PetSmart Announces Third Quarter 2013 Results

  PetSmart Announces Third Quarter 2013 Results

Total Sales up 4.0%; Comp Sales of 2.7%; Earnings up 17.3% to $0.88 per Share

Business Wire

PHOENIX -- November 22, 2013

PetSmart, Inc. (NASDAQ: PETM) today announced financial results for the third
quarter of 2013 and provided guidance for the fourth quarter and fiscal year
2013.

Third Quarter Results

Earnings of $0.88 per share, up 17.3% compared to $0.75 per share in the third
quarter of 2012. Net income totaled $92 million in the third quarter of 2013,
compared to $82 million in the third quarter of 2012.

Total sales for the third quarter of 2013 increased 4.0% to $1.7 billion.
Comparable store sales, or sales in stores open at least a year, grew 2.7%,
including comparable transactions growth of 0.2%. Services sales, which are
included in total sales, grew 5.2% to $184 million.

The company generated $107 million in cash flows from operating activities,
spent $51 million in capital expenditures, distributed $17 million in
dividends, and repurchased $30 million of PetSmart stock. The company ended
the quarter with $367 million in cash, cash equivalents and restricted cash
and zero borrowings on its credit facility.

“Given the challenged consumer environment during the quarter, we are pleased
with our results and level of execution,” said David Lenhardt, Chief Executive
Officer. “Our performance demonstrates the strength and stability of our
business.”

Guidance

Fiscal year 2013 is a 52-week year. Except for comparable stores sales growth,
which is calculated on an equivalent basis, comparisons to fiscal year 2012, a
53-week year, are based on U.S. GAAP, unless otherwise noted.

  *Comparable store sales growth of 3% to 3.5%
  *Total sales growth of approximately 3% (on a 52 to 52-week basis, total
    sales growth of approximately 5%)
  *Earnings before tax margin expansion of 20 to 40 basis points (on a 52 to
    52-week basis, earnings before tax margin expansion of 50 to 70 basis
    points)
  *Earnings per share of $3.94 to $3.98

The fourth quarter of 2013 is a 13-week quarter. Except for comparable stores
sales growth, which is calculated on an equivalent basis, comparisons to the
fourth quarter of 2012, a 14-week quarter, are based on U.S. GAAP, unless
otherwise noted.

  *Comparable store sales growth of 2.5% to 3.5%
  *Total sales growth of -3% to -2% (on a 13 to 13-week basis, total sales
    growth of 4% to 5%)
  *Earnings before tax margin expansion of -45 to -15 basis points (on a 13
    to 13-week basis, earnings before tax margin expansion of 45 to 75 basis
    points)
  *Earnings per share of $1.19 to $1.23

Conference call information

PetSmart management has scheduled a teleconference for 9:00 a.m. EST on
November 22, 2013 to discuss results for the third 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 fourth
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 1627400.

A phone replay will be available through December 22, 2013, 11:59 p.m. EST, at
888-266-2081 in the United States and Canada, or at 703-925-2533 for
international callers, code 1627400.

About PetSmart

PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of
services and solutions for the lifetime needs of pets and is a leading online
provider of pet supplies and pet care information (http://www.petsmart.com).
The company employs approximately 54,000 associates and operates more than
1,314 pet stores in the United States, Canada and Puerto Rico, and over 196
in-store PetSmart^® PetsHotel^® dog and cat boarding facilities. 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 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 $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          Thirty-Nine Weeks Ended       Thirty-Nine Weeks Ended
                 November 3,     % of        October 28,     % of        November 3,     % of        October 28,     % of
                 2013              Sales       2012              Sales       2013              Sales       2012              Sales
                                                                                                                             
Merchandise      $ 1,500,443       88.5  %     $ 1,444,683       88.7  %     $ 4,502,272       88.0  %     $ 4,303,625       88.2  %
sales
Services           184,190         10.9  %       175,018         10.7  %       580,474         11.4  %       546,899         11.2  %
sales
Other             10,535       0.6   %      9,810        0.6   %      29,015       0.6   %      28,547       0.6   %
revenue
                                                                                                                             
Net sales         1,695,168    100.0 %      1,629,511    100.0 %      5,111,761    100.0 %      4,879,071    100.0 %
                                                                                                                             
Cost of
merchandise        1,045,743       61.7  %       1,008,278       61.9  %       3,123,671       61.1  %       2,989,671       61.3  %
sales
Cost of
services           133,917         7.9   %       128,911         7.9   %       409,136         8.0   %       392,152         8.0   %
sales
Cost of
other             10,535       0.6   %      9,810        0.6   %      29,015       0.6   %      28,547       0.6   %
revenue
                                                                                                                             
