PetSmart Q3 2012

PetSmart, Inc. (NASDAQ:PETM) last week reported strong 3rd quarter results for 2012, booking $82 million in net income on $1.6 billion in sales, up 9%. Comparable store sales grew 6.5%. Services sales grew 8% to $175 million.

The company credits its hard goods resets over the past two years for continued differentiation in a competitive industry, supplying a mix of exclusive brands - including GNC, KONG and Martha Stewart - and private labels like Top Paw that align with consumer demand. Hard goods made up for 33.1% of sales.

In consumables, which accounted for 53.9% of sales, super-premium continues to be the largest and fastest growing category.

Services accounted for 10.7% of sales. Pet services like grooming, boarding and veterinary care are an "integral part" of PetSmart's strategy to further differentiate it from the competition, drive traffic and repeat visits to the stores, and provide cross-selling opportunities.

PetSmart adapts well to fast-changing consumer trends and loyalties, which can't be easy with 1,269 stores. Illustrating the humanization trend, the company has increased television advertising spending for the holiday season, jumping on the Black Friday shopping spree with specific ads, and soon to launch a 12 Days of Christmas ad campaign.

Feeling good in the U.S., the company is "dipping a toe in the water" in Asia with a "low-risk learning exercise" in South Korea with Emart.

Source: PetSmart Investor Relations

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.

PetSmart Q1 2011

PetSmart Inc (PETM) reported strong first quarter 2011 results, booking net income of $71 million on $1.5 billion in revenues, with earnings up 33%. The company reported comparable store sales growth of 5%, services sales growth of 9%, and total sales up 6.8%.

Super premium pet food and services seem to be primary drivers of the customer to the store. The company believes it has captured 15% of the $3.6 billion annual market for grooming and boarding services. Further, the company notes strong sales in grooming supplies, and points to exclusive Martha Stewart and GNC branded product launches.

PetSmart has recently matured efforts to drive the customer into cross-selling and defined channel strategies, as well as adding higher margin private label brands into the mix. A good combination in the highly competitive pet industry.

Source: PetSmart Investor Relations

Pet Owner Spending Trends in the U.S.

A new report has just been published on nationwide pet owner spending trends.

The aging population, childless consumers and the ascendancy of high-income baby boomers are analyzed by their pet spending habits. Charts and tables are included using data from the Department of Labor, Bureau of Labor Statistics that highlight core trends in U.S. consumer spending by income, age, general region, and family composition.

The Pet Industry 2008 Strategic Outlook is our annual report, written for businesses marketing to pet owners.
 

Petco Expands Services Offerings

Petco announced a partnership with Sittercity.com today, adding in-home pet sitting services to its lineup. While PetSmart (NASDAQ:PETM) focuses on bringing the customer to the store for daycare and PetsHotels, where they subsequently load up on high-margin tennis balls and the like, Petco is going in the other direction, extending its reach directly into the consumer's home. Here's the press release.


Photo: PR Newswire Photo Service/Sittercity.com

----

Marketing Pet Services?
The Pet Industry 2008 Strategic Outlook is an affordable market research report on current and emerging trends and demographics for pet businesses.

PetSmart, Inc. Nears All-Time High

PetSmart, Inc. (NASDAQ:PETM) celebrated its 20th anniversary this month by announcing a three cent dividend, payable on May 11, 2007, to shareholders of record at the close of business on April 27, 2007.

The stock is quickly approaching its highest point in 140 years. Dog years, that is.

Another company well-positioned after two decades in the pet business is VCA Antech, which also celebrated its 20th this year, as noted in an earlier post.
 

Pet Food Recall Update: Affected Brands

Menu Foods fixed their website and posted the affected brands at http://www.menufoods.com/recall.

Thirty-eight different cat food labels and 46 brands of dog food are listed.

The FDA has posted additional information.

