Petsmart Inc. (PETM), posted earnings of 41 cents a share in the second quarter of fiscal 2010 thereby beating the Zacks Consensus Estimate of 36 cents a share and jumping 32.0% from the year-ago earnings of 31 cents a share.
The company also tugged its expectation up from $1.91 per share to $1.99 for fiscal 2010. Petsmart also looks forward to earning 35 to 39 cents a share in the third quarter of fiscal 2010.
The current Zacks Consensus Estimates of 38 cents and $1.97 a share for the upcoming quarter and fiscal 2010, respectively, is inclined more towards the high end of the guidance range provided by Petsmart.
Petsmart delivered a top-line growth of 6.2% in the quarter to $1,390.5 million versus $1,308.9 million in the prior-yea quarter. Service sales surged 7.2% from the year-ago period to $165.0 million. Total sales came ahead of the Zacks Revenue Estimate of $1,387.0 million.
Backed by higher same store sales in higher-margin hardgoods business, total same store sales elevated 4.6% in the quarter. Shoppers’ demand for higher quality products drove sales in the hardgoods business for the second consecutive quarter. The company expects comparable store sales in the range of low to mid-single digit in the fiscal 2010.
Despite a 5.0% rise in the cost of goods sold, the company posted a substantial increase of 7.0% in gross profit to $396.3 million, aided by strong top-line growth. Consequently, gross margin increased 30 basis points to 28.5% from 28.2% in the prior year period. Operating income increased 24.0% for the quarter to $92.0 million from $73.8 million in the year-ago period. Operating margin expanded 100 basis points to 6.6%. The company earned $48.4 million in net income in the second quarter of fiscal 2010.
Petsmart represents the most pristine balance sheet with no long-term debt. The company’s balance sheet is flush with $239.4 million of cash and cash equivalents. It ended the quarter with stockholders equity of $1,178.1 million. Petsmart opened 5 stores and closed 1 store in the quarter and is currently operational with 1,164 stores.
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