PetSmart Up 3% Following Earnings Beat

PetSmart, Inc. PETM beat third-quarter earnings expectations Tuesday but delivered an outlook below expectations.

The Phoenix-based company said its review of strategic alternatives continues and it touted a previously announced plan to cut annual costs by $200 million.

PetSmart gained more than 3 percent recently to $75.92 per share.

PetSmart, with a market capitalization of $7.5 billion, has reportedly drawn recent interest from private-equity buyers, although PetSmart didn't provide confirmation Tuesday.

The company got prodded into putting itself up for sale in August by activist investors including 10 percent stake-holder Jana Partners LLC as well as Longview Asset Management LLC.

Chief Executive David Lenhardt said Tuesday that amid the strategic review, "we remain focused" on growth strategies and profit improvement.

About 60 percent of the annual savings is expected to be realized in 2015, with the full value realized in 2016. The company forecast charges of $30 million connected with cost cutting, with a "substantial portion" expected by the end of 2014.

The company forecast fourth-quarter adjusted EPS of $1.34 to $1.38, on "slightly positive" same-store sales growth. Wall Street expects fourth-quarter EPS of $1.37 on revenue of $1.85 billion.

For fiscal year 2015, the company expects pre-tax earnings growth "in the mid-teens, on same-store sales growth "in the low-single digits."

For the recent period, PetSmart posted net earnings of $92.2 million, or $0.92 per share, flat compared to $92.2 million, or $0.88 per share a year earlier.Excluding charges for cost-cutting, adjusted earnings equaled $1.02 per share.

Revenue grew 2.6 to $1.7 billion, from $1.69 billion, while same-store sales were unchanged.

Analysts expected $0.94 a share on revenue of $1.73 billion.