As I write this, my cat is giving me a particularly malicious look. Typically, he lies sprawled out across a narrow strip of sunshine that splashes onto my office floor and watches indifferently as I work. Occasionally, he may move a few inches to get a closer look at a squirrel scurrying outside the window -- but that's about the extent of his morning activity. By comparison, Garfield has boundless energy. Today, though, he has a ravenous look in his eye, and I'm not entirely comfortable with the narrow distance between his teeth and my unprotected foot.
Should I finish this article with only nine toes, I really have no one to blame but myself. We made the mistake of running out of cat food yesterday, and I forgot to pick up another bag while I was out last night. Trust me, this morning he was none too pleased with the oversight. Many people develop strong bonds with their four-legged (or feathered, or finned, or even scaled) friends, and is precisely upon that relationship that PETsMART
Yesterday, the nation's leading specialty pet supply retailer posted earnings (excluding a $3.6 million legal settlement) of $0.43 per share, a 13% increase from a year ago, on revenues that rose 11% to $934 million. Like dozens of other retailers and restaurateurs, PETsMART has recently restated its financial results to reflect changes in the way it accounts for leases. For the year, earnings advanced 22% to $1.12, on revenues that climbed 12% to $3.36 billion.
The company opened more than 90 new locations last year, but it did not rely on that expansion to fuel its top line growth. Same-store sales were up 4.6% during the quarter and gained 6.3% for the year. As has been the case, premium pet services -- such as in-store grooming, boarding, and training -- remain the fastest-growing business segment. Though they still account for only a small fraction of overall revenues, service-related sales for the quarter and full year jumped 22.7% and 24.4%, respectively.
Pet ownership continues to expand at a healthy rate, and it comes as no surprise that PETsMART is also growing at more than just a trot. The company is forecasting another year of 20%-plus earnings growth ahead, aided by a 5%-6% improvement in same-store sales. Furthermore, all that top-line growth continues to improve operating leverage, which in turn has expanded margins. After rising another 51 basis points last quarter, gross margins have now increased for 15 consecutive quarters.
Trends like that make it easy to see why investors have been begging for more.
Are you a dog or cat person, or is having both the only way to go? Discuss it with other Fools in the Pet Lovers Discussion Board.
Fool contributor Nathan Slaughter is leaving to buy some cat food. He owns none of the companies mentioned.