Petsmart 2001 Annual Report Download - page 19

Fiscal Year Ended
Jan. 28, Jan. 30, Jan. 31,
2001 2000 1999
Income (loss) before income tax expense, minority interest,
extraordinary item, and cumulative eÅect of a change in
accounting principleÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.5) (0.3) 1.8
Income tax expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì 1.2 0.8
Income (loss) before minority interest, extraordinary item, and
cumulative eÅect of a change in accounting principleÏÏÏÏÏÏÏÏÏÏ (1.5) (1.5) 1.0
Minority interest in subsidiary loss ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì
Income (loss) before extraordinary item and cumulative eÅect of
a change in accounting principle ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.5) (1.5) 1.0
Extraordinary item, gain on early extinguishment of debt, net of
income tax expense ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ 0.1 Ì Ì
Income (loss) before cumulative eÅect of a change in accounting
principle ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.4) (1.5) 1.0
Cumulative eÅect of a change in accounting principle, net of
income tax beneÑt ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ Ì Ì Ì
Net income (loss) ÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏÏ (1.4)% (1.5)% 1.0%
Fiscal 2000 Compared to Fiscal 1999
Net sales were approximately $2.2 billion for Ñscal 2000, compared to $2.1 billion for Ñscal 1999.
Comparable North American store sales increased 1.4% for the period. During Ñscal 2000, the Company
opened 55 new stores, including four replacement stores, and closed two stores in North America for a net
increase of 49 stores. The Company had 533 North American stores in operation at January 28, 2001
compared to 484 North American stores open at January 30, 2000.
Gross proÑt, deÑned as net sales less cost of sales, including distribution costs and store occupancy costs,
decreased as a percentage of net sales to 25.0% for Ñscal 2000 from 27.1% for Ñscal 1999. The decrease in
gross proÑt in Ñscal 2000 as a percentage of net sales was the result of a planned inventory reduction that
included the sell-oÅ of discontinued and slow-moving items at a discount, higher inventory shrink, higher
warehouse and distribution costs from the addition of three new forward distribution centers, and increased
store occupancy costs due to higher costs associated with newer stores, partially oÅset by higher product gross
margins as a result of more competitive unit pricing with vendors.
Store operating expenses, which includes payroll and beneÑts, advertising and other store expenses,
increased as a percentage of net sales to 20.1% for Ñscal 2000 from 19.7% for Ñscal 1999. This increase in Ñscal
2000 resulted from increased payroll and beneÑts, store supplies, and repairs and maintenance costs for North
American stores. The increase in store payroll and beneÑts was the result of increased emphasis on customer
service, and the increases in store supplies and repairs and maintenance expense was the result of the increase
in the average age of the stores.
Store preopening expenses as a percentage of net sales decreased to 0.2% for Ñscal 2000, compared to
0.3% in Ñscal 1999. Including four replacement stores, the Company opened 55 stores during Ñscal 2000,
compared to 58 stores opened in Ñscal 1999. For stores that opened during Ñscal 2000, the average preopening
expense incurred was approximately $95,000 per store, which is consistent with the Company's prior
experience.
General and administrative expenses as a percentage of sales increased to 3.8% for Ñscal 2000, compared
with 3.0% for Ñscal 1999. The change was due to a planned increase in Ñeld management personnel to expand
the grooming and pet training service areas, increased professional fees related to strategic initiatives, and
increased depreciation expense related to the Company's new information system installed during the summer
of 1999.
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