PetSmart considers putting itself up for sale

2014-08-20T16:51:00Z 2014-08-20T21:11:34Z PetSmart considers putting itself up for saleBy Angelique Soenarie The Arizona Republic Arizona Daily Star

PHOENIX — PetSmart, one of Arizona’s largest companies, is considering putting itself up for sale.

The company said Tuesday it is weighing “strategic alternatives” after a months-long review by the company’s board of directors. The Phoenix company also faces pressure from shareholders who have been pushing for a sale.

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 pet retailer, Arizona’s fourth-largest public company by revenue, said it plans to cut costs. It will provide more details next quarter and expects to realize the savings by the end of its next fiscal year.

In a conference call with financial advisers Wednesday, PetSmart CEO and President David Lenhardt acknowledged that overall consumer spending is down and that the company is “operating in a more competitive market. Our customers have more choices for their pets’ specialty needs.”

PetSmart is also grappling with increased customer demand for natural and organic pet foods, a trend that puts the Phoenix-based retailer in competition with specialty pet-food stores and online retailers.

PetSmart said it realizes it needs to change some of its offerings in order to stay relevant with customers. The company is planning to roll out more products, personalized services 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.

PetSmart also discussed its second-quarter financial results during the Wednesday call.

In the recent second quarter, PetSmart’s earnings rose to $98.1 million, or 98 cents per share, compared with $93.4 million, or 89 cent per share, in the second quarter of 2013.

Revenue in the quarter that ended Aug. 3 rose 1.4 percent to $1.7 billion.

Comparable store sales, or sales in stores open at least one year, including online sales, decreased 0.5 percent from a year ago.

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