 

PR Strategy Needs a Recall

Menu Foods, one of the largest pet food manufacturers in North America, announced a recall this morning but failed to name affected brands, saying they will be available tomorrow morning on their website that currently doesn't function. Since they make pet food for Wal-Mart (WMT), Safeway (SWY), Kroger (KR), and many more, people were left understandably confused.

So far, Proctor & Gamble Pet Care (PG) and Safeway have taken the proactive move of recalling their labels possibly affected by their manufacturer, possibly compelled by Menu Foods vague press release that resulted in Friday night newscasts in major cities across the nation asking questions but getting no answers.

[update]
Purina (Nestle), Hills (CL), Petco and PetSmart (PETM) also made proactive moves before the affected brands were announced.

Pet Industry News

PetSmart, Inc., the nations largest retailer of pet supplies, announced 2006 fiscal year results. Net sales in 2006 grew 11% from the previous year, to $4.23 billion. Pet services sales and revenue continue quarterly growth above 20%, generating $376 million in revenue in 2006.

The company will close all 180 State Line Tack departments, exiting the equine business to make room for higher margin pet supplies or PetsHotels.

Earlier this month, PetSmart increased its number of stores in Canada by 58% to 42 with the acquisition of 19 Super Pet stores.

One current advertising campaign directs users to the Nutrition Selector on the website, featuring highly differentiated premium dog and cat foods. Pet food is the largest segment of the industry - American's spend about $14 billion each year on pet food - and a primary driver of the consumer into the store.

Petco, the nation's second largest pet specialty retailer, went private last year but refuses to sit, expanding on services and pampering themes. The company announced a nationwide fashion show marketing campaign, and was reported to be exploring the mobile grooming business in Las Vegas.

Central Garden & Pet, the largest supplier of pet items to PetSmart, Petco, Wal-Mart, Target and many others, has been impacted recently by rising grain prices and Wal-Mart's decision to stop selling live fish. But it continues to innovate and grow across many segments of the industry, winning nine New Product awards at the 2007 Global Pet Expo.

Nestle, the world's largest food company, will open its first pet food factory in China this year as it tries to take a bite out of Mars Inc's Chinese market share. Mars has been in China for 10 years, and sells a lot of Pedigree and Whiskas to the local market through an alliance with a Chinese company, in this case Effem Foods (Beijing) Co. Ltd. Nestle may benefit from newer foreign ownership regulations.

.

PetSmart 3Q results highlight services growth

PetSmart Inc., the nations largest pet specialty retailer, posted higher earnings in its third quarter 2006 results. Net income grew1.9% to $31.7 million on net sales of $1.0 billion, up 14% from the same period in 2005.

Comparable store sales grew 6.8% in the quarter, compared to 2.4% during last year's third quarter. Pet services sales were up 25.4% to $89.7 million.

Source: petsmart.com

In earlier conference calls, CEO Phil Francis has said services customers on average spend more money and return to the store more often than others, and that dog grooming is the primary driver of the services-oriented pet parent into the store.

Pet services spending has grown consistently over the last decade. These days, both the busy professional and the empty nester happily spend record amounts of money on dog grooming, boarding and training.

And the aging demographic of American househoulds should continue to drive this trend in the future. Click on the chart to enlarge.

Organic Pet Food by Wal-Mart Stores, Inc.

The pet food industry continues to evolve at a fast pace. Just two months after Target Corp. (NYSE:TGT) introduced a private label premium pet food, Wal-Mart Stores Inc. (NYSE:WMT) launched a private label, all natural, organic pet food called Natural Life.

Moving further upscale, Wal-Mart is also stepping up competition in the $14 billion market for pet food. It already sells Ol' Roy dog food in the non-premium dry segment, and has now entered the organic pet food market, which is growing at high double digit rates annually.

Ol' Roy is a Wal-Mart private label manufactured by Doane Pet Care Co., a leading supplier of private label food to many companies. Doane announced today that it is being acquired by privately held Mars, Inc., owner of Pedigree, Sheba and Whiskas pet foods.

