Petsmart (PETM) Q2 July 2009 Earnings Notes
Press Release
-revenue $1.31 billion (+5.4%), EPS 31c, comp sales +0.8%
-guiding Q3 EPS 20-24c comp sales flat, FY $1.37-1.45 comp sales low single digits
-$180.65 million cash, $553.96 million long-term capital leases
-125.5 million diluted shares
Conference Call
-comp transactions -0.5%
-large benefit from food inflation last few quarters has slowed significantly
-gross margin declined 130bps to 28.2%
-anticipate continue gross margin pressure back half of the year
-traffic is flat to slightly down
-consumer is spending less on higher margin hard goods (wet food, treats, toys, beds)
Q&A
-expect flat inflation, not deflation
-weak guidance due to both lower margin and lower sales trends
-Q4 is the biggest hard goods quarter
-going to be promotional on specific traffic driving SKUs. Overall pricing won’t change much
-CA, FL, and AZ were weak before. Southern California is improving, while FL and AZ remain weak. TX and northwest has caught up in weakness with those others due to high unemployment
Net-net
-food inflation benefit/headwind is disappearing. Guidance is weak at 20-24c EPS next quarter vs. 26c street estimate
-comp store sales are decelerating from 3.9% Q1 to 0.8% Q2, guiding to 0% Q3