Petsmart 2011 Annual Report Download - page 37

Download and view the complete annual report

Please find page 37 of the 2011 Petsmart annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 88

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88

Recently Issued Accounting Pronouncements
See Note 2, Recently Issued Accounting Pronouncements, in the Notes to the Consolidated Financial State-
ments included in this Annual Report on Form 10-K for a description of recently issued and adopted accounting
pronouncements, including the impact to our consolidated financial statements.
Results of Operations
The following table presents the percent to net sales of certain items included in our Consolidated
Statements of Income and Comprehensive Income:
Year Ended
January 29,
2012
January 30,
2011
January 31,
2010
Statement of Operations Data:
Net sales .......................................... 100.0% 100.0% 100.0%
Cost of sales ....................................... 70.5 70.9 71.5
Gross profit ........................................ 29.5 29.1 28.5
Operating, general and administrative expenses ........... 21.3 21.5 21.6
Operating income ................................... 8.2 7.5 6.9
Interest expense, net ................................. (0.9) (1.0) (1.1)
Income before income tax expense and equity in income from
Banfield ......................................... 7.3 6.5 5.8
Income tax expense .................................. (2.7) (2.5) (2.2)
Equity in income from Banfield ........................ 0.2 0.2 0.1
Net income ........................................ 4.7% 4.2% 3.7%
2011 compared to 2010
Net Sales
Net sales increased $0.4 billion, or 7.4%, to $6.1 billion in 2011, compared to net sales of $5.7 billion in
2010. The increase in net sales was partially impacted by $11.2 million in favorable foreign currency fluctuations
during 2011. Approximately 75% of the sales increase is due to a 5.4% increase in comparable store sales for
2011, and 25% of the sales increase is due to the addition of 45 net new stores and 12 new PetsHotels since Jan-
uary 30, 2011.
Comparable store sales growth was driven by an increase in comparable transactions and average sales per
comparable transaction due to the impact of merchandising strategies, pricing strategies and new product offer-
ings. The impact of comparable transactions and average sales per comparable transaction is summarized below.
Year Ended
January 29,
2012
January 30,
2011
Comparable transactions ......................................... 2.5% 2.1%
Average sales per comparable transaction ........................... 2.9 2.7
Services sales, which include grooming, training, boarding and day camp, increased 9.1%, or $56.1 million,
to $674.9 million for 2011, compared to $618.8 million for 2010. Services sales represented 11.0% and 10.9% of
net sales for 2011 and 2010, respectively. The increase in services sales is primarily due to continued strong
demand for our grooming services, and the addition of 45 net new stores and 12 new PetsHotels since Jan-
uary 30, 2011.
Other revenue included in net sales during 2011, represents license fees and reimbursements for utilities and
specific operating expenses charged to Banfield under the master operating agreement which comprised 0.6% of
net sales, or $36.7 million, in 2011, compared to 0.6% of net sales, or $34.2 million, during 2010.
27