So Mars now owns the company that makes Wal-Mart's top-selling dry dog food. Mars launched a $200 million advertising campaign for Pedigree in '05, which is not sold at Wal-Mart and does not directly compete with Ol' Roy, but Wal-Mart's new entry into the premium space should be interesting to watch. I would assume (but don't really know), that Doane's also manufactures brands that compete directly with Pedigree.

Del Monte Foods Co. (NYSE:DLM) recently bought the Meow Mix and Milk-Bone brands for over $1 billion.

The Proctor & Gamble Company (NYSE:PG) bought Iams in 1999 and brought it out of veterinarian offices and into 25,000 retail outlets, developed a tartar control coating using processes from Crest toothpaste, and turned Iams into the nations top pet food brand by dollar sales according to AC Neilsen with 10% of retail sales in Sep 2005. In 2006 P&G will debut a tartar control pet treat and possibly pet shampoos and odor removers as well ('Pets are People Too, You Know,' Businessweek Online, Nov 28 2005).

Colgate-Palmolive Company (NYSE:CL) owns Hill's Science Diet, which was sold primarily in the vet channel until last year when it became available in PetSmart, Inc. (NASDAQ:PETM) retailers with in-store Banfield hospitals. Similar to Procter & Gamble, it seems Colgate-Palmolive is well positioned to use existing processes and technologies to produce odor control products from pet shampoos to fabric cleaners.

Colgate today announced first quarter 2006 results. Sales rose 5 percent to $2.87 billion from $2.74 billion, with the oral, personal and home care segment up 4.3 percent to $2.49 billion and the pet nutrition segment up 7 percent to $385.3 million. Hill's sales accounted for 13 percent of the company's total sales.

Nestle Purina PetCare owns many brands including Alpo, Beneful, Pro Plan, Purina One, Puppy Chow, Fancy Feast, and Friskies. Headquartered in St. Louis, Missouri, where Ralston Purina Company was founded more than a century ago, the company is part of the Swiss-based Nestle S.A. - the world's largest food company.

Marketing to Pet Owners?
Check out the Pet Industry Strategic Outlook by Dillon Media.

Target Launches Premium Pet Food Label

Target Corporation (NYSE:TGT) announced today the launch of a 'super-premium' private label pet food, firmly placing itself as a competitor to PetSmart and Petco in the pet food and supplies category.

According to the company press release, 'The LIFELong line of pet food features five scientific formulas, each offering high-quality protein such as real lamb and chicken; antioxidants such as vitamins E and C and selenium; omega fatty acids such as linoleic acid, and other premium ingredients. Designed to provide unconditional pet nutrition, LIFELong pet foods help to support healthy immune systems and cardiovascular health, promote strong muscles, bones and teeth, freshen breath and maintain visibly healthy coats' (source: target.com).

Related posts:
Jun 2005: Target Pets TV Ad Campaign
Apr 2005: Target Unleashes Pet Website

Looking toward 2006

The large pet specialty retailers took a hit in consumer traffic this summer due to a shift in consumer shopping behavior. High gas prices forced people to consolidate trips around a central shopping destination like the grocery store or home supplies store, resulting in fewer trips to PetSmart, Inc. (NASDAQ:PETM) and Petco Animal Supplies, Inc. (NASDAQ:PETC) and fewer purchases of high margin goods.

No kidding. Over the summer I found a coupon in the mail to visit the new PetSmart across town. It was for $3 off a large sack of premium food. Considering it would cost nearly that much in gasoline to drive there ($3.17 a gallon at the time), this hardly seemed worth an extra trip.

But pet services proved resilient to these changes, growing at over 20% all year. Petco announced in its 3rd Quarter conference call on Nov 22 that services customers also return to the store more often, and spend more per trip, than the average customer. Grooming is the major driver of this trend, according to Bruce Hall, president and COO of Petco.

