PetSmart LLC’s second-quarter performance was buoyed by higher merchandise and services revenues, according to people with knowledge of the situation.
The BC Partners-owned pet supply retailer booked US$2.5 billion in sales for the quarter ended July 31, up 7.5 per cent from the same period a year ago, said the people, who asked not to be identified because the results were private.
Big box retailers have been battered by rising costs and weakening demand. While the pet sector is not immune to these pressures, it is holding up fairly well because consumers are continuing to spend on pet food and healthcare.
A big portion of PetSmart’s business comes from consumables, like pet food, which have lower margins but are stickier compared to higher-margin products like toys.
Looking ahead, PetSmart is betting big on private labels, which attract consumers with their lower price points, the people said. The company now has 10 proprietary brands that each generate more than US$100 million in annual revenues, and continues to see growth in those brands, they said.
Overall comparable store sales increased 8.4 per cent year-over-year, the people said.
Representatives at PetSmart didn’t respond to request for comment, while BC Partners declined to comment.
PetSmart’s quarterly gross margins were 36.8 per cent, down 187 basis points year-over-year due to the higher mix of consumable goods, the people said.