Most pet owners spend big bucks on their four-legged friends – in fact companies such as PetSmart (PETM) count on it. But with the markets shedding gains like a Golden Retriever shedding his coat, will America's pampered pets start feeling the pinch?
PetSmart Chief Executive Philip Francis along with his dog "Bit 'O Honey” joins the guys for this conversation. Here are excerpts from what was said?
Dylan Ratigan explains that PetSmart is up 5% this year and profit jumped 36% this quarter.
Why is your company seemingly insolated from many economic variables?
“We're riding the wave of the humanization of pets,” says Francis. “We sell groceries and we sell affordable luxuries. And we differentiated our store experience with services, which you typically don’t find in a retail store. And we hire staff who can help people become better pet parents.”
What impact did the pet food recall have on your company?
“I wish the recall had never happened,” says Francis. We had a manufacturer lose control of their ingredients supply chain. In our case we had the best information fast. And our website never shut down. Our call center never shut down. And we had a staff of people who were worried.. so people could get comfort and information when they came to see us.”
Did you see any noticeable uptick in traffic at the time of the recall?
“In the first few weeks (of the recall) we saw more foot traffic because people came to us for information.. and they came to us for product returns,” says Francis. “We took all returns without question. So the short term average ticket went down a bit. But transactions went up. And we had a chance to have a conversation with people when they really needed us. Sorry it happened, but we came through it well.”
What is the greatest risk to your business?
“I worry about…getting enough people on board,” says Francis “And finding people who will talk well to our pet parent customers. And if we do a good job in the store, we’re pretty resilient to whatever happens outside the store.”
Why are you buying back $300 million dollars in stock?
“We have a bit of cash, and we think our stock is a good buy. And we’re confident in our cash flows,” says Francis.
Dylan Ratigan asks the guys what they think of this stock?
Jeff Macke, Pete Najarian, Guy Adami and Tim Seymour all like this stock.
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Trader disclosure: On Aug 15 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money Macke Owns (EMC), (JWN) Najarian Is Short (CFC), (GS), Seymour Owns (X), (EEM), Seymour Is Short (LEH), Red Star Asset Management Owns (MBT), Red Star Asset Management Is Short (EEM)
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