Earnings Preview: PetSmart

| About: PetSmart, Inc (PETM)

PetSmart (NASDAQ:PETM) is expected to report Q2 earnings after the market close on Wednesday, August 19 with a conference call scheduled for 4:30 pm ET.


Analysts are looking for a profit of 29c on revenue of $1.32B. The consensus range is 28c-31c for EPS, and revenue of $1.3B-$1.34B, according to First Call. In May PetSmart forecast Q2 EPS 26c-30c and Q2 same-store sales in the low-to-mid single digits.The company also guided FY09 SSS in the low-single digits. In June the company named President and COO Bob Moran as CEO, announced a $350M stock repurchase program, and raised its dividend 23% to 10c from 3c per share. Moran said that even in the current economic environment the company continues to perform well. Additionally, the company announced plans to increase stores by nearly 40 per year "for the foreseeable future" and said other plans include reinvesting in existing stores to help improve gross margins and SSS growth. Moran said he believes all of these actions will allow the company to react quickly "in the ever-changing retail environment."

Analyst Views

A JP Morgan analyst downgraded the stock to Neutral from Overweight on August 11, saying investments will take longer than expected to produce results. The analyst said that the company is likely underestimating how long it takes to improve operations despite its focus on promotions, customer service and merchandise. The analyst noted that the stock is up 23% so far this year.