Overall PetSmart sales reached $1 billion for the quarter, up 14% from $907.7 million in the third-quarter of 2005. And comp-store sales rose 6.8% on top of a 2.4%-gain in the parallel 2005 third quarter. During a conference call, Bob Moran, president and COO, said, "grooming, training and day camps build loyalty, causing customers to spend more in our stores and also create word-of-mouth referrals."
The success of services in general and pet hotels in particular prompted the company to add nine pet hotels for the quarter. "At full build out," Moran projects an eventual total of 435 pet hotels, which is an increase more than the company's previous estimate. "At maturity," he forecasts that pet hotels will generate a 29% increase in overall store revenues.
The company plans to roll out a smaller pet hotel format that is testing at one store in Dallas. Compared with a traditional 7,200-sf PetSmart pet hotel, these will range between 5,000 sf and 5,500 sf and include two to three playrooms to support pet daycare. For 2007, an additional 35 new pet hotels are scheduled to open, and five will be in the smaller format.
"Increased traffic accounted for 71% of (total) growth" during the most recent quarter, said Phil Francis, chairman and chief executive officer, during the conference call. "We're better prepared for the holidays than ever before," he added, noting that the stores have 1,300 products and pet gifts for the season. He again touted services, saying, "many of our pet hotels are fully booked for the holidays."
The chain remodeled 213 stores so far this year and opened a net of 83 new units. By year-end it will have remodeled a third of all units. Another third will get facelifts in 2007 and the rest the following year. In 2007, it will open about 100 net new stores: 29 in each of the first two quarters, 55 in the third and eight in the final quarter, while closing about 21 for the year.
Capital expenditures during third quarter were $90 million and will total between $230 million and $250 million for the year. At a cost of $1.9 million, the company re-racked its Phoenix distribution center. "The tools are in place for a strong finish," said Tim Kullman, senior vice president and chief financial officer.
He projects mid-single-digit growth in fourth quarter. Earnings per share are expected to increase between 17% and 19% in 2007, he added. Earlier this quarter, Kullman announced that he is resigning to pursue other interests, but will stay on until a successor is found next year.
PetSmart currently operates approximately 885 stores in the US and Canada and also sells on the internet. The third-quarter results, which exceeded analysts' expectations, and conference call came after the close of the Nasdaq on Nov. 15. PETM stock closed at $30.96 a share, close to the recently reached 52-week high of $31.38 a share, compared with a 52-week low of $22.07 a share.
Want to continue reading?
Become a Free ALM Digital Reader.
Once you are an ALM Digital Member, you’ll receive:
- Breaking commercial real estate news and analysis, on-site and via our newsletters and custom alerts
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the property casualty insurance and financial advisory markets on our other ALM sites, PropertyCasualty360 and ThinkAdvisor
Already have an account? Sign In Now
*May exclude premium content© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.
