Earnings up 6.1% to $1.04 per Share; Total Sales up 1.1%
Updates
Guidance for Fiscal Year 2014
PHOENIX--(BUSINESS WIRE)--May 21, 2014--
PetSmart, Inc. (NASDAQ: PETM) today announced financial results for the
first quarter of 2014, and updated guidance for fiscal year 2014.
First Quarter Results
Earnings of $1.04 per share were up 6.1% compared to $0.98 per share in
the first quarter of 2013. Net income increased 1.3% to $104 million,
compared to $102 million in the first quarter of 2013.
Net sales for the first quarter of 2014 increased 1.1% to $1.7 billion.
Comparable store sales, or sales in stores open at least one year,
including online sales, fell 0.6%, with comparable transactions
decreasing 2.2%. Services sales, which are included in net sales, grew
4.5% to $200 million.
The company generated $137 million in cash flows from operating
activities, spent $32 million in capital expenditures, distributed $20
million in dividends, and repurchased $130 million of PetSmart stock.
The company ended the quarter with $301 million in cash, cash
equivalents and restricted cash and zero borrowings on its credit
facility.
“We are pleased with the company’s ability to achieve earnings per share
growth of 6.1% while continuing to drive earnings before tax margin
expansion during the first quarter,” said David Lenhardt, President and
Chief Executive Officer. “However, we did not achieve our sales goals,
which were impacted by a challenging and volatile consumer environment
and a competitive market.”
Updated Fiscal Year 2014 Guidance
Based on the Company’s year-to-date results and updated assumptions for
the remainder of the year in light of the consumer environment and
competitive market, the Company updated its fiscal year 2014 outlook.
-
Comparable store sales relatively flat
-
Net sales growth in the low-single digits
-
Earnings per share between $4.29 to $4.39
-
Operating cash flow between $600 to $625 million
Second Quarter 2014 Guidance
-
Comparable store sales growth flat to slightly down
-
Earnings per share of $0.92 to $0.96
Conference Call Information
PetSmart management has scheduled a teleconference for 10:00 a.m. EDT on
May 21, 2014 to discuss results for the first quarter 2014. 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 2014. 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 1637996.
A phone replay will be available through June 21, 2014, 11:59 p.m. EDT,
at 888-266-2081 in the United States and Canada, or at 703-925-2533 for
international callers, code 1637996. The announcement will also be
archived at www.petm.com.
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 53,000 associates and operates more than 1,340 pet
stores in the United States, Canada and Puerto Rico, 200 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® and PetSmart Charities® of Canada, PetSmart has helped save
the lives of more than 5.7 million pets since 1994. PetSmart Charities,
Inc. and PetSmart Charities of Canada (collectively “PetSmart
Charities”) are independent, nonprofit organizations that save the lives
of homeless pets and reduce shelter intake through spay and neuter
efforts. In 2013, nearly 440,000 dogs and cats found homes through
PetSmart Charities’ 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 $34 million given
in 2013 throughout North America.
Forward-looking statements
This news release contains forward-looking statements concerning our
expectations for future performance, including the statements comprising
our 2014 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 4, 2014
|
|
% of Sales
|
|
|
May 5, 2013
|
|
% of Sales
|
|
|
|
|
|
|
|
|
|
|
|
Merchandise sales
|
|
|
$
|
1,519,006
|
|
|
87.8
|
%
|
|
|
$
|
1,509,372
|
|
|
88.2
|
%
|
Services sales
|
|
|
|
200,155
|
|
|
11.6
|
%
|
|
|
|
191,577
|
|
|
11.2
|
%
|
Other revenue
|
|
|
|
9,971
|
|
|
0.6
|
%
|
|
|
|
9,647
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
|
|
1,729,132
|
|
|
100.0
|
%
|
|
|
|
1,710,596
|
|
|
100.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Cost of merchandise sales
|
|
|
|
1,051,644
|
|
|
60.8
|
%
|
|
|
|
1,037,114
|
|
|
60.6
|
%
|
Cost of services sales
|
|
|
|
136,679
|
|
|
7.9
|
%
|
|
|
|
134,089
|
|
|
7.8
|
%
|
Cost of other revenue
|
|
|
|
9,971
|
|
|
0.6
|
%
|
|
|
|
9,647
|
|
|
0.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of sales
|
|
|
|
1,198,294
|
|
|
69.3
|
%
|
|
|
|
1,180,850
|
|
|
69.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit
|
|
|
|
530,838
|
|
|
30.7
|
%
|
|
|
|
529,746
|
|
|
31.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating, general, and administrative expenses
|
|
|
|
359,080
|
|
|
20.8
|
%
|
|
|
|
362,228
|
|
|
21.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Operating income
|
|
|
|
171,758
|
|
|
9.9
|
%
|
|
|
|
167,518
|
|
|
9.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(13,183
