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Pet Valu Holdings Ltd T.PET

Alternate Symbol(s):  PTVLF

Pet Valu Holdings Ltd. is a Canadian specialty retailer of pet food and pet-related supplies. The Company has over 800 corporate-owned or franchised locations across the country. Through its neighborhood stores and digital platform, the Company offers more than 9,000 competitively priced products, including an assortment of premium, super premium and holistic brands. Its family of stores consists of Pet Valu, Bosley’s by Pet Valu, Total Pet and Tisol Pet Nutrition & Supply. Its product categories include puppy essentials, dog food, dog treats, dog toys, dog collars, leashes & harnesses, dog carriers & travel, kitten essentials, cat food, cat litter & litter boxes, cat bowls & feeding, small pet food, treats & hay and aquariums, kits & tanks. Its brands include Performatrin Ultra, ACANA, Royal Canin, ORIJEN, Go! Solutions, Performatrin Prime, Hill's Science Diet, Big Country Raw, Open Farm and Stella & Chewy’s, Purina Proplan, Purina Pro Plan, and Weruva.


TSX:PET - Post by User

Post by retiredcfon Aug 08, 2023 9:30am
87 Views
Post# 35577203

CIBC

CIBC
Have a $44.00 target. GLTA

EQUITY RESEARCH
August 8, 2023 Flash Research
PET VALU HOLDINGS LTD.

Q2 First Look: Earnings Beat But Slower SSS Growth
 
PET reported mixed Q2 results with adjusted EPS of $0.36, two cents ahead
of consensus, driven primarily by better-than-expected gross margin while
same-store sales (SSS) fell short of our estimate.
 
SSS of +6% were driven by basket of +4.8% and traffic of +1.2%, and fell
short of our +10% estimate. Management called out “double-digit growth in
consumables” (~75% of sales), which implies sales in the hardlines category
decelerated meaningfully on a sequential basis.
 
Adjusted gross margin was down 140bps Y/Y, driven by unfavourable FX
and higher wholesale merchandise sales, partially offset by lower inbound
freight. We had forecast greater pressure (-248 bps) and this was the primary
driver of the earnings beat. Note that adjusted gross margin (not reported by
PET) excludes a 20bps headwind in Q2 related to supply chain investment
costs; as a reminder, these are excluded from adjusted EBITDA/EPS but
included in reported gross margins. SG&A dollars were well controlled and
adjusted EBITDA margin of 21.0% came in ahead of mgmt.’s guide of
“roughly similar” to Q1, where margin was 19.5%.
 
PET reiterated F23 guidance with consensus sitting towards the higher end
of guidance on revenues ($1.05B to $1.075B; consensus $1.069B) and the
lower end on EPS ($1.60 to $1.66; consensus $1.62). That said, while the
Q2 comps fell short of our estimate, we do not believe the 7% to 10% SSS
guidance is aggressive, given 1) PET will be lapping easier comparisons in
H2, and 2) comps in H2 do not have to re-accelerate sequentially in order to
hit the low end of guidance; by our math, we estimate a +6.5% H2 comp in
order to achieve 7% SSS for the year.
 
Management will host a conference call at 8:30am EST; dial-in number is 1-
833-950-0062 (ID: 675228). 

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