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Pet Food News
on December 22, 2011

Petfood sales expected to remain strong, analyst says

PetSmart well-positioned in pet retail market with nearly half of sales from petfood

Pet product retail is expected to maintain its sales volumes during this time of slow economic growth, with petfood and pet treats resilient to trade-downs because of the pet owner's attachment to their animal companions, Daniel Hofkin, an analyst at William Blair & Company LLC, told TWST.com.

“People tend to spoil and dote on their pets. They will sometimes sacrifice their own eating or spending, but especially among older families or empty nesters, pets are often considered children. And people like to treat their pets as such, not just in terms of continuing to buy them the food that they are used to, but also in terms of other products,” Hofkin said.

Hofkin says pet retailer PetSmart Inc. is well-positioned in the industry from a long-term point of view, because petfood accounts for nearly half of the company’s inventory, with pet products making up the other half.

“We don’t currently have an ‘outperform’ rating on PetSmart, primarily because we are watching the impact high gas prices and input-cost inflation will have on the traffic, particularly in hard goods. But I would say that’s more of a temporary concern, and it doesn’t appear to have materially impacted PetSmart’s results so far,” Hofkin said.

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