The industry remains healthy and I believe will see 2005 overall growth above 4 percent. Central Garden and Pet Co. (NASDAQ:CENT), a major creator and supplier of pet supplies, forecasts net sales growth of 5-6 percent for 2006. While Petco and PetSmart's stock prices have declined over the last year, significant gains were seen in health-related pet companies like PetMed Express, Inc. (NASDAQ:PETS), VCA Antech, Inc. (NASDAQ:WOOF) and MWI Veterinary Supply, Inc. (NASDAQ:MWIV) during 2005.

Segments like premium food and health care saw a huge boost in consumer awareness and acceptance in 2005 due to mass-marketing and are poised to continue strong growth next year in a more competitive environment.

For businesses selling pet products and services, check out The Pet Industry Strategic Outlook Report by Dillon Media LLC.
 

Halloween Dog Costumes

The American Kennel Club (AKC) reported that 10% of owners will dress their dogs in costumes for Halloween, 49% like the idea, and that women are 6% more likely than men to do so.

The survey, conducted for the AKC by Kelton Research, sampled 1,000 adults in the U.S., 500 dog owners and 500 non-dog owners.

Separately, a survey of shoppers conducted by August Partners for The Macerich Co. reported that 21% of 4,300 respondents will dress up their pets for Halloween ("Trick or Treat. Arf!" Retail Traffic Magazine, Oct 1, 2005).

This implies an interesting marketing experiment: selling pet products to non-pet owners. For example, amongst the ubiquitous Halloween-branded packages of candy at every grocery store in the nation could be similarly packaged dog treats targeted at people who do not own pets, but may find some at their door on Halloween. Also, "Trick or Treat" from a dog's point of view could have devastating effects on your flower garden or lawn.

My question is, has this been attempted in any pet product category, and if not, is it only a matter of time?

Halloween tips for pet owners by the American Kennel Club.

Some dog costumes on the web:

Pampered Puppy is always a source of great dog accessories.

Petco's website has been heavily Halloween'd

PetSmart has a small image on the lower right of the page for dog costumes.

Target has dog costumes but they are difficult to find on their site.
 

Pet Evac Roundup

A rapid understanding and acceptance after the horrific aftermath of Katrina on people and pets has resulted in equally rapid movement to make things better.

In the face of Rita, preventive action was taken by informing people to get out of town and bring their pets. It has been widely reported, on CNN, the BBC, RAI Italy and the Financial Times among others, that cars evacuating Texas are full of pets this time around, unlike Katrina where many people left their pets assuming they'd be back in a couple of days.

But most hopeful is the legislation sponsored by Representatives Tom Lantos (D-Calif), Barney Frank (D-Mass) and Christopher Shays (R-Conn) that would condition state and local disaster preparedness plans on having provisions for companion and service animals. Read more here.


Related Posts:
PetSmart and FEMA
No-pet policy is 'a lousy plan'
Lesson for FEMA: feed the dog
Pets and hurricane Katrina
The dog as part of the family

PetSmart and FEMA

PetSmart and FEMA tried to work together after Katrina to help rescue pets as detailed in the Newsweek article Cash and 'Cat 5' Chaos. It didn't work out very well as FEMA dropped the ball after placing a $28,000 order.

But it's a start. In preparation for Rita, the Mayor of Galveston said pets in cages would be allowed on evacuation buses, a proactive move that should be imitated in other disaster evacuations, and one signalling a fast response to public sentiment on the issue.

Maybe privatizing disaster recovery and relief isn't a bad idea. At least companies that excel in supply chain logistics often also have people in charge with relevant experience. Instead of no-bid contracts and reductions of consumer and worker protections in the name of 'recovery' - which is a recipe for fraud - why not hire those most skilled at the task and provide incentives for quality work. This is how highway 10 in Los Angeles got rebuilt over 90% ahead of schedule after the Northridge earthquake, saving the state from losing an estimated $600,000 per day for two years.

Related Posts:
Pet Evac Roundup
No-pet policy is 'a lousy plan'
Lesson for FEMA: feed the dog
Pets and hurricane Katrina
The dog as part of the family

No-Pet Policy is "A Lousy Plan"

"A plan to evacuate and care for the victims of a natural disaster, if it doesn't include their pets, is a lousy plan."

