PetSmart Q3 2011

PetSmart, Inc. (NASDAQ:PETM) reported strong quarterly earnings yesterday, highlighting increasing store traffic, organic and natural dog food sales, and services revenue.

Total sales in the third quarter increased 8% to $1.5 billion, of which services accounted for $161 million, up 9%. Comparable same-store sales grew 6.1%, based in part on a 2.2% increase in traffic.

High-end dog food brands like Innova, Wellness and Blue Buffalo were key differentiators, bringing in customers and driving sales.

(This is in contrast to Wal-Mart's recent strength in value brand sales. Why? Because about half the dog food market is bought by households making less than $70,000 in annual income, and that half is also growing year-over-year. In fact, strong increases in pet food spending were recently made by households making only $15,000 - $39,000 per year. So it seems there's plenty of room for both value and premium brands to thrive. Check out our pet market research to learn more.)

"Sustained momentum" on exclusive partnerships with Martha Stewart and GNC helped "moved the bar" on proprietary brands from 18 to 22%. In 2012 the company will launch exclusive Toys R' Us pet toys.

The first national television ad campaign for services in a decade was cited as responsible for increases in customer growth, retention and satsifaction for the grooming business.