Friday, September 22, 2006

Calls of Note Part 2

Goldman Sacks notes that Nielsen's monthly survey, our best source of mid-quarter data for the pet retail sector, shows that sales growth continued at the strongest rate in the past year, even with the prior month, and yielding the best trailing three-month period for industry sales. Weighted average growth in the four categories surveyed by Nielsen for the period of August 12 - September 9 tracked at 4.4%, even with the prior month. Over the past three months, sales increased 4.0%, versus a 3.6% increase in the prior three month period.

This showing reinforces firm's confidence in PetsMart's (NASDAQ:PETM) sales momentum. Of late, the company is having a hard time converting solid sales to profit growth, and is ramping up discretionary investment, further pressuring the earnings outlook. The company addressed these issues effectively at firm's recent Conference, and should tackle them further at its upcoming analyst meeting (9/28).

Notablecalls: Not actionable but good to know category.

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