Total cost        1,190,195    70.2  %     1,146,999    70.4  %      3,561,822    69.7  %     3,410,370    69.9  %
of sales
                                                                                                                             
Gross profit       504,973         29.8  %       482,512         29.6  %       1,549,939       30.3  %       1,468,701       30.1  %
                                                                                                                             
Operating,
general and       352,304      20.8  %      342,958      21.0  %      1,073,202    21.0  %      1,038,736    21.3  %
administrative
expenses
                                                                                                                             
Operating          152,669         9.0   %       139,554         8.6   %       476,737         9.3   %       429,965         8.8   %
income
                                                                                                                             
Interest          (12,930   )   -0.8  %      (13,375   )   -0.8  %      (38,926   )   -0.8  %      (41,054   )   -0.8  %
expense, net
                                                                                                                             
Income before
income tax
expense and        139,739         8.2   %       126,179         7.8   %       437,811         8.5   %       388,911         8.0   %
equity income
from Banfield
                                                                                                                             
Income tax         (51,054   )     -3.0  %       (48,335   )     -3.0  %       (161,094  )     -3.2  %       (144,840  )     -3.0  %
expense
                                                                                                                             
Equity
income from       3,536        0.2   %      4,472        0.3   %      11,287       0.2   %      11,448       0.2   %
Banfield
                                                                                                                             
Net income       $ 92,221       5.4   %     $ 82,316       5.1   %     $ 288,004      5.5   %     $ 255,519      5.2   %
                                                                                                                             
Earnings per
common
share:
Basic            $ 0.89                       $ 0.76                       $ 2.78                       $ 2.36      
Diluted          $ 0.88                       $ 0.75                       $ 2.75                       $ 2.32      
                                                                                                                             
Weighted
average
shares
outstanding:
Basic              103,957                       107,719                       103,579                       108,303
Diluted            104,753                       109,333                       104,637                       110,117
                                                                                                     
Stores open
at beginning       1,301                         1,249                         1,278                         1,232
of each
period
Stores
opened             16                            24                            41                            49
during each
period
Stores
closed            (3        )                  (4        )                  (5        )                  (12       )
during each
period
Stores open
at end of       1,314                  1,269                  1,314                  1,269        
each period
                                                                                                                             


PetSmart, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
                                                       
                          November 3,        February 3,        October 28,
                          2013               2013               2012
                                                                
Assets
Cash and cash             $ 295,868          $ 335,155          $ 298,090
equivalents
Short-term                  1,967              9,150              13,862
investments
Restricted cash             71,226             71,916             71,916
Receivables, net            52,576             72,198             49,811
Merchandise                 797,533            679,090            765,831
inventories
Deferred income taxes       62,859             62,859             51,381
Prepaid expenses and       118,757          86,768           111,164    
other current assets
                                                                
Total current assets        1,400,786          1,317,136          1,362,055
                                                                
Property and                956,653            985,707            997,361
equipment, net
Equity investment in        30,326             39,934             35,412
Banfield
Deferred income taxes       101,321            102,992            85,308
Goodwill                    42,951             44,242             44,248
Other noncurrent           63,945           46,970           44,623     
assets
                                                                
Total assets              $ 2,595,982       $ 2,536,981       $ 2,569,007  
                                                                
Liabilities and
Stockholders' Equity
Accounts payable and      $ 240,603          $ 202,122          $ 266,708
bank overdraft
Accrued payroll,
bonus and employee          164,111            176,082            161,030
benefits
Accrued occupancy
expenses and deferred       79,716             70,671             74,106
rents
Current maturities of
capital lease               66,517             61,581             60,023
obligations
Other current              208,133          244,436          181,381    
liabilities
                                                                
Total current               759,080            754,892            743,248
liabilities
                                                                
Capital lease               453,620            464,578            475,552
obligations
Deferred rents              67,439             73,855             75,948
Other noncurrent           110,769          120,064          117,248    
liabilities
                                                                
Total liabilities          1,390,908        1,413,389        1,411,996  
                                                                
Stockholders' Equity:
Preferred stock;            -                  -                  -
$.0001 par value
Common stock; $.0001        17                 17                 17
par value
Additional paid-in          1,504,135          1,418,411          1,393,158
capital
Retained earnings           2,061,254          1,827,996          1,711,574
Accumulated other           2,082              5,506              5,600
comprehensive income
Less: Treasury stock       (2,362,414 )      (2,128,338 )      (1,953,338 )
                                                                
Total stockholders'        1,205,074        1,123,592        1,157,011  
equity
                                                                
Total liabilities and     $ 2,595,982       $ 2,536,981       $ 2,569,007  
stockholders' equity

Contact:

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