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PET FOOD AND SUPPLIES
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9125 Rehco Road San Diego, California 92121 (858) 453-7845
FOR IMMEDIATE RELEASE James M. Myers, Senior Vice President
and Chief Financial Officer (858) 677-3005
PETCO REPORTS SECOND QUARTER SALES AND EARNINGS
OPERATING EARNINGS ARE $0.27 PER SHARE
INCLUDING INTERNET OPERATIONS, NET EARNINGS ARE $0.12 PER SHARE
SAN DIEGO - August 17, 2000 - PETCO Animal Supplies, Inc. (NASDAQ:
PETC) today reported sales and net earnings for its second quarter and six month
period ended July 29, 2000.
Net sales for the second quarter increased to $262.7 million from
$236.2 million in the second quarter last year. During the second quarter,
comparable store sales rose 5.0%.
For the six months (26 weeks) ended July 29, 2000, net sales increased
to $527.9 million from $465.8 million in the same period last year. Comparable
store sales increased 6.7% for the six month period.
Gross profit margin improved to 27.9% in the second quarter, from 26.2%
in the second quarter last year. The wider availability of Iams brand pet food
reduced comparable store sales growth. However, the sales mix continued to shift
in favor of higher-margin supplies. Pet supplies and services in the second
quarter represented more that 65% of sales, an increase of more than 400 basis
points in sales mix on a year-over-year basis.
Operating income climbed to $12.1 million for the second quarter
compared with $8.9 million in the second quarter last year. Operating income for
the six month period increased to $23.6 from $16.7 in the prior year period.
Net earnings for the second quarter were $2.7 million, or $0.12 per
diluted share, compared with $4.1 million, or $0.19 per diluted share, in the
second quarter last year. Net earnings include the negative impact of Internet
operations and equity in loss of unconsolidated affiliates, and related tax
effects, of $0.15 per diluted share, for the second quarter 2000.
Operating earnings for the second quarter, or net earnings excluding
Internet operations and equity in loss of unconsolidated affiliates, and related
tax effects, increased to $5.9 million, or $0.27 per diluted share, an increase
over operating earnings in the prior year of $4.1 million, or $0.19 per diluted
share.
Net earnings for the year to date (26 weeks) were $9.1 million, or
$0.42 per diluted share, compared with $7.7 million, or $0.36 per diluted share,
in the prior year period. Net earnings include the negative impact of Internet
operations and equity in loss of unconsolidated affiliates, and related tax
effects, of $0.11 per diluted share, for the year to date.
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PETCO Animal Supplies, Inc.
August 17, 2000
Page 2 of 4
Operating earnings for the year to date, or net earnings excluding
Internet operations and equity in loss of unconsolidated affiliates, and related
tax effects, increased to $11.4 million, or $0.53 per diluted share, an increase
over operating earnings in the prior year period of $7.7 million, or $0.36 per
diluted share.
PETCO added 12 new superstores during the second quarter of fiscal
2000, compared with 10 new superstores opened in same period a year ago. PETCO
has added 29 new superstores through the first six months of fiscal 2000.
As previously reported, the Company has entered into a definitive
merger agreement with a company organized by Leonard Green & Partners, L.P. and
Texas Pacific Group. Completion of the transaction is subject to customary
closing conditions, including stockholder approval, receipt of regulatory and
other approvals and the completion of debt financing. PETCO anticipates
completing the transaction in the fall of 2000.
PETCO is a leading specialty retailer of premium pet food and supplies.
PETCO operated 509 stores in 40 states and the District of Columbia as of July
29, 2000.
Certain statements in this news release that are not historical fact
constitute "forward-looking statements" within the meaning of Section 21E of the
Securities and Exchange Act of 1934 and the Private Securities Litigation Reform
Act of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results of PETCO to
be materially different from historical results or from any results expressed or
implied by such forward-looking statements. These factors, such as integration
of operations as a result of acquisitions, competition, reliance on vendors,
product lines and exclusive distribution arrangements, dependence on senior
management and performance of new superstores, are discussed under the caption
"Certain Cautionary Statements" in PETCO's Annual Report on Form 10-K for the
year ended January 29, 2000.
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PETCO Animal Supplies, Inc.
August 17, 2000
Page 3 of 4
PETCO Animal Supplies, Inc.
Consolidated Statements of Earnings
(Unaudited, in thousands, except per share data)
<TABLE>
<CAPTION>
Thirteen Weeks Ended Twenty-Six Weeks Ended
---------------------- ---------------------
July 29, July 31, July 29, July 31,
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales $ 262,719 $ 236,184 $ 527,885 $ 465,841
Cost of sales and occupancy costs 189,348 174,304 381,248 344,839
--------- --------- --------- ---------
Gross profit 73,371 61,880 146,637 121,002
Selling, general and administrative expenses 61,280 52,991 122,999 104,301
--------- --------- --------- ---------
Operating income 12,091 8,889 23,638 16,701
Interest expense, net 2,362 2,078 4,742 4,002
--------- --------- --------- ---------
Earnings before internet operations
and equity in loss of unconsolidated
affiliates and income taxes 9,729 6,811 18,896 12,699
Internet operations and equity in loss of
unconsolidated affiliates (2,992) -- 1,903 --
--------- --------- --------- ---------
Earnings before income taxes 6,737 6,811 20,799 12,699
Income taxes 4,043 2,690 11,724 5,016
--------- --------- --------- ---------
Net earnings $ 2,694 $ 4,121 $ 9,075 $ 7,683
========= ========= ========= =========
Operating earnings per common share:
Basic $ 0.28 $ 0.20 $ 0.54 $ 0.36
Diluted $ 0.27 $ 0.19 $ 0.53 $ 0.36
Earnings per common share:
Basic $ 0.13 $ 0.20 $ 0.43 $ 0.36
Diluted $ 0.12 $ 0.19 $ 0.42 $ 0.36
Weighted average number of common
shares outstanding:
Basic 21,108 21,090 21,108 21,082
Diluted 21,669 21,497 21,445 21,303
</TABLE>
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PETCO Animal Supplies, Inc.
August 17, 2000
Page 4 of 4
PETCO Animal Supplies, Inc.
Condensed Consolidated Balance Sheets
(in thousands)
<TABLE>
<CAPTION>
July 29, January 29,
2000 2000
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(unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 31,411 $ 36,059
Receivables 9,465 8,721
Inventories 110,439 116,913
Deferred tax assets 10,097 18,686
Other 5,846 4,844
------------ ------------
Total current assets 167,258 185,223
Fixed assets, net 192,885 192,403
Goodwill 45,270 36,362
Investment in affiliates 33,127 26,360
Other assets 13,363 13,546
------------ ------------
$ 451,903 $ 453,894
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LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable $ 44,096 $ 52,147
Accrued expenses 37,182 31,929
Accrued salaries and employee benefits 16,304 15,285
Current portion of long-term debt 9,125 9,125
Current portion of capital lease and other obligations 7,202 7,854
------------ ------------
Total current liabilities 113,909 116,340
Long-term debt, excluding current portion 85,400 89,050
Capital lease and other obligations, excluding current portion 9,087 12,436
Accrued store closing costs 4,071 5,378
Deferred tax liability 7,083 7,083
Deferred rent and other liabilities 17,372 17,717
Stockholders' equity 214,981 205,890
------------ ------------
$ 451,903 $ 453,894
============ ============
</TABLE>
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