PetSmart Q4 Profit Tops View, But Revenues Miss; Guides 2014 In Line

(RTTNews) - Pet products retailer PetSmart, Inc. (PETM) reported Wednesday a profit for the fourth quarter that decreased from last year, reflecting lower gross margin and a sales drop. However, earnings per share grew 20 percent on a 13-week equivalent basis.

The year-ago quarter had one week extra which contributed sales of $125.95 million, and earnings of $0.17 per share.

Earnings per share for the quarter topped analysts' expectations, while quarterly net sales missed their estimates. The company also provided earnings guidance for the first quarter, below estimates, and for the full-year 2014, in line with Street view.

The Phoenix, Arizona-based company reported net income of $131.52 million or $1.28 per share for the fourth quarter, compared to $134.01 million or $1.24 per share in the prior-year quarter. On a 13-week equivalent basis, earnings per share grew 19.6 percent.

On average, 26 analysts polled by Thomson Reuters expected the company to report earnings of $1.21 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter decreased 4 percent to $1.80 billion from $1.88 billion in the same quarter last year, and missed twenty-three Wall Street analysts' consensus estimate of $1.83 billion. Proforma net sales grew 2.9 percent on a 13-week equivalent basis.

Comparable store sales or sales at established stores, grew 1.2 percent in the fourth quarter on a 13-week equivalent basis.

Merchandise sales for the quarter were $1.61 billion, down from $1.68 billion a year ago. Services sales declined 4.2 percent to $185.53 million from last year. Other revenue for the quarter were $9.90 million, up from $9.62 million last year.

Operating margin for the quarter expanded 20 basis points to 12 percent from last year's 11.8 percent as operating, general and administrative expenses as a percentage of total sales declined 40 basis points, while gross margin contracted 20 basis points. Stores open at the end of the fourth quarter were 1,333, compared to 1,278 at the end of the year-ago quarter.

Looking ahead to the first quarter, the company expects earnings in a range of $0.99 to $1.03 per share, on projected comparable store sales growth in the low-single digits. Analysts currently expect earnings of $1.07 per share for the quarter, on revenues of $1.79 billion.

For fiscal 2014, the company anticipates earnings in the range of $4.42 to $4.54 per share, on projected sales growth of 3 to 6 percent and comparable store sales growth of 2 to 4 percent.

Street is currently looking for full-year 2014 earnings of $4.45 per share on annual revenue growth of 5.1 percent to $7.29 billion.

PETM closed Tuesday's regular trading session at $67.66, up $0.15 on a volume of 3.20 million shares. In the past 52-week period, the stock has been trading in a range of $61.30 to $77.32.