorable foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 3.5%, benefitting from comparable transactions growth of 0.8%. Services sales, which are included in total sales, grew 5.8% to $192 million.

During the first quarter, the company generated $147 million in cash flows from operating activities, spent $35 million in capital expenditures, and repurchased $180 million of PetSmart stock. The company ended the quarter with $324 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility.

“We are pleased to report another quarter of solid earnings growth,” said Bob Moran, Chairman and Chief Executive Officer. “Our focus on providing solutions for the lifetime needs of pets has kept our pet parent customers highly engaged with our brand, resulting in positive comparable store sales growth and transaction growth.”

“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% - 4%, and total sales growth of 3% - 4%. We are raising our earnings per share guidance from a previous range of $3.76 to $3.92, to our current expectations of $3.82 to $3.94,” said Chip Molloy, Executive Vice President and Chief Financial Officer. "For the second quarter of 2013, we are expecting comparable store sales growth in the 3% to 4% range, and earnings per share between $0.82 to $0.86.”

Conference call information

PetSmart management has scheduled a teleconference for 4:30 p.m. EDT on May 22, 2013 to discuss results for the first 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 second quarter of 2013. In addition, you can listen to the call live by dialing 866-814-1933 (within the United States and Canada) or 703-639-1365 (for international callers), code 1613971.

A phone replay will be available through June 22, 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 1613971.

About PetSmart

PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 52,000 associates and operates more than 1,289 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




May 5, 2013     % of Sales


April 29, 2012     % of Sales














 
Merchandise sales


$ 1,509,372


88.2 %


$ 1,439,559


88.3 %
Services sales



191,577


11.2 %



181,014


11.1 %
Other revenue


  9,647       0.6 %


  9,320       0.6 %














 
Net sales


  1,710,596       100.0 %


  1,629,893       100.0 %














 
Cost of merchandise sales



1,037,114


60.6 %



994,508


61.0 %
Cost of services sales



134,089


7.8 %



128,691


7.9 %
Cost of other revenue


  9,647       0.6 %


  9,320       0.6 %














 
Total cost of sales


  1,180,850       69.0 %

    1,132,519       69.5 %














 
Gross profit



529,746


31.0 %



497,374


30.5 %














 
Operating, general and administrative expenses


  362,228       21.2 %


  343,023       21.0 %














 
Operating income



167,518


9.8 %



154,351


9.5 %














 
Interest expense, net


  (13,168 )     -0.8 %


  (14,129 )     -0.9 %














 

Income before income tax expense and equity income from Banfield

 





154,350


9.0 %



140,222


8.6 %














 
Income tax expense



(55,547 )

-3.2 %



(48,172 )

-3.0 %














 
Equity income from Banfield


  3,612       0.2 %


  2,633       0.2 %














 
Net income


$ 102,415       6.0 %


$ 94,683       5.8 %














 
Earnings per common share:













Basic


$ 0.99  





$ 0.87  


Diluted


$ 0.98  





$ 0.85  
















 
Weighted average shares outstanding:













Basic



103,305







108,930



Diluted



104,583







111,030



                             
Stores open at beginning of each period



1,278







1,232



Stores opened during each period



13







14



Stores closed during each period


  (2 )





  (5 )


Stores open at end of each period         1,289                 1,241        














 














 

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


















May 5,


February 3,


April 29,






2013


2013


2012














 
Assets












Cash and cash equivalents


$ 252,988



$ 335,155



$ 268,928

Short-term investments



7,455




9,150




22,276

Restricted cash



71,226




71,916




71,929

Receivables, net



66,272




72,198




57,346

Merchandise inventories



738,568




679,090




682,896

Deferred income taxes



62,859




62,859




51,381

Prepaid expenses and other current assets


  81,041  


  86,768  


  81,716  














 


Total current assets



1,280,409




1,317,136




1,236,472














 

Property and equipment, net



972,679




985,707




1,035,759

Equity investment in Banfield



28,426




39,934




26,597

Deferred income taxes



100,601




102,992




79,798

Goodwill



43,914




44,242




44,738

Other noncurrent assets


  48,155  


  46,970  


  43,036  














 


Total assets


$ 2,474,184  


$ 2,536,981  


$ 2,466,400  














 
Liabilities and Stockholders' Equity












Accounts payable and bank overdraft


$ 257,628



$ 202,122



$ 246,612

Accrued payroll, bonus and employee benefits



132,705




176,082




126,195

Accrued occupancy expenses and deferred rents



69,626




70,671




69,456

Current maturities of capital lease obligations



63,180




61,581




55,920

Other current liabilities


  246,431  


  244,436  


  177,511  














 


Total current liabilities



769,570




754,892




675,694














 

Capital lease obligations



462,436




464,578




496,004

Deferred rents



71,565




73,855




79,582

Other noncurrent liabilities


  119,352  


  120,064  


  115,644  














 


Total liabilities


  1,422,923  


  1,413,389  


  1,366,924  














 

Stockholders' Equity:












Preferred stock; $.0001 par value



-




-




-

Common stock; $.0001 par value



17




17




17

Additional paid-in capital



1,441,863




1,418,411




1,352,889

Retained earnings



1,913,209




1,827,996




1,586,499

Accumulated other comprehensive income



4,510




5,506




6,706

Less: Treasury stock


  (2,308,338 )


  (2,128,338 )


  (1,846,635 )














 


Total stockholders' equity


  1,051,261  


  1,123,592  


  1,099,476  














 


Total liabilities and stockholders' equity


$ 2,474,184  


$ 2,536,981  


$ 2,466,400  

 

Source: PetSmart, Inc.

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