A quote from a letter written to the Washington Post by Jim Perkins, who commanded the U.S. joint task force that evacuated 21,000 Navy and Air force family members and their pets from the Philippines after the eruption of Mount Pinatubo in 1991.

Related Posts:
Pet Evac Roundup
PetSmart and FEMA
Lesson for FEMA: feed the dog
Pets and hurricane Katrina
The dog as part of the family

Lesson for FEMA: feed the dog

Should FEMA, state and local agencies include pets in future evacuation plans? Some people will say that's stupid, but the fact remains that many people risked their lives - and others' - for their pets (read more from the Washington Post: Strays of Hope), dramatically highlighting the difficulties in forcefully separating companion animals from their owners.

Yes, many people view their pets as children, and yes, images of pets are easy attention-getters. But the situation in the Gulf is beyond that; after losing one's home and all one's possessions, everything except a pet, imagine being told to abandon Fido to a slow death. Besides being illegal under state law, this might just seem insane to an evacuee who has lost so much already.

Kudos to the Navy people who built a kennel and solved the problem instead, and to every volunteer out there trying to help.

As noted in the first post of this blog, the family dog is not a watchdog any more, but more like a child to many owners. And a legislative trend is already underway in the U.S. shifting pet ownership from property rights to guardianship laws, reflecting the cultural norm of pets as 'one of the family.'

This is nothing new according to pet industry statistics. In fact, a staggering 93 percent of owners said they would risk their life for their pet, according to the American Animal Hospital Association's 2004 Pet Owner Survey.

So listen up, FEMA. Or at least turn on CNN. Fido may not be a child, but sure isn't a toaster oven either.

Related Posts:
Pet Evac Roundup
PetSmart and FEMA
No-pet policy is 'a lousy plan'
Pets and hurricane Katrina
The dog as part of the family

Pets and hurricane Katrina

The aftermath of hurricane Katrina is taking its toll on pets as well as people. The sheer number of news stories on people abandoning pets or refusing to leave them behind is telling. The Louisiana SPCA alone has rescued over 400 animals.

On Sep. 6, searching Google News for Katrina pets yielded 3,070 results. One week later there are over 6,000.

The LSU School of Veterinary Medicine has set up an emergency animal shelter to house pets, including horses, until they can be reunited with their owners. Read more in Newsweek: Pets in Peril (Sep 13, 2005).

The American Pet Product Manufacturer's Association (APPMA), one of the main industry trade organizations, has information on how to donate to shelters in need, and another section for shelters in need of donations.

Some organizations helping with animal rescue and care, from CBS News:

Humane Society of the United States
800-486-2631

American Society for the Prevention of Cruelty to Animals
866-275-3923

American Humane Association

Noah's Wish 530-622-9313

Searching for a lost pet? Visit petfinder.com.

Hotline only for New Orleans residents who had to leave their pets behind: 225-578-6111

Hotline for evacuees in the Houston area who need a place to house their pets: 713-802-0555

Related Posts:
Pet Evac Roundup
PetSmart and FEMA
No-pet policy is 'a lousy plan'
Lesson for FEMA: feed the dog
The dog as part of the family

PetSmart to rebrand with new logo

PetSmart, the nations largest pet retailer, will reposition its brand in the marketplace, introducing a new logo and nationwide advertising campaign on September 7.

"Mart to Smart" represents the culmination of over a year of planning, according to the company, and the new marketing strategy aims to develop brand awareness and bring in new customers in target markets.

Nationwide television, magazine and radio advertisements will emphasize pet food and low prices, introducing the new brand in the company's largest ad campaign in the last few years.

The retailer will emphasize 'Smart' over 'Mart' and has released previews of the new PetSmart TV commercials.

Related Posts:
Target Pet TV Commercials
Pets in Advertising
Pets in Catalogs