Who is selling and why?, page-37

Thanks for posting those articles Dunjo.

What i found to be the most interesting article pointed out the fact that, even during the brutal 2007-2010 recession, pet scare spending in the US continued to increase: http://www.americanpetproducts.org/press_industrytrends.asp.

That fact surprised me, to be honest, so i went back and cross-checked that data against PetSmart's reported financial results. As disclosed in PetSmart's 2010 10K (annual report), same store sales continued to grow even during the US 'great recession' with the worst year being 2010 (1.6% LFL sales growth), and operating profits flat-lined from 2007-2009 but didn't fall, which i find impressive given the severity of that recession. Operating profits bounced 16% in a single year post the recession finishing in 2009, which helps explain why PetSmart comprehensively outperformed other US listed specialty retailers during the recession.

While i don't expect the US experience to translate perfectly to Australia, that data does support my 'gut feeling' that GXL will suffer less than most other specialty retailers in the event of a general economic downturn.