Zeev's Turnips Patch-No Politics (ZEEV)

[madrose1]

PETM $27.35 ...Earnings of $1.25 per Share... sees FY07 $1.37-1.39 vs $1.38 Reuters consensus
Comp Sales Growth of 4.2 Percent

Services Sales Up 24 Percent
PetSmart, Inc. today reported net income of $70.9 million, or $0.50 per diluted share, for the fiscal fourth quarter of 2005. That compares with net income of $65.0 million, or $0.43 per diluted share, for the fourth quarter of fiscal 2004.

The fourth quarter of 2005 included benefits from a credit card rate settlement and an adjustment to the company's stock-based compensation expense. The fourth quarter of 2004 included a benefit from the recognition of a legal settlement. Excluding these amounts, the company's non-GAAP earnings per diluted share were $0.47 in the fourth quarter of 2005 and $0.41 in the fourth quarter of 2004.

For all of fiscal 2005, the company reported net income of $182.5 million, or $1.25 per diluted share. That compares with fiscal 2004 net income of $157.5 million, or $1.05 per diluted share.

Fiscal 2005 included benefits for the credit card settlement and the stock-based compensation adjustment, as well as a previously disclosed first quarter legal settlement and tax adjustments in the third quarter. Fiscal 2004 included a benefit from the recognition of a legal settlement. Excluding those amounts, non-GAAP earnings per diluted share were $1.17 in fiscal 2005 and $1.03 in fiscal 2004.

Results for 2004 have been restated to retroactively apply the adoption of SFAS 123R, which requires that all stock-based compensation be expensed and accounted for using a fair-value-based method. All 2004 results discussed in this release reflect this restatement.

"In 2005, PetSmart once again delivered solid results and generated meaningful returns for our shareholders," said Phil Francis, chairman and CEO. "We demonstrated the underlying strength of our business model and our ability to thrive in a variety of economic conditions. We grew, we continued to gain share, and we further strengthened our competitive position."

Sales

Net sales for the fourth quarter of 2005 were $1.05 billion, compared to $934.3 million for the same period in 2004, and comparable store sales - or sales in stores open at least a year - grew 4.5 percent in the fourth quarter, on top of 4.6 percent in the fourth quarter of 2004.

PetSmart generated $3.76 billion in net sales in 2005, up from $3.36 billion in net sales a year ago. Comparable store sales grew 4.2 percent in 2005, on top of 6.3 percent growth in 2004.

"I'm pleased to report that our business was strong throughout the fourth quarter. Our traffic returned to a more normal pattern, we had a good holiday season, and our services business continued to generate meaningful, consistent growth," Francis said.

During the fourth quarter, pet services sales were $79.5 million, up 27 percent from the same period last year. For the full year, pet services generated $298.9 million in revenue, or 24 percent growth over 2004