Stifel Nicolaus Reiterates Hold on PetSmart
Stifel Nicolaus maintains its Hold rating on PetSmart, Inc. (NASDAQ: PETM) on solid 3Q11 results due to improved fundamentals, favorable environment and accelerating demand from core customers.
According to Stifel, “Proprietary brand penetration rose from 18% in 3Q10 to 22% in 3Q11. PETM is pleased with early results of Martha Stewart Cat in September with roughly 30 SKUs. Additional product launches with Toy's R' Us and Brett Michaels in FY12. …Accelerated advertising and promotional spending drove (a) accelerated comp traffic trends on a 2-year basis (from +2.8% in 2Q11 to +5.9% in 3Q11), (b) merchandise margin headwinds (-10 bp y/y), and (c) partial offsets to inflation (inflation was roughly a +150 bp y/y impact expected to accelerate to +180 bp in 4Q11).”
PETM closed at $47.66 a share on Wednesday.
