On Aug. 15, PetSmart (NASDAQ:PETM) released second-quarter earnings for the period ended July 30.

  • Revenues came in slightly ahead of expectations. EPS fell short of estimates on expenses to evaluate a merger the company did not pursue and updates to one of its distribution centers, which also lowered gross margins.
  • Same-store sales increased by 4.9% during the quarter, and sales of services continued to grow at a rapid clip, with a 28% increase.
  • A $250 million share repurchase plan was announced. If executed at today's prices, the plan would reduce the share count by more than 7%.

(Figures in thousands, except per-share data)

Income Statement Highlights

Avg. Est.

Q2 2006

Q2 2005

Change

Sales

$1,010,000

$1,020,609

$899,097

13.5%

Net Profit

--

$34,630

$35,745

(3.1%)

EPS

$0.28

$0.25

$0.24

4.2%

Diluted Shares

141,237

147,099

(4%)



Get back to basics with a look at the income statement.

Margin Checkup

Q2 2006

Q2 2005

Change*

Gross Margin

29.87%

31.33%

(1.46)

Operating Margin

6.07%

6.8%

(0.73)

Net Margin

3.39%

3.98%

(0.59)

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q2 2006

Q2 2005

Change

Cash + ST Invest.

$390,466

$399,926

(2.4%)

Accounts Rec.

$24,172

$24,101

0.3%

Inventory

$415,645

$367,727

13%



Liabilities

Q2 2006

Q2 2005

Change

Accounts Payable

$177,096

$174,845

1.3%

Long-Term Debt

$0

$0

N/A



Learn the ways of the balance sheet.

Cash Flow Highlights

Not provided by company.

Find out why Fools always follow the money.

Related companies:

  • Petco (NASDAQ:PETC)
  • Wal-Mart (NYSE:WMT)
  • Target (NYSE:TGT)
  • PetMed Express (NASDAQ:PETS)
  • Tractor Supply (NASDAQ:TSCO)
  • MWI Veterinary Supply (NASDAQ:MWIV)

Related Foolishness:

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At the time of publication,Nathan Parmelee held shares of PetSmart but had no positions in any of the other companies mentioned. Fool rules are here.