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PetSmart Announces Second Quarter 2013 Results



  PetSmart Announces Second Quarter 2013 Results

 Total Sales up 5.3%; Comp Sales of 3.4%; Earnings up 25% to $0.89 per Share

Business Wire

PHOENIX -- August 21, 2013

PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.89 per share, up
25% compared to $0.71 per share in the second quarter of 2012. Net income
totaled $93 million in the second quarter of 2013, compared to $79 million in
the second quarter of 2012.

Total sales for the second quarter of 2013 increased 5.3% to $1.7 billion.
Comparable store sales, or sales in stores open at least a year, grew 3.4%,
benefitting from comparable transactions growth of 1.0%. Services sales, which
are included in total sales, grew 7.3% to $205 million.

During the second quarter, the company generated $87 million in cash flows
from operating activities, spent $26 million in capital expenditures, and
repurchased $24 million of PetSmart stock. The company ended the quarter with
$353 million in cash, cash equivalents and restricted cash and zero borrowings
on its credit facility.

“We are pleased with our results and level of execution in the second
quarter,” said David Lenhardt, Chief Executive Officer. “Our performance
demonstrates the continued strength and stability of our business model, and
what we can achieve when we focus on caring for our customers.”

“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% to 4%, and total sales growth of 3% to 4%. We are raising our earnings per
share guidance from a previous range of $3.82 to $3.94, to our current
expectations of $3.88 to $3.98,” said Carrie Teffner, Senior Vice President
and Chief Financial Officer. "For the third quarter of 2013, we are expecting
comparable store sales growth in the 3% to 4% range, and earnings per share
between $0.83 to $0.87.”

Conference call information

PetSmart management has scheduled a teleconference for 10:00 a.m. EDT on
August 21, 2013 to discuss results for the second 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 third
quarter of 2013. In addition, you can listen to the call live by dialing
866-219-5631 (within the United States and Canada) or 703-639-1122 (for
international callers), code 1621111.

A phone replay will be available through September 21, 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 1621111.

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 1,301 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 Camp^SM
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            Twenty-Six Weeks Ended          Twenty-Six Weeks Ended
                     August 4,         % of          July 29, 2012     % of          August 4,         % of          July 29, 2012     % of
                     2013              Sales                           Sales         2013              Sales                           Sales
                                                                                                                                        
Merchandise          $ 1,492,457       87.5  %       $ 1,419,383       87.6  %       $ 3,001,829       87.9  %       $ 2,858,942       88.0  %
sales
Services sales         204,707         12.0  %         190,867         11.8  %         396,284         11.6  %         371,881         11.4  %
Other revenue          8,833           0.5   %         9,417           0.6   %         18,480          0.5   %         18,737          0.6   %
                                                                                                                                        
Net sales              1,705,997       100.0 %         1,619,667       100.0 %         3,416,593       100.0 %         3,249,560       100.0 %
                                                                                                                                        
Cost of
merchandise            1,040,814       61.0  %         986,885         60.9  %         2,077,928       60.8  %         1,981,393       61.0  %
sales
Cost of                141,130         8.3   %         134,550         8.3   %         275,219         8.1   %         263,241         8.1   %
services sales
Cost of other          8,833           0.5   %         9,417           0.6   %         18,480          0.5   %         18,737          0.6   %
revenue
                                                                                                                                        
Total cost of          1,190,777       69.8  %         1,130,852       69.8  %         2,371,627       69.4  %         2,263,371       69.7  %
sales
                                                                                                                                        
Gross profit           515,220         30.2  %         488,815         30.2  %         1,044,966       30.6  %         986,189         30.3  %
                                                                                                                                        
Operating,
general and            358,670         21.0  %         352,755         21.8  %         720,898         21.1  %         695,778         21.4  %
administrative
expenses
                                                                                                                                        
Operating              156,550         9.2   %         136,060         8.4   %         324,068         9.5   %         290,411         8.9   %
income
                                                                                                                                        
Interest               (12,828   )     -0.8  %         (13,550   )     -0.8  %         (25,996   )     -0.8  %         (27,679   )     -0.9  %
expense, net
                                                                                                                                        
