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Press release from Business Wire

PetSmart Reports Results for the First Quarter 2013

<p class='bwalignc'> <b>Q1 Earnings up 15% to $0.98 per Share; Comp Sales of 3.5%; Total Sales up 5.0%; Comp Transactions up 0.8%</b> </p>

Wednesday, May 22, 2013

PetSmart Reports Results for the First Quarter 2013

16:02 EDT Wednesday, May 22, 2013

PHOENIX (Business Wire) -- PetSmart, Inc. (NASDAQ: PETM) today reported earnings of $0.98 per share, up 15% compared to $0.85 per share in the first quarter of 2012. Net income totaled $102 million in the first quarter of 2013, compared to $95 million in the first quarter of 2012.

Total sales for the first quarter of 2013 increased 5.0% to $1.7 billion. The increase in net sales was partially impacted by $2 million in unfavorable foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 3.5%, benefitting from comparable transactions growth of 0.8%. Services sales, which are included in total sales, grew 5.8% to $192 million.

During the first quarter, the company generated $147 million in cash flows from operating activities, spent $35 million in capital expenditures, and repurchased $180 million of PetSmart stock. The company ended the quarter with $324 million in cash, cash equivalents and restricted cash and zero borrowings on its credit facility.

“We are pleased to report another quarter of solid earnings growth,” said Bob Moran, Chairman and Chief Executive Officer. “Our focus on providing solutions for the lifetime needs of pets has kept our pet parent customers highly engaged with our brand, resulting in positive comparable store sales growth and transaction growth.”

“As a reminder, the annual guidance for 2013 is for 52 weeks versus 53 weeks in 2012. For fiscal year 2013, we anticipate comparable store sales growth of 3% - 4%, and total sales growth of 3% - 4%. We are raising our earnings per share guidance from a previous range of $3.76 to $3.92, to our current expectations of $3.82 to $3.94,” said Chip Molloy, Executive Vice President and Chief Financial Officer. "For the second quarter of 2013, we are expecting comparable store sales growth in the 3% to 4% range, and earnings per share between $0.82 to $0.86.”

Conference call information

PetSmart management has scheduled a teleconference for 4:30 p.m. EDT on May 22, 2013 to discuss results for the first quarter 2013. This teleconference will be webcast live for all investors at www.petm.com. The webcast will be available until the company announces results for the second quarter of 2013. In addition, you can listen to the call live by dialing 866-814-1933 (within the United States and Canada) or 703-639-1365 (for international callers), code 1613971.

A phone replay will be available through June 22, 2013, 11:59 p.m. EDT, at 888-266-2081 in the United States and Canada, or at 703-925-2533 for international callers, code 1613971.

About PetSmart

PetSmart, Inc. (NASDAQ: PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company employs approximately 52,000 associates and operates more than 1,289 pet stores in the United States, Canada and Puerto Rico, over 196 in-store PetSmart® PetsHotel® dog and cat boarding facilities, and is a leading online provider of pet supplies and pet care information (http://www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers dog training, pet grooming, pet boarding, PetSmart Doggie Day CampSM day care services and pet adoption services. Through its in-store pet adoption partnership with PetSmart Charities®, PetSmart has helped save the lives of more than 5 million pets since 1994. PetSmart Charities, Inc. and PetSmart Charities of Canada, Inc. (“PetSmart Charities”) are independent, nonprofit organizations that save the lives of homeless pets and reduce shelter intake through spay/neuter efforts. In 2012, nearly 450,000 dogs and cats found homes through the organization's adoption centers in all PetSmart stores and by sponsoring community adoption events. PetSmart Charities is the leader in granting money to help pets in need, with more than $28 million given in 2012 throughout North America.

Forward-looking statements

This news release contains forward-looking statements concerning our expectations for future performance, including the statements comprising our 2013 guidance. These "forward-looking statements" are based on currently available information, operating plans and projections about future events and trends. They inherently involve risks and uncertainties that could cause actual results to differ materially from those predicted in such forward-looking statements. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.

