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PetSmart Inc. (NAS:PETM)
Gross Profit
$2,116 Mil (TTM As of Jan. 2014)

PetSmart Inc.'s gross profit for the three months ended in Jan. 2014 was $566 Mil. PetSmart Inc.'s gross profit for the trailing twelve months (TTM) ended in Jan. 2014 was $2,116 Mil.

Gross Margin is calculated as gross profit divided by its revenue. PetSmart Inc.'s gross profit for the three months ended in Jan. 2014 was $566 Mil. PetSmart Inc.'s revenue for the three months ended in Jan. 2014 was $1,805 Mil. Therefore, PetSmart Inc.'s Gross Margin for the quarter that ended in Jan. 2014 was 31.36%.

PetSmart Inc. had a gross margin of 31.36% for the quarter that ended in Jan. 2014 => Competition eroding margins

During the past 13 years, the highest Gross Margin of PetSmart Inc. was 31.28%. The lowest was 6.70%. And the median was 29.06%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

PetSmart Inc.'s Gross Profit for the fiscal year that ended in Jan. 2014 is calculated as

Gross Profit (A: Jan. 2014 )=Revenue - Cost of Goods Sold
=6916.627 - 4800.69
=2,116

PetSmart Inc.'s Gross Profit for the quarter that ended in Jan. 2014 is calculated as

Gross Profit (Q: Jan. 2014 )=Revenue - Cost of Goods Sold
=1804.866 - 1238.868
=566

PetSmart Inc. Gross Profit for the trailing twelve months (TTM) ended in Jan. 2014 was 529.746 (Apr. 2013 ) + 515.22 (Jul. 2013 ) + 504.973 (Oct. 2013 ) + 565.998 (Jan. 2014 ) = $2,116 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

PetSmart Inc.'s Gross Margin for the quarter that ended in Jan. 2014 is calculated as

Gross Margin (Q: Jan. 2014 )=Gross Profit (Q: Jan. 2014 ) / Revenue (Q: Jan. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=566 / 1804.866
=31.36 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

PetSmart Inc. had a gross margin of 31.36% for the quarter that ended in Jan. 2014 => Competition eroding margins


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

PetSmart Inc. Annual Data

Jan05Jan06Jan07Jan08Jan09Jan10Jan11Jan12Jan13Jan14
Gross_Profit 1,0391,1761,3081,4371,4951,5191,6551,8042,0622,116

PetSmart Inc. Quarterly Data

Oct11Jan12Apr12Jul12Oct12Jan13Apr13Jul13Oct13Jan14
Gross_Profit 428498497489483593530515505566
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