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PetSmart Warns Weak Consumer Demand Will Hurt 2Q Earnings

PetSmart (Dog Getting Groomed)

 (Reuters)

Shares of PetSmart (PETM) ticked lower Wednesday after the retailer reported disappointing first-quarter sales and said a “light consumer environment” will trigger an earnings decline in the current quarter.

The Phoenix-based pet-supplies retailer reported net income of $104 million, or $1.04 a share, compared with a year-earlier profit of $102 million, or 98 cents. The results were slightly above the $1.01 a share predicted by analysts in a Thomson Reuters poll.

In a statement, PetSmart CEO David Lenhardt said he was encouraged by the company’s ability to grow earnings per share but disappointed it failed to meet sales goals.

Revenue for the three-month period grew 1.1% to $1.73 billion but missed the Street’s view of $1.77 billion due to a “challenging and volatile consumer environment and a competitive market," according to Lenhardt.

Same-store sales, a key growth metric measuring sales at stores open longer than a year, slumped 0.6%.

Reflecting the challenges, PetSmart said it now sees full-year earnings in the range of $4.29 to $4.39 a share, far below the $4.45 predicted by analysts on average.

It anticipates second-quarter earnings between 92 cents and 96 cents a share on either flat or slightly negative same-store sales growth, which is below the $1 a share predicted by the Street. 

Shares of PetSmart in recent trade were down 5.3% to $58.94.

Follow Jennifer Booton on Twitter at @Jbooton