Track the companies that matter to you. It's FREE! Click one of these fan favorites to get started: Apple; Google; Ford.



PetSmart, Inc.'s Recent Earnings: What You Need to Know

PetSmart (NASDAQ: PETM  ) unleashed earnings on Wednesday. Here's what you need to know about the company's results.

Source: Wikimedia Commons, Anthony92931.

Results recap
The pet-centric retailer posted first-quarter earnings per share of $1.04, ahead of analysts' expectations of $1.02 per share, and up 6.1% compared to the year-ago quarter. However, the company posted first-quarter revenue of $1.7 billion, which increased 1.1% from the year-earlier figure. The company expects full-year 2014 EPS to come in between $4.29 and $4.39. Results weren't enough to receive praise from investors. Shares were trading down more than 7% after Wednesday's announcement.

Sales growth slowed
PetSmart's historical growth rate had been like a belly scratch for investors for years, with net sales outpacing the industry. For the first quarter, PetSmart expected same-store sales growth in the low-single digits. Yet quarterly same-store sales fell 0.6%, down substantially from the year-ago quarter's 3.5% growth. Meanwhile, sales for PetSmart's important services sales, which includes grooming, training, boarding, and veterinary services, grew 4.5% in the first quarter, compared to 6% growth in the year-ago period. For full-year 2014, the retailer expects flat same-store sales. Clearly, PetSmart's sales growth has tempered.

PetSmart still top dog in one key area
E-retailing giant has aggressively entered the pet-supply market with countless pet products, free shipping, and two-day delivery guarantees. Since 88% of PetSmart's sales are derived from merchandise as opposed to services, Amazon could potentially bite into PetSmart's revenues. Yet PetSmart's strengths lie in differentiation through its service offerings. Services substantially drive PetSmart's margins, and also provide an in-store customer experience that online competitors can't match. As a result, PetSmart is quickly growing the services side of its business. PetSmart's services sales have grown 68%, from $455 million in 2007 to $766 million in 2013, while costs associated with its services have moderated.

Foolish takeaway
PetSmart has been a shareholder's best friend for years. The retailer still boasts a strong brand, differentiation through services, and opportunities for international expansion. But these recent results confirm the company's slowing growth. Stay tuned for PetSmart's future earnings releases, which will indicate whether the pet-centric retailer is tiring out or still has legs to run.

Will this stock be your next multibagger?
PetSmart's growth is flagging. But give me five minutes, and I'll show you how you could own the best stock for 2014. Every year, The Motley Fool's chief investment officer handpicks one stock with outstanding potential. But it's not just any run-of-the-mill company. It's a stock perfectly positioned to cash in on one of the upcoming year's most lucrative trends. Last year, his pick skyrocketed 134%. And previous top picks have gained upwards of 908%, 1,252%, and 1,303% during the subsequent years! Believe me, you don't want to miss what could be his biggest winner yet! Just click here to download your free copy of  "The Motley Fool's Top Stock for 2014" today.

Read/Post Comments (0) | Recommend This Article (1)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2966751, ~/Articles/ArticleHandler.aspx, 8/29/2015 2:21:01 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Nicole Seghetti

Nicole is a contributing writer for The Motley Fool. She's worked as a financial advisor and planner for over a decade. Nicole holds an MBA from the University of the Pacific and a chemical engineering degree from Purdue University. She welcomes you to follow her on Twitter.

Today's Market

updated 5 hours ago Sponsored by:
DOW 16,643.01 -11.76 -0.07%
S&P 500 1,988.87 1.21 0.06%
NASD 4,828.33 15.62 0.32%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

12/31/1969 7:00 PM
PETM $0.00 Down +0.00 +0.00%
PetSmart CAPS Rating: *****