PetSmart Results Top Expectations

By Chelsey Dulaney 

PetSmart Inc. posted better-than-expected results in its fourth quarter as both revenue and profit improved, in what could be the pet retailer's last full quarter before it is taken private.

After facing pressure from shareholders including activist investor Jana Partners, PetSmart agreed to be bought by a group led by BC Partners Inc. in December for more than $8.2 billion in the largest private-equity buyout of 2014. BC prevailed over other private-equity firms that had been vying for the retailer, including Apollo Global Management LLC and KKR & Co.

PetSmart said Wednesday that its shareholders are set to vote on the deal on Friday and it expects the deal to close in its current quarter.

PetSmart, which was founded in 1987 and has about 1,400 stores, has lost market share to broader-focused competitors such as Target Corp. and Wal-Mart Stores Inc., as well as online-retail giant Amazon.com Inc. PetSmart has also been criticized for its lagging e-commerce sales.

Recent results, however, have shown signs of improvement as the company works through a plan to cut costs by $200 million a year by 2016.

In February, the company said its earnings would likely top expectations in the latest quarter, as both sales and ticket numbers inched up. The company reported that sales excluding newly opened stores grew 2.6% in the fourth quarter, while the average ticket grew by 2% and comparable transactions rose 0.6%.

Overall, for the period ended Feb. 1, the company posted a profit of $132.1 million, or $1.32 a share, up slightly from $131.5 million, or $1.28 a share a year earlier. Excluding costs related to the buyout and other items, per-share earnings improved to $1.43 from $1.28 a year ago.

PetSmart had forecast per-share earnings of $1.34 to $1.38 for the quarter.

Revenue grew 6% to $1.91 billion, topping the $1.87 billion analysts polled by Thomson Reuters had forecast.

Write to Chelsey Dulaney at [e-mail]

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