Pet Valu Holdings Ltd. raised its full-year outlook for the third quarter in a row Tuesday after the company beat analyst expectations in its latest quarter.
The Markham, Ont.-based pet retailer said it expects its 2022 full-year revenue to land between $938 million and $947 million amid strong same-store-sales growth and new store openings.
Pet Valu reported Tuesday that it generated $244.7 million in its third quarter, a 22 per cent gain compared to the same period a year ago.
The company also declared a dividend of $0.06 per common share, which will be paid to investors on Dec. 15.
"We continue to see robust signals from devoted pet lovers across Canada as our team and franchisees work tirelessly to provide value to our customers," Richard Maltsbarger, president and chief executive officer of Pet Valu, said in a press release. He added that the retailer expects growing sales into the holiday shopping season.
In an attempt to avoid supply chain challenges over the holidays, Pet Valu spent $136 million in inventory during the third quarter, up $44.3 million compared to the end of 2021. The increase in inventory was attributed to strong buyer demand during the holiday shopping season, inflationary pressures on product costs and ensuring that it would have enough stock amid heightened global supply chain disruptions.
Subhead: ‘recession resilient characteristics’
Martin Landry, retail analyst at Stifel GMP, said he thinks the pet industry will continue to remain resilient even if a recession occurs next year.
“Pet Valu's revenue growth of 20 per cent, and same-store-sales growth of 15 per cent are impressive given the economic slowdown and support our thesis that the pet industry exhibit recession resilient characteristics,” Landry wrote in a note to clients on Tuesday.
Landry has a buy rating for Pet Value shares and a 12-month price target of $36.47.