PetSmart Declines on Mixed Results
Shares of PetSmart Inc. (NASDAQ:PETM) traded to the downside on Friday following the announcement of the company’s third quarter results at the start of the day. Over the last couple years shares of the company have performed well as pet spending has remained relatively strong. Consumers have been weary to cut pet spending even throughout times of economic turbulence.
The company reported earnings per share of $0.88, ahead of analysts’ expected $0.86 per share. On the top line the company posted third-quarter revenue of $1.7 billion, 4% better than the $1.63 billion figure reported in the third quarter of last year. However, even with these good results the company felt it was necessary to lower guidance for the rest of the year. Full-year 2013 EPS is now expected to come in around $3.94 to $3.98.
If we look a little deeper into the results we see a mixed bag for shareholders. In the third quarter, PetSmart generated same-store sales growth at 2.7%, down from the prior quarter’s 3.4%. Moreover, sales for PetSmart’s important services segment, which includes grooming, boarding, training, and veterinary services, were up 5.2%, compared to 7.3% growth in the second quarter.
At the time of this writing shares of the company were to the downside despite continued broad market strength. Shares were down by 2.5 percent to $72.75 per share. Over the last year shares have underperformed the S&P 500. The company is higher by only 8 percent in comparison with the 27 percent returns seen by the S&P. Going forward, many analysts have praised the pet space for its inelasticity. Pet ownership is expected to rises in the coming years alongside the broad economy. PetSmart from initial review looks like it stands in a strong position to capitalize on these gains.
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