PetSmart Adds Nature's Variety to its Kitty - Analyst Blog

Pet food and supplies departmental retailer PetSmart, Inc. PETM announced that it has commenced selling two wholesome pet food brands of Nature's Variety this week.

Nature's Variety is an independent company, which produces natural pet food. The company makes pet food through two leading brands, namely Instinct and Prairie. While Instinct is a premier raw pet food, Prairie is a balanced holistic range of products. Instinct animal food is grain and glutton-free, and is available in several forms like kibbles, raw frozen, cans, treats and freeze dried raw. Prairie, on the other hand, is only found in cans, kibbles and treats.

Although PetSmart commenced the sale of these brands in the U.S. on Jun 9, it had started selling these brands in Canada by the end of May.

The company decided to introduce these brands through its retail outlets in order to focus on rising and evolving demands of pet parents, who look to provide a wholesome diet with optimum nutrients to their pets. The company believes that with the addition of Nature's Variety to its product portfolio, it will be able to better serve its customers with a wide assortment of wholesome food.

PetSmart currently carries a Zacks Rank #5 (Strong Sell). The company recently posted its first-quarter fiscal 2014 earnings where its quarterly sales of $1,729.1 million came below management's expectations and also missed the Zacks Consensus Estimate of $1,772.0 million. This lag in revenues was attributable to a challenging consumer environment coupled with competitive headwinds.

Moreover, comparable-store sales (comps) for the quarter dipped 0.6%, with a 2.2% slip in comparable transactions. Comps were adversely affected by currency translations and inclement weather conditions.

However, the reported earnings of $1.04 per share reflected a year-over-year improvement of 6.1% and also surpassed the Zacks Consensus Estimate by a couple of cents.

Some better-ranked stocks in the same industry include Build-A-Bear Workshop Inc. BBW, with a Zacks Rank #1 (Strong Buy), and ITOCHU Corporation (ITOCY) and Office Depot, Inc. ODP, both carrying a Zacks Rank #2 (Buy).