PetSmart Q1 Profit Beats Estimates, But Revenues Miss; Cuts FY14 Outlook

(RTTNews) - Pet products retailer PetSmart, Inc. (PETM) Wednesday reported a higher first-quarter profit amid slight increase in sales. Earnings per share beat analysts' expectations, while revenues missed view.

The firm also forecast second-quarter earnings per share below estimates, and cut its full year outlook. The shares fell about 7 percent in pre-market trading.

For the first quarter, the company's net income increased to $103.77 million or $1.04 per share from $102.42 million or $0.98 per share in the same quarter last year.

On average, 25 analysts polled by Thomson Reuters expected the company to report earnings of $1.01 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged up 1.1 percent to $1.73 billion from $1.71 billion in the prior-year quarter. Twenty two analysts' revenue estimate was $1.77 billion for the quarter.

Merchandise sales improved to $1.52 billion from $1.51 billion a year ago. Services sales, which are included in net sales, grew 4.5 percent to $200.16 million.

Comparable store sales, or sales in stores open at least one year, including online sales, declined 0.6 percent, with comparable transaction decrease of 2.2 percent.

David Lenhardt, president and chief executive officer of the company said, "We are pleased with the company's ability to achieve earnings per share growth...However, we did not achieve our sales goals, which were impacted by a challenging and volatile consumer environment and a competitive market."

During the quarter, the firm opened seven stores, and stores open at end of the period was 1,340, up from 1,289 in the year-ago period.

PetSmart repurchased $130 million of its stock in the first quarter.

Looking ahead, for the second quarter, the company expects earnings per share to be in the range of $0.92 to $0.96, and comparable store sales growth flat to slightly down. Analysts expect the company to report earnings of $1.00 per share, on revenues of $1.78 billion for the second-quarter.

For fiscal 2014, the company now expects earnings per share to be in the range of $4.29 to $4.39, on net sales growth in the low-single digits. Comparable store sales are expected to be relatively flat. Street currently is looking for fiscal year 2014 earnings of $4.45 per share, on annual revenues of $7.25 billion.

The company's earlier guidance was for earnings per share of $4.42 to $4.54, on projected sales growth of 3 to 6 percent and comparable store sales growth of 2 to 4 percent for fiscal 2014.

PETM closed Tuesday's regular trading at $62.19. In the pre-market activity on Wednesday, the shares are down 6.74 percent to trade at $58.