Petco's Earnings Rise

SAN DIEGO-Petco Animal Supplies Inc. posts net earnings for the fourth quarter of $26.8 million, or 46 cents per diluted share, an increase of $26.3 million, or 45 cents per diluted share, for the same period in 2004. Analysts were expecting earnings of 45 cents per diluted share, according to Reuters Estimates.

Net sales during the fourth quarter were $541.5 million, an increase of 10% from the fourth quarter of 2004. Comparable store sales were 2% on top of a 5.1% increase in the prior-year’s fourth quarter. Sales in the chain’s services business in the fourth quarter increased 23% over the same period last year.

For fiscal 2005, net sales were $2 billion, an increase of 10.2% from 2004. Comparable store net sales increased 2.7%, on top of a 6.2% increase in 2004. Net earnings were $75.2 million, or $1.28 per diluted share, compared to net earnings of $82.4 million, or $1.41 per diluted share, in 2004. Petco CEO James M. Myers noted in the chain’s earnings conference call Thursday that traffic patterns improved, but did not reach historic levels. To that end, he said that he is encouraged by overall market trends and expects the chain’s focus on marketing and supply chain management to improve future earnings performance.

Petco opened 89 new stores during fiscal 2005, bringing its total to 779 locations. The chain plans to continue its expansion and will open roughly 90 new stores in 2006.

For the first quarter 2006, the chain expects a comparable store sales increase in the low single digits–1% to 3%–and earnings per diluted share in the range of 23 cents to 25 cents.