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PetSmart Reports Results for the Second Quarter 2008 Earnings of $0.30 per Share; Comp Sales Growth of 4.0 Percent; Net Sales Growth of 11.2 Percent; Services Sales Growth of 20.4 Percent PHOENIX, AZ--(MARKET WIRE)--Aug 28, 2008 -- PetSmart, Inc. (NasdaqGS:PETM - News) today reported
net income of $37.2 million, or $0.30 per share, for the
second fiscal
quarter of 2008. That compares with net income of $47.1
million, or $0.35
per share, for the second fiscal quarter of 2007, which
included $6.7
million of net benefits associated with the reductions in
insurance and
stock option expenses as well as favorable timing of rent
reimbursement
from MMI Holdings, Inc. (MMI), the third-party operator
of PetSmart's
in-store Banfield veterinary hospitals.
Net sales for the second quarter of 2008 increased 11.2 percent to $1.2 billion, compared to the second quarter of 2007. Comparable store sales -- or sales in stores open at least a year -- grew 4.0 percent in the second quarter, on top of 4.0 percent growth in the same period in 2007. During the second quarter, pet services sales were $141.1 million, up 20.4 percent from the second quarter of last year. "We are executing well in this tough environment and are on track to achieve our targets for the year," said Phil Francis, chairman and CEO. "Our long term focus continues to be on investing in a solid business model that can deliver sustainable returns to our shareholders. We have decided to slow our store and PetsHotel growth going forward to balance our investment between the productivity of our current asset base and driving market share gains." Guidance "PetSmart delivered on its plan for the first half, and we feel good about delivering on our targets for all of 2008," said Chip Molloy, Chief Financial Officer. "We expect current macro trends to continue throughout the year, so we are focused on consistent and efficient execution, driving sales and taking great care of the customer. For the third fiscal quarter of 2008, we estimate comparable store sales growth in the mid-single digits and earnings per share in the range of $0.25 to $0.29." 2008 Full Year Guidance
-- Total sales growth: High single digits to low double digits
-- Comparable store sales growth: Mid-single digits
-- Operating income percentage: Flat to down 20 basis points as a
percentage of sales
-- Net interest expense: Approximately $15 million per quarter
-- Income tax rate: 38 to 39 percent
-- Earnings per share: $1.51 to $1.59 per share
-- Capital expenditures: $285 million or lower
-- Net new store growth: 100 to 104
-- PetsHotel growth: 45Conference call information PetSmart management has scheduled a teleconference for 4:30 p.m. (EDT) today to discuss results for the second quarter of 2008 as well as the current outlook. This teleconference will be Web-cast live for all investors at www.petm.com or www.streetevents.com. The Web-cast will be available until the company announces results for the third quarter of 2008. In addition, you can listen to the call live by dialing 866-802-4322 (within the United States and Canada) or 703-639-1319 (for international callers), code 1254711. A phone replay will be available through September 12, 2008, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1254711. 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 1,075 pet stores in the United States and Canada, a growing number of 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 and pet adoption services. Since 1994, PetSmart Charities®, Inc., an independent 501(c)(3) non-profit animal welfare organization, has funded more than $70 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 million pets. Forward-looking statements This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2008 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 arising 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 Balance Sheets
(in thousands)
Unaudited
August 3, February 3,
2008 2008
----------- -----------
Assets
Cash and cash equivalents $ 57,904 $ 58,322
Receivables, net 39,621 49,341
Merchandise inventories 544,609 501,212
Deferred income taxes 47,016 46,765
Prepaid expenses and other current assets 77,262 73,231
----------- -----------
Total current assets 766,412 728,871
Property and equipment, net 1,318,573 1,230,770
Equity investment in affiliate 25,283 23,346
Deferred income taxes 106,862 108,544
