(RTTNews) - Wednesday, PetSmart, Inc (PETM: News ) a provider of products and services for pets, reported an increase in net income for the third quarter as sales increased across segments, with comparable store sales improving marginally. Earnings for the quarter, as well as revenues came in ahead of estimates. Looking ahead, the company has forecast its fourth quarter earnings that is more or less in line with current Street estimates, while lifting its full year 2009 outlook.

PetSmart's net income for the third quarter increased to $38.07 million or $0.31 per share from $35.82 million or $0.28 per share in the year-ago period.

Nineteen analysts polled by Thomson Reuters estimated earnings of $0.28 per share for the quarter. Analysts' estimates typically exclude special items.

The Phoenix, Arizona-based company's net sales for the quarter increased 3.5% to $1.29 billion from $1.25 billion in the prior year period. Sixteen Wall Street analysts estimated a revenue of $1.28 billion for the quarter.

Segment-wise, merchandise sales increased to $1.157 billion from $1.124 billion year-ago, while service sales increased by 8.0% to $136.70 million from $126.55 million in the prior year period.

Comparable store sales or sales in stores open at least a year grew by 0.3% in the third quarter.

PetSmart's total cost of sales, which includes the cost of merchandise sales as well as the cost of services sales increased to $938.17 million from $893.44 million in the year earlier period.
Operating, general and administrative expenses for the quarter decreased to $284.89 million from $285.57 million in the year-ago period. Net interest expense for the quarter was higher at $15.03 million, compared with $14.76 million year-ago.

Gross profit margin for the quarter declined to 27.5%, from 28.6% reported in the corresponding quarter a year ago.

"I am pleased to report our results for the third quarter with strong EPS growth and positive comparable store sales. Our ability to deliver positive comp sales, while still battling a challenging retail environment and a difficult inflationary comparison, continues to show the strength of the PetSmart brand and the loyalty of our customers even in tough times," said Bob Moran, chief executive officer and president of the company.

In the retail sector, the quarter saw retail giant Wal-Mart report an increase in earnings as well as a reduction in expenses and lower inventory.

Looking ahead to the fourth quarter, the company said it expects earnings in the range of $0.52 - $0.56 per share and sees comparable store sales to be flat to low single digits. Eighteen Wall Street analysts currently estimate earnings of $0.55 per share for the fourth quarter.

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