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PetSmart chain is considering selling itself

Published August 19, 2014 7:40 pm

Acquisitions • While it ponders, the pet supply firm bought online retailer Pet360 for $130M.
This is an archived article that was published on sltrib.com in 2014, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Bowing to pressure from investors, PetSmart Inc. is considering putting itself up for sale.

The pet supply chain, which has 14 stores in Utah, said Tuesday it will weigh "strategic alternatives" after a board review that included conversations with shareholders.

Investment firm Longview Asset Management and hedge fund Jana Partners have both called on PetSmart to sell itself, a move they say would benefit shareholders. Longview has about a 9 percent stake in PetSmart, while Jana holds nearly 10 percent, according to FactSet.

The company also said it plans to cut costs. It said it will provide more details next quarter and expects to realize the savings by the end of its next fiscal year.

Its shares rose 3.4 percent to $72.10 in after-hours trading. The stock has dropped 4 percent this year.

The Phoenix-based company in May cut its earnings outlook for the year, citing a challenging consumer environment and competition.

PetSmart said Tuesday it is focusing on pet food, exclusive brands and services, online shoppers and a loyalty program. It also announced a $130 million acquisition of online retailer Pet360, whose websites include Pet360.com, PetFoodDirect.com and petMD.com, to bolster its online business.

In the fiscal second quarter, PetSmart's earnings rose 5.1 percent to $98.1 million, or 98 cents per share. Revenue in the quarter that ended on Aug. 3 rose 1.4 percent to $1.73 billion.

It left its guidance for the year unchanged.