PetSmart Focuses on Services for Growth

Executives at pet-supplies retailer PetSmart Inc. on Monday said they are focusing on services such as "PetsHotel" to drive growth for the future and affirmed second-quarter guidance.

Phil Francis, company chairman and chief executive, said at the Wachovia (nyse: WB - news - people ) Securities CEO Summit in Nantucket, Mass., said the market for pet services is growing at a 5 percent to 6 percent rate and should be a $47 billion industry by the end of the year.

Francis said the company has about a 12 percent market share, and there is room for growth.

"We're the only national player in grooming, training, and hoteling," Francis said. "There is real opportunity for us to continue to grow and gain share."

PetSmart (nasdaq: PETM - news - people ) Chief Financial Officer Ray Storck affirmed guidance of earnings between 26 cents and 28 cents per share for the second quarter and earnings between $2.03 and $2.05 for the year, including some charges.

Analysts polled by Thomson Financial expect a profit of 30 cents for the quarter and $1.66 for the year. Analysts estimates typically exclude one-time charges.

Francis said PetSmart is exiting its State Line Tack horse business, which makes up about 2 percent of sales and is the chain's least-profitable, lowest-growth category. The company expects an 11-cent per share charge in 2007 to exit the business.

The company said its PetsHotel day and overnight-pet care business is one of its growth drivers. At the end of the first quarter there were 70 open, and the company plans to open 240 by 2010.


source: www.forbes.com