Goodwill 43,341 44,333
Intangible assets, net 1,272 1,457
Other noncurrent assets 27,007 29,936
----------- -----------
Total assets $ 2,288,750 $ 2,167,257
=========== ===========
Liabilities and Stockholders' Equity
Accounts payable and bank overdraft $ 184,281 $ 172,352
Accrued payroll bonus and employee benefits 138,789 132,768
Accrued occupancy expenses 53,460 46,955
Short-term debt 32,000 30,000
Current maturities of capital lease obligations 30,833 24,982
Other current liabilities 161,588 148,832
----------- -----------
Total current liabilities 600,951 555,889
Capital lease obligations 546,965 508,765
Deferred rents 90,572 88,954
Other noncurrent liabilities 29,746 27,052
----------- -----------
Total liabilities 1,268,234 1,180,660
----------- -----------
Stockholders' Equity:
Preferred stock; $.0001 par value - -
Common stock; $.0001 par value 16 16
Additional paid-in capital 1,093,585 1,079,190
Retained earnings 829,519 758,674
Accumulated other comprehensive income 4,219 5,585
Treasury stock (906,823) (856,868)
----------- -----------
Stockholders' equity 1,020,516 986,597
----------- -----------
Total liabilities and stockholders' equity $ 2,288,750 $ 2,167,257
=========== ===========
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 3, July 29,
2008 % of Sales 2007 % of Sales
----------- ----------- ----------- -----------
Net sales $ 1,241,948 100.0% $ 1,116,681 100.0%
Cost of sales 875,542 70.5% 770,358 69.0%
----------- ----------- ----------- -----------
Gross profit 366,406 29.5% 346,323 31.0%
Operating, general and
administrative
expenses 291,007 23.4% 261,587 23.4%
----------- ----------- ----------- -----------
Operating income 75,399 6.1% 84,736 7.6%
Gain on sale of
investments - 0.0% - 0.0%
Interest expense, net (15,211) -1.2% (8,732) -0.8%
----------- ----------- ----------- -----------
Income before income
tax expense and equity
in income from
investee 60,188 4.8% 76,004 6.8%
Income tax expense (24,294) -2.0% (29,435) -2.6%
Equity in income from
investee, net of tax 1,354 0.1% 556 0.0%
----------- ----------- ----------- -----------
Net income $ 37,248 3.0% $ 47,125 4.2%
=========== =========== =========== ===========
Basic earnings per
share $ 0.30 $ 0.36
=========== ===========
Diluted earnings per
share $ 0.30 $ 0.35
=========== ===========
Weighted average shares
outstanding - basic 123,751 132,262
Weighted average shares
outstanding - diluted 126,210 135,514
----------- ----------- ----------- -----------
Stores open at
beginning of each
period 1,043 928
Stores opened during
each period 37 40
Stores closed during
each period (5) (2)
Stores open at end of
each period 1,075 966
----------- ----------- ----------- -----------
Twenty-Six Weeks Ended Twenty-Six Weeks Ended
------------------------ ------------------------
August 3, July 29,
2008 % of Sales 2007 % of Sales
----------- ----------- ----------- -----------
Net sales $ 2,454,879 100.0% $ 2,228,306 100.0%
Cost of sales 1,732,105 70.6% 1,543,505 69.3%
----------- ----------- ----------- -----------
Gross profit 722,774 29.4% 684,801 30.7%
Operating, general and
administrative
expenses 567,106 23.1% 523,481 23.5%
----------- ----------- ----------- -----------
Operating income 155,668 6.3% 161,320 7.2%
Gain on sale of
investments - 0.0% 95,363 4.3%
Interest expense, net (28,953) -1.2% (17,556) -0.8%
----------- ----------- ----------- -----------
Income before income
tax expense
and equity in income
from investee 126,715 5.2% 239,127 10.7%
Income tax expense (50,193) -2.0% (86,076) -3.9%
Equity in income from
investee, net of tax 1,937 0.1% 781 0.0%
----------- ----------- ----------- -----------
Net income $ 78,459 3.2% $ 153,832 6.9%
=========== =========== =========== ===========
Basic earnings per
share $ 0.63 $ 1.16
=========== ===========
Diluted earnings per
share $ 0.62 $ 1.13
=========== ===========
Weighted average shares
outstanding - basic 124,401 132,789
Weighted average shares
outstanding - diluted 126,814 136,095
----------- ----------- ----------- -----------
Stores open at
beginning of each
period 1,008 908
Stores opened during
each period 72 63
Stores closed during
each period (5) (5)
Stores open at end of
each period 1,075 966
----------- ----------- ----------- -----------Contact: CONTACT:
Tawni Adams
(623) 587-2686
PetSmart Media Line
623-587-2177
Source: PetSmart
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