petsmart: Colder Weather, Fatter Dogs, Bigger Profits - Forbes

PetSmart
(nasdaq:
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) reported a 6.9% net income microscope slide for the third-quarter caused by unseasonably warm weather condition and soft consumer spending. However, the company raised its full-year outlook, which caused its stock terms to climb up in Thursday trading.

The biggest domestic pet retail merchant said its third-quarter profit was $29.5 million, or 23 cents per share, compared with $31.7 million, or 23 cents per share in the similar time period of 2006 when PetSmart had more than outstanding shares.

Even so, shares of PetSmart jumped $1.88, or 7.5%, to $26.79 on Thursday. Possibly in expectancy of winter.

While the company made nice gains, warm weather condition could have got significantly altered PetSmart's quarterly results. Dogs eat less in warm weather, which may have got decreased the figure of consumers buying domestic dog food. Also, cold weather condition thrusts up gross sales of animate being clothing and bedding.

Sales for the time period ending October 28 matched the Street's outlooks climbing 8% to $1.12 billion from $1.03 billion a twelvemonth ago.

Chairman said: "We are headed into the vacation season with a solid concern model, the right amount of inventory, and a good mixture on the shelf to please the consumer."

While demand for merchandises was somewhat soft during the quarter, PetSmart's veterinary and grooming services go on to be strong, climbing 23% to $111 million. According to CIBC World Markets analyst Vivian Ma, service gross gross sales for the time period were "impressive." In a recent short letter to investors, Ma recognized the success of the PetSmart's service sales stating: "Growth in the service concern may go on to coerce gross margin. Services carry a less gross border rate, but assists on the operating line."

For the 4th one-fourth of 2007, PetSmart is predicting comparable shop gross sales growing in the low single digits, with net income of 70 to 74 cents per share. For the full-year, the pet retail merchant anticipates net income of $2.05 to $2.09 per share, up from $2.02 to $2.06 per share.