|
)
|
|
-0.8
|
%
|
|
|
|
(13,168
|
)
|
|
-0.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Income before income tax expense
and equity income from Banfield
|
|
|
|
158,575
|
|
|
9.2
|
%
|
|
|
|
154,350
|
|
|
9.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
|
|
|
|
(58,592
|
)
|
|
-3.4
|
%
|
|
|
|
(55,547
|
)
|
|
-3.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Equity income from Banfield
|
|
|
|
3,783
|
|
|
0.2
|
%
|
|
|
|
3,612
|
|
|
0.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
$
|
103,766
|
|
|
6.0
|
%
|
|
|
$
|
102,415
|
|
|
6.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per common share:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
$
|
1.05
|
|
|
|
|
|
$
|
0.99
|
|
|
|
Diluted
|
|
|
$
|
1.04
|
|
|
|
|
|
$
|
0.98
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
|
99,205
|
|
|
|
|
|
|
103,305
|
|
|
|
Diluted
|
|
|
|
99,844
|
|
|
|
|
|
|
104,583
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stores open at beginning of each period
|
|
|
|
1,333
|
|
|
|
|
|
|
1,278
|
|
|
|
Stores opened during each period
|
|
|
|
7
|
|
|
|
|
|
|
13
|
|
|
|
Stores closed during each period
|
|
|
|
-
|
|
|
|
|
|
|
(2
|
)
|
|
|
Stores open at end of each period
|
|
|
|
1,340
|
|
|
|
|
|
|
1,289
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PetSmart, Inc. and Subsidiaries
|
Condensed Consolidated Balance Sheets
|
(In thousands, except par value)
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
May 4,
|
|
|
February 2,
|
|
|
May 5,
|
|
|
|
|
|
2014
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
230,102
|
|
|
|
$
|
285,622
|
|
|
|
$
|
252,988
|
|
|
Short-term investments
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
7,455
|
|
|
Restricted cash
|
|
|
|
71,226
|
|
|
|
|
71,226
|
|
|
|
|
71,226
|
|
|
Receivables, net
|
|
|
|
65,944
|
|
|
|
|
72,685
|
|
|
|
|
66,272
|
|
|
Merchandise inventories
|
|
|
|
792,140
|
|
|
|
|
740,302
|
|
|
|
|
738,568
|
|
|
Deferred income taxes
|
|
|
|
71,940
|
|
|
|
|
71,945
|
|
|
|
|
62,859
|
|
|
Prepaid expenses and other current assets
|
|
|
|
81,314
|
|
|
|
|
76,463
|
|
|
|
|
81,041
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current assets
|
|
|
|
1,312,666
|
|
|
|
|
1,318,243
|
|
|
|
|
1,280,409
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
949,167
|
|
|
|
|
952,955
|
|
|
|
|
972,679
|
|
|
Equity investment in Banfield
|
|
|
|
29,272
|
|
|
|
|
33,577
|
|
|
|
|
28,426
|
|
|
Deferred income taxes
|
|
|
|
102,316
|
|
|
|
|
110,408
|
|
|
|
|
100,601
|
|
|
Goodwill
|
|
|
|
41,510
|
|
|
|
|
41,140
|
|
|
|
|
43,914
|
|
|
Other noncurrent assets
|
|
|
|
62,124
|
|
|
|
|
65,645
|
|
|
|
|
48,155
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
|
$
|
2,497,055
|
|
|
|
$
|
2,521,968
|
|
|
|
$
|
2,474,184
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Stockholders' Equity
|
|
|
|
|
|
|
|
|
|
|
Accounts payable and bank overdraft
|
|
|
$
|
244,114
|
|
|
|
$
|
255,251
|
|
|
|
$
|
257,628
|
|
|
Accrued payroll, bonus, and employee benefits
|
|
|
|
136,310
|
|
|
|
|
160,008
|
|
|
|
|
132,705
|
|
|
Accrued occupancy expenses and deferred rents
|
|
|
|
70,298
|
|
|
|
|
81,867
|
|
|
|
|
69,626
|
|
|
Current maturities of capital lease obligations
|
|
|
|
68,858
|
|
|
|
|
66,887
|
|
|
|
|
63,180
|
|
|
Other current liabilities
|
|
|
|
280,633
|
|
|
|
|
230,332
|
|
|
|
|
246,431
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total current liabilities
|
|
|
|
800,213
|
|
|
|
|
794,345
|
|
|
|
|
769,570
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital lease obligations
|
|
|
|
450,538
|
|
|
|
|
451,597
|
|
|
|
|
462,436
|
|
|
Deferred rents
|
|
|
|
63,563
|
|
|
|
|
65,932
|
|
|
|
|
71,565
|
|
|
Other noncurrent liabilities
|
|
|
|
111,400
|
|
|
|
|
116,312
|
|
|
|
|
119,352
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities
|
|
|
|
1,425,714
|
|
|
|
|
1,428,186
|
|
|
|
|
1,422,923
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
|
|
|
|
|
|
|
Preferred stock; $.0001 par value
|
|
|
|
-
|
|
|
|
|
-
|
|
|
|
|
-
|
|
|
Common stock; $.0001 par value
|
|
|
|
17
|
|
|
|
|
17
|
|
|
|
|
17
|
|
|
Additional paid-in capital
|
|
|
|
1,537,707
|
|
|
|
|
1,515,333
|
|
|
|
|
1,441,863
|
|
|
Retained earnings
|
|
|
|
2,257,308
|
|
|
|
|
2,173,005
|
|
|
|
|
1,913,209
|
|
|
Accumulated other comprehensive (loss) income
|
|
|
|
(1,277
|
)
|
|
|
|
(2,159
|
)
|
|
|
|
4,510
|
|
|
Less: Treasury stock
|
|
|
|
(2,722,414
|
)
|
|
|
|
(2,592,414
|
)
|
|
|
|
(2,308,338
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total stockholders' equity
|
|
|
|
1,071,341
|
|
|
|
|
1,093,782
|
|
|
|
|
1,051,261
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' equity
|
|
|
$
|
2,497,055
|
|
|
|
$
|
2,521,968
|
|
|
|
$
|
2,474,184
|
|

Source: PetSmart, Inc.
PetSmart, Inc. Investor Relations, 623-587-2025
|