Petco's Profits Up By $2M

"We are pleased with the solid results Petco delivered in the first quarter," said James M. Myers, the company's chief executive officer in announcing the company's financials in a conference call Wednesday.

Meyers said net sales for the quarter ending April 30 were up 12.6%, or $479.6 million, over the first quarter of 2004 while comparable store sales increased 5.2%. The increase in comparable store sales marks the 49th consecutive quarter that the firm has seen comparable store sales of 4.6% or better, said Petco Chairman Brian K. Devine.

The San Diego-based pet product supplier said it expects comparable store net sales to increase 4% to 5% during the second quarter and about 5% for the full fiscal year as the pet industry continues its expected growth of 6% annually.

Bruce C. Hall, the firm's president and chief operating officer said the strong sales were driven by the success of the company's two new concept stores, Pisces and Millennium, and a 24% surge in its pet grooming and training services.

The company, which operates more than 740 stores nationwide, opened 96 stores in the last 12 months and expects to expand by an additional 70 outlets by the end of the year. The firm also plans to add extra services to its menu of offerings, including 10 doggie day care centers.

Projected earnings per diluted share is expected to range from 33 cents to 35 cents for the second quarter and $166 to $172 per diluted share for the full year. Despite those strong sales figures, shares of the company's stock fell 74 cents or 2.2%, to close at $32.30 on Nasdaq, sliding another $2.34 or 7.2% to $29.96 in aftermarket activity.

Nasdaq has threatened to remove the company from its listings because Petco failed to file its annual report on Form 10-K for the last fiscal year in violation of its rules requiring the timely filing of all SEC documents. As a result of that filing delinquency, Nasdaq changed the company's trading symbol form "PETC" to "PETCE" on May 23. The company plans to request a hearing before a Nasdaq Listing Qualifications Panel to request a continued listing until the company files the required 10-K form.