X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.

SAN DIEGO-Net income and earnings per share at Petco Animal Supplies Inc. dipped in the second quarter ended July 30, with the company blaming rising gas prices for most of the decline. Petco management, commenting during the company’s conference call with financial analysts, said surveys show customers growing reluctant to make extra shopping trips in the face of record-high gas prices.

Petco’s net earnings for the second totaled $18 million, or 31 cents per diluted share, compared with net earnings of $19.3 million, or 33 cents per diluted share, in the year-earlier period. Sales grew to $482.7 million versus $438.5 million in last year’s second quarter, with comparable store sales increasing on top of a 6.7% increase in the second quarter of 2004.

James Myers, Petco’s CEO, said in the conference call that customer traffic “was soft at the start of the quarter and deteriorated sharply as we progressed through July.” Although a number of factors were at work, Myers said, the most notable were “higher gas prices and the impact of related headlines on consumer behavior.”

Petco surveys show that customers are consolidating their shopping trips. “Our good customers are remaining loyal, but they are not always making that second or third trip to Petco that usually leads to sales of the more discretionary items,” that are more profitable, Myers said.

Other factors affecting Petco’s second-quarter performance included increased distribution costs and higher year-over-year occupancy costs stemming from the greater number of store openings in the last few quarters. The company opened a net of 11 new stores in the second quarter, counting relocations and closings, and remodeled 14 stores into its new Pisces format. It is on track to open 70 new stores for the year and to remodel up to 50 stores.

In answer to an analyst’s question, Myers said that price competition from stores like Target, Petsmart and Wal-Mart was not a significant factor in the company’s latest quarterly performance. “We’ve been conducting extensive research,” Myers said, and “the No. 1″ reason that the surveys identified was that shoppers are consolidating trips, with price ranking relatively far down the list.

Want to continue reading?
Become a Free ALM Digital Reader.

Once you are an ALM digital member, you’ll receive:

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

*May exclude premium content
Already have an account?

Dig Deeper

GlobeSt. NET LEASE Spring 2021Event

This conference brings together the industry's most influential & knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt. NET LEASE Awards 2021Event

These awards honor the industry's most influential and knowledgeable real estate executives from the net lease sector.

Get More Information
 

GlobeSt

Join GlobeSt

Don't miss crucial news and insights you need to make informed commercial real estate decisions. Join GlobeSt.com now!

  • Free unlimited access to GlobeSt.com's trusted and independent team of experts who provide commercial real estate owners, investors, developers, brokers and finance professionals with comprehensive coverage, analysis and best practices necessary to innovate and build business.
  • Exclusive discounts on ALM and GlobeSt events.
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com.

Already have an account? Sign In Now
Join GlobeSt

Copyright © 2021 ALM Media Properties, LLC. All Rights Reserved.