                   
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Statements of Operations
(in thousands, except per share and store data)
(Unaudited)
 
Thirteen Weeks Ended Thirteen Weeks Ended
May 5, 2013     % of Sales April 29, 2012     % of Sales
 
Merchandise sales $ 1,509,372 88.2 % $ 1,439,559 88.3 %
Services sales 191,577 11.2 % 181,014 11.1 %
Other revenue   9,647       0.6 %   9,320       0.6 %
 
Net sales   1,710,596       100.0 %   1,629,893       100.0 %
 
Cost of merchandise sales 1,037,114 60.6 % 994,508 61.0 %
Cost of services sales 134,089 7.8 % 128,691 7.9 %
Cost of other revenue   9,647       0.6 %   9,320       0.6 %
 
Total cost of sales   1,180,850       69.0 %     1,132,519       69.5 %
 
Gross profit 529,746 31.0 % 497,374 30.5 %
 
Operating, general and administrative expenses   362,228       21.2 %   343,023       21.0 %
 
Operating income 167,518 9.8 % 154,351 9.5 %
 
Interest expense, net   (13,168 )     -0.8 %   (14,129 )     -0.9 %
 

Income before income tax expense and equity income from Banfield

 

154,350 9.0 % 140,222 8.6 %
 
Income tax expense (55,547 ) -3.2 % (48,172 ) -3.0 %
 
Equity income from Banfield   3,612       0.2 %   2,633       0.2 %
 
Net income $ 102,415       6.0 % $ 94,683       5.8 %
 
Earnings per common share:
Basic $ 0.99   $ 0.87  
Diluted $ 0.98   $ 0.85  
 
Weighted average shares outstanding:
Basic 103,305 108,930
Diluted 104,583 111,030
                             
Stores open at beginning of each period 1,278 1,232
Stores opened during each period 13 14
Stores closed during each period   (2 )   (5 )
Stores open at end of each period         1,289                 1,241        
 
 
                 
PetSmart, Inc. and Subsidiaries
Condensed Consolidated Balance Sheets
(In thousands, except par value)
(Unaudited)
   
May 5, February 3, April 29,
2013 2013 2012
 
Assets
Cash and cash equivalents $ 252,988 $ 335,155 $ 268,928
Short-term investments 7,455 9,150 22,276
Restricted cash 71,226 71,916 71,929
Receivables, net 66,272 72,198 57,346
Merchandise inventories 738,568 679,090 682,896
Deferred income taxes 62,859 62,859 51,381
Prepaid expenses and other current assets   81,041     86,768     81,716  
 
Total current assets 1,280,409 1,317,136 1,236,472
 
Property and equipment, net 972,679 985,707 1,035,759
Equity investment in Banfield 28,426 39,934 26,597
Deferred income taxes 100,601 102,992 79,798
Goodwill 43,914 44,242 44,738
Other noncurrent assets   48,155     46,970     43,036  
 
Total assets $ 2,474,184   $ 2,536,981   $ 2,466,400  
 
Liabilities and Stockholders' Equity
Accounts payable and bank overdraft $ 257,628 $ 202,122 $ 246,612
Accrued payroll, bonus and employee benefits 132,705 176,082 126,195
Accrued occupancy expenses and deferred rents 69,626 70,671 69,456
Current maturities of capital lease obligations 63,180 61,581 55,920
Other current liabilities   246,431     244,436     177,511  
 
Total current liabilities 769,570 754,892 675,694
 
Capital lease obligations 462,436 464,578 496,004
Deferred rents 71,565 73,855 79,582
Other noncurrent liabilities   119,352     120,064     115,644  
 
Total liabilities   1,422,923     1,413,389     1,366,924  
 
Stockholders' Equity:
Preferred stock; $.0001 par value - - -
Common stock; $.0001 par value 17 17 17
Additional paid-in capital 1,441,863 1,418,411 1,352,889
Retained earnings 1,913,209 1,827,996 1,586,499
Accumulated other comprehensive income 4,510 5,506 6,706
Less: Treasury stock   (2,308,338 )   (2,128,338 )   (1,846,635 )
 
Total stockholders' equity   1,051,261     1,123,592     1,099,476  
 
Total liabilities and stockholders' equity $ 2,474,184   $ 2,536,981   $ 2,466,400  

PetSmart, Inc.
Investor Relations, 623-587-2025

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