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reported on March 4, 2009 that its Q4 FY08 earnings rose 4.0% on higher revenue. Net income increased to $78.39 million or $0.62 per share from $75.40 million or $0.59 per share in Q4 FY07. The latest quarterly earnings beat the consensus estimate of $0.59 per share.
Revenue increased 2.3% to $1.36 billion from $1.33 billion, driven by a 3.0% increase in comparable store sales. Merchandise sales rose 1.9% to $1.23 billion from $1.21 billion, whereas pet services revenue jumped 6.9% to $130.73 million from $122.25 million in Q4 FY07. Gross margin deteriorated 112 basis points to 30.53% from 31.65% due to a 4.0% increase in the cost of sales. However, operating margin improved 62 basis points to 10.45% from 9.83% as a result of a 0.62% decline in total operating, general, and administrative expenses.
PetSmart opened 8 new stores and closed 3 stores, taking the total store count to 1,112 from 1,008 in Q4 FY07. The company paid a quarterly cash dividend of $0.03 per share and recalled seven of its Great Choice Dog Biscuit products that contain peanut paste made by the Peanut Corporation of America.
FY08 net income declined 25.5% to $192.67 million or $1.52 per share from $258.68 million or $1.95 per share in FY07 as the prior year included a $95.36 million gain on the sale of assets. Annual revenue rose 8.4% to $5.07 billion from $4.67 billion, driven by a 3.8% increase in comparable store sales.
PetSmart expects FY09 EPS of $1.40 to $1.50 and expects sales growth in the mid-to-high-single digits. Comparable store sales growth is projected in the low-single digits while services sales growth is projected in the mid-to-high-single digits. New store additions are projected between 40 and 42 on anticipated capital expenditure of $115.00 million to $125.00 million.