PetSmart Announces First Quarter 2014 Results

  PetSmart Announces First Quarter 2014 Results             Earnings up 6.1% to $1.04 per Share; Total Sales up 1.1%                      Updates Guidance for Fiscal Year 2014  Business Wire  PHOENIX -- 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 Camp^SM 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          May 5, 2013     % of                                        Sales                         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                  1,051,644     60.8   %        1,037,114     60.6   % merchandise sales Cost of services         136,679       7.9    %        134,089       7.8    % sales Cost of other           9,971        0.6    %       9,647        0.6    % revenue                                                                       Total cost of           1,198,294    69.3   %       1,180,850    69.0   % sales                                                                       Gross profit             530,838       30.7   %        529,746       31.0   %                                                                       Operating, general, and            359,080      20.8   %       362,228      21.2   % administrative expenses                                                                       Operating income         171,758       9.9    %        167,518       9.8    %                                                                       Interest expense,       (13,183   )   -0.8   %       (13,168   )   -0.8   % net                                                                       Income before income tax expense                          158,575       9.2    %        154,350       9.0    % and equity income from Banfield                                                                       Income tax expense       (58,592   )   -3.4   %        (55,547   )   -3.2   %                                                                       Equity income from      3,783        0.2    %       3,612        0.2    % Banfield                                                                       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        1,333                         1,278 period Stores opened            7                             13 during each period Stores closed           -                           (2        ) during each period Stores open at end    1,340                   1,289        of each period                                                                                                                                              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         $ 230,102          $ 285,622          $ 252,988     equivalents     Short-term              -                  -                  7,455     investments     Restricted cash         71,226             71,226             71,226     Receivables, net        65,944             72,685             66,272     Merchandise             792,140            740,302            738,568     inventories     Deferred income         71,940             71,945             62,859     taxes     Prepaid expenses     and other current      81,314           76,463           81,041          assets                                                                          Total current       1,312,666          1,318,243          1,280,409         assets                                                                      Property and            949,167            952,955            972,679     equipment, net     Equity investment       29,272             33,577             28,426     in Banfield     Deferred income         102,316            110,408            100,601     taxes     Goodwill                41,510             41,140             43,914     Other noncurrent       62,124           65,645           48,155          assets                                                                          Total assets      $ 2,497,055       $ 2,521,968       $ 2,474,184                                                                    Liabilities and Stockholders' Equity     Accounts payable     and bank              $ 244,114          $ 255,251          $ 257,628     overdraft     Accrued payroll,     bonus, and              136,310            160,008            132,705     employee benefits     Accrued occupancy     expenses and            70,298             81,867             69,626     deferred rents     Current     maturities of           68,858             66,887             63,180     capital lease     obligations     Other current          280,633          230,332          246,431         liabilities                                                                          Total current       800,213            794,345            769,570         liabilities                                                                      Capital lease           450,538            451,597            462,436     obligations     Deferred rents          63,563             65,932             71,565     Other noncurrent       111,400          116,312          119,352         liabilities                                                                          Total              1,425,714        1,428,186        1,422,923           liabilities                                                                      Stockholders'     Equity:     Preferred stock;        -                  -                  -     $.0001 par value     Common stock;           17                 17                 17     $.0001 par value     Additional              1,537,707          1,515,333          1,441,863     paid-in capital     Retained earnings       2,257,308          2,173,005          1,913,209     Accumulated other     comprehensive           (1,277     )       (2,159     )       4,510     (loss) income     Less: Treasury         (2,722,414 )      (2,592,414 )      (2,308,338 )     stock                                                                          Total         stockholders'      1,071,341        1,093,782        1,051,261           equity                                                                          Total         liabilities         and               $ 2,497,055       $ 2,521,968       $ 2,474,184           stockholders'         equity  Contact:  PetSmart, Inc. Investor Relations, 623-587-2025  
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