Income before
income tax
expense and            143,722         8.4   %         122,510         7.6   %         298,072         8.7   %         262,732         8.1   %
equity income
from Banfield
                                                                                                                                        
Income tax             (54,493   )     -3.2  %         (48,333   )     -3.0  %         (110,040  )     -3.2  %         (96,505   )     -3.0  %
expense
                                                                                                                                        
Equity income          4,139           0.2   %         4,343           0.3   %         7,751           0.2   %         6,976           0.2   %
from Banfield
                                                                                                                                        
Net income           $ 93,368          5.5   %       $ 78,520          4.8   %       $ 195,783         5.7   %       $ 173,203         5.3   %
                                                                                                                                        
Earnings per
common share:
Basic                $ 0.90                          $ 0.73                          $ 1.89                          $ 1.59       
Diluted              $ 0.89                          $ 0.71                          $ 1.87                          $ 1.57       
                                                                                                                                        
Weighted
average shares
outstanding:
Basic                  103,474                         108,260                         103,390                         108,595
Diluted                104,512                         109,934                         104,547                         110,507
                                                                                                                                        
Stores open at
beginning of           1,289                           1,241                           1,278                           1,232
each period
Stores opened
during each            12                              11                              25                              25
period
Stores closed
during each            -                               (3        )                     (2        )                     (8        )
period
Stores open at
end of each            1,301                           1,249                           1,301                           1,249            
period
                                                                                                                                        
                                                                                                                                        

                                                               
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
                                                                 
                      August 4,            February 3,          July 29,
                      2013                 2013                 2012
                                                                 
Assets
Cash and cash         $ 281,554            $ 335,155            $ 282,011
equivalents
Short-term              3,087                9,150                16,730
investments
Restricted cash         71,226               71,916               71,916
Receivables,            69,118               72,198               56,358
net
Merchandise             770,268              679,090              691,820
inventories
Deferred income         62,859               62,859               51,381
taxes
Prepaid
expenses and            115,319              86,768               131,521     
other current
assets
                                                                 
Total current           1,373,431            1,317,136            1,301,737
assets
                                                                 
Property and            951,499              985,707              1,016,359
equipment, net
Equity
investment in           29,678               39,934               30,940
Banfield
Deferred income         98,162               102,992              84,288
taxes
Goodwill                43,031               44,242               44,043
Other
noncurrent              54,105               46,970               44,115      
assets
                                                                 
Total assets          $ 2,549,906          $ 2,536,981          $ 2,521,482   
                                                                 
Liabilities and
Stockholders'
Equity
Accounts
payable and           $ 248,467            $ 202,122            $ 248,072
bank overdraft
Accrued
payroll, bonus          163,494              176,082              140,607
and employee
benefits
Accrued
occupancy               72,829               70,671               71,543
expenses and
deferred rents
Current
maturities of           64,449               61,581               58,152
capital lease
obligations
Other current           221,150              244,436              188,978     
liabilities
                                                                 
Total current           770,389              754,892              707,352
liabilities
                                                                 
Capital lease           454,673              464,578              482,099
obligations
Deferred rents          68,856               73,855               77,992
Other
noncurrent              108,649              120,064              117,272     
liabilities
                                                                 
Total                   1,402,567            1,413,389            1,384,715   
liabilities
                                                                 
Stockholders'
Equity:
Preferred
stock; $.0001           -                    -                    -
par value
Common stock;
$.0001 par              17                   17                   17
value
Additional              1,487,860            1,418,411            1,377,678
paid-in capital
Retained                1,989,401            1,827,996            1,647,088
earnings
Accumulated
other                   2,475                5,506                5,322
comprehensive
income
Less: Treasury          (2,332,414 )         (2,128,338 )         (1,893,338 )
stock
                                                                 
Total
stockholders'           1,147,339            1,123,592            1,136,767   
equity
                                                                 
Total
liabilities and       $ 2,549,906          $ 2,536,981          $ 2,521,482   
stockholders'
equity

Contact:

PetSmart, Inc.
Investor Relations, 623-587-2025
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