Unfortunately, PetSmart (Nasdaq: PETM) is still having accidents.

Fourth-quarter net income dropped 2% to $75.4 million, or $0.59 per share. Without the 14th week and the costs related to exiting the State Line Tack business, earnings would have been $0.52 per share.

Net sales increased 13.8% to $1.33 billion, but hold your enthusiasm: The 14th week gave the quarterly sales figure a $90 million boost. Same-store sales increased just 0.8% in the fourth quarter and gross margin continued to drop.

What's worse, though, is that PetSmart reported 2007 earnings of $1.95 per share, at the low end of the guidance it reduced back in January (which also includes a huge one-time $0.48-per-share gain from the sale of MMI Holdings). And its guidance for 2008 left many investors cold. In the first quarter, it expects earnings of $0.29 to $0.33 per share, and earnings of $1.51 to $1.59 per share for the full year.

On the face of it, PetSmart has looked "cheap" for quite some time now, but then again, one-time items and so forth have at times made the financial picture lumpy and confusing. And the big question when surveying its financial ratios is: Can PetSmart pull off the anticipated growth? I'm leaning toward the idea that the answer is no, at least in the near term.

Even though there is no doubt that pets are an important part of people's lives, the competitive landscape is rough. No one should underestimate the power of discounters like Wal-Mart (NYSE: WMT), Target (NYSE: TGT), and Costco (Nasdaq: COST) on the one hand, and the mom-and-pop stores with their personal touch on the other.

Meanwhile, PetSmart's pet hotels business sounded like a great idea, but it may not be so brilliant during a recession. I'd imagine people may ratchet back travel plans and try to get friends and neighbors to look after pets when they're away, rather than pay a premium for pet lodging. It's yet another reason for near-term uncertainty.  

I lost my confidence in PetSmart back in November (I had had it as an "outperform" in my Motley Fool CAPS page for quite some time, but that was the point when I finally gave up). More bad tidings from PetSmart, and a slow consumer spending environment, give me little reason to regain my confidence at the moment.

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PetSmart and Costco are Motley Fool Stock Advisor recommendations. Wal-Mart is a Motley Fool Inside Value pick.

Alyce Lomax does not own shares of any of the companies mentioned. The Fool has a disclosure policy.