Pet Smart (PETM) Q1 Profit rises

• Pet Smart reported a rise in Q1 profits as sales increased by about 10% YoY compared to Q1 2008.
• Earnings and revenue came above analysts’ consensus. 
• Company also lifted guidance for Fiscal 2009.
• Q1 profit came in at $46.3 million or 0.37c per share compared to $41.2 million or 0.23c per share YoY in Q1 2008.  Analyst were expecting the company report earnings of $37.5 million or 0.30c per share. 
• Operations income increased to $89.9 million from $80.3 million in the previous year.
• Q4 2008 reported a net income of $78.4 million or $0.62 per share.
• Net sales increased 10% to $1.33 billion from $1.21 billion Q1 2008.  Analysts were expecting revenue to be $1.32 billion.
• Q4 2008 revenue was $1.36  billion.

Sales Breakdown:

• Comparable store sales grew 3.9% while comparable transactions increased 0.1% compared to Q1 2008.
• Pet services sales increased 10.3% to $142.8 million compared to Q1 2008 which was $128.09 million.

"With a solid first quarter performance, our results continue to validate the strength of our commitment to providing differentiated solutions at a great value.” – Phil Francis (CEO Pet Smart)

Forecasts:

• Company expects Q2 to be in the range of $0.26 to $0.30 per share. Analysts expects Pet Smart to earn $0.30 for Q2 2009.
• For Fiscal 2009 company expects a range between $1.42 to $1.52 per share.  Slight improvement compared to $1.40 to $1.50 per share. Analysts expects $1.47 for Fiscal year 2009.
• Full year comparable sales growth is expected to be within the low single digits.
• Capital spending will be between $115 million to $125 million.
• Total sales growth is expected to be in the mid-to-high single digits.

Technicals

Technicals looks ok, But would hold off buying this share unless it breaks the downward sloping trendline around $23.90 with convincing volume.  If it fails and resumes its downward drift.  I will observe its reaction towards its approach near $20.78.  If that trendline breaks, will look for entry in the long term trendline $19.50. 

Personally, this company is a solid company.  It is highly regarded as a defensive stock just like the WalMarts, Family Dollars and Unilevers of the world as spending on pets is becoming more and more of a need rather than a luxury.  Consumers these days love their pets like their own kids and that is reflected from the growth in PetSmart’s revenue.  This is a nice stock to add to my portfolio as one of those defensive companies as soon as I get the desired entry price.  

Source: CNBC & RTT News