Petsmart Cuts Profit Forecasts, Shares Fall
Petsmart cut its third-quarter and 2007 earnings forecasts Wednesday, citing weak consumer spending and warmer-than-usual weather, sending its shares down nearly 11% pre-market trading.
The biggest US pet supplies retailer said it expects earnings of 17 cents to 20 cents a share for the third quarter.
Previously, it forecast 21 cents to 23 cents.
The forecast includes a previously announced charge of 4 cents a share to exit the State Line Tack business, Petsmart said.
For the full year, the Phoenix, Arizona-based company forecast earnings of $2.02 to $2.07 a share, including a gain from the sale of shares of MMI Holdings, which operates Petsmart's in-store veterinary hospitals. It previously forecast $2.08 to $2.10 a share.
Consumers have pulled back on spending as they face high energy and food costs and a slack housing market.
This, along with unusually warm weather that has hurt sales in key cold-weather categories, will cut into business, Petsmart Chief Executive Philip Francis said in a statement.
"At the same time, we're working hard to mitigate the impact of the weakness on our bottom line," Francis said.
The company said third-quarter sales at stores open at least a year would be below its original forecast for a rise in the low- to mid-single digits. In August it cut its same-store sales forecast for the full year, citing the impact of a massive pet food recall that started in March.
Company officials were to meet with analysts in Phoenix later on Wednesday.
Petsmart shares were at $28.90 in pre-market trading, down from a Tuesday close at $32.38 on Nasdaq.