PetSmart-Petco merger talks stall over antitrust risk

Merger talks between PetSmart Inc. and Petco Holdings Inc. have stalled because of disagreements over antitrust risks, according to a report.
The risks for a deal hinge on how the Federal Trade Commission would define the pet supply market, reports say. A narrow definition that includes only specialty pet supply stores would make it more difficult to get a deal approved. A broader definition that includes any retailer that sells pet supplies would make the deal easier to approve.
In September, PetSmart said it was exploring the possibility of acquiring Petco.
The two companies also explored a merger possibility in 2014, but PetSmart ruled out a deal with Petco in favor of a buyout by private equity consortium led by BC Partners Ltd. for US$8.7 billion. At the time, PetSmart was unsure a deal with Petco would receive antitrust clearance.
In August 2015, Petco filed for an initial public offering of stock that could value it at US$5 billion to US$6 billion, including debt. And, in early October, the company confirmed it would go public again after nine years of private ownership.
The company has filed an amended S-1 form with the US Securities and Exchange Commission, but no terms were given in the filing.
Proceeds from the offering will go to the selling stockholders instead of the company. The private equity firms that own it and other investors will retain majority voting power after the initial public offering.

PetSmart, Petco eyeing merger possibility?

PetSmart Inc. is exploring the possibility of acquiring Petco Holdings Inc., according to reports.
The two companies explored a merger possibility in 2014, but PetSmart ruled out a deal with Petco in 2014 in favor of a buyout by private equity consortium led by BC Partners Ltd. for US$8.7 billion. At the time, PetSmart was unsure a deal with Petco would receive antitrust clearance.
If PetSmart and Petco merged, the new company would account for 30% of US pet specialty supplies stores, reports say.
PetSmart and Petco account for 20% of all pet product sales in the US, according to market research publisher Packaged Facts. The two pet retail stores had combined sales of about US$11 billion in 2014 based on Packaged Facts' estimates, with sales of natural pet products an important factor in the strong performances.
In August 2015, Petco filed for an initial public offering of stock that could value it at US$5 billion to US$6 billion, including debt.

Petsmart now offers Natural Balance dog, cat foods

Natural Balance dog and cat foods are now available from Petsmart Inc. online and on store shelves throughout the United States, Canada and Puerto Rico. The expansion of PetSmart’s premium food selection confirms its commitment to providing customers with an unparalleled selection of quality products for their pets in one convenient destination.
“The introduction of Natural Balance products highlights our commitment to providing pet parents with the very best for their pets,” said Ted Passig, executive vice president, buying and sourcing, PetSmart. “We are thrilled to bring one of the best brands in the marketplace to our customers so they have even more options to care for their pet’s health and well-being.”
Built upon a genuine passion for pets and a commitment to quality, Natural Balance Pet Foods Inc. meets a variety of pet parents’ dog and cat food needs, such as grain-free, limited ingredient, and weight management formulas. Natural Balance products are made with premium quality ingredients and include a variety of dry and canned food, stews and treats.
 “At Natural Balance, we believe that every pet has something that makes them unique. That’s why we offer a wide selection of premium quality dog and cat foods that are used and respected worldwide,” said Heather Govea, general manager, Natural Balance. “Expanding our distribution is a huge milestone for our brand. Through PetSmart, we will be able to give more households access to the wholesome offerings their pets deserve.”

PetSmart lays off workers at Phoenix headquarters

PetSmart plans to lay off 15% of its employees at its headquarters in Phoenix, Arizona, USA, according to reports.

The company was bought by a private equity consortium led by BC Partners Ltd. for US$8.7 billion in March 2015. Along with the sale, PetSmart’s CEO David K. Lenhardt was replaced by Michael J. Massey.

“We are focusing our efforts right now on PetSmart’s future growth,” a company spokeswoman said in a report. “We identified priority areas of the business where we need to invest additional resources. And as part of this, we also identified areas where we need to gain efficiency.”

“This is an important step to ensure that we are staying true to our commitment to become a highly efficient retailer and to further invest in the future growth of the company,” the spokeswoman said.

PetSmart employs 53,000 people at more than 1,400 stores in the US, Canada and Puerto Rico. About 1,700 people work at the headquarters. 

Acquisition of PetSmart by BC Partners complete

The acquisition of PetSmart Inc. by a consortium led by BC Partners was completed on March 11, 2015.

PetSmart shareholders will receive $83 per share in cash, representing a premium of approximately 39% over PetSmart’s unaffected closing share price on July 2, 2014. The transaction was approved by PetSmart stockholders at a special meeting of stockholders held on March 6, 2015. As a result of the completion of the acquisition, the common stock of PetSmart will no longer be listed for trading on NASDAQ and PetSmart expects no further trading after the close of business on March 11, 2015.
“Today is an important day in PetSmart’s history. We are committed to actively investing in long-term growth opportunities for PetSmart and delivering for its customers and their pets for many years to come,” said Raymond Svider, a managing partner at BC Partners.
PetSmart’s David K. Lenhardt will step down from his role as president and CEO. He will be replaced by Michael J. Massey. Svider will become non-executive chairman of the board of directors.
“I have been honored and privileged to lead this great company,” Lenhardt said. “My 15-year journey with PetSmart is filled with wonderful memories of our passionate associates who represent the best and brightest in retail. I am confident that PetSmart will continue to lead the industry by creating more moments for people to be inspired by pets."
Massey, who will be based at PetSmart headquarters in Phoenix, Arizona, USA, said: “I am honored today to be appointed to this role and look forward to building upon the heritage and reputation that PetSmart has established as the most admired pet retailer. I am excited to work closely with the PetSmart team to bring the brand ever closer to the hearts of pet parents everywhere. I’m confident that PetSmart’s future will be one defined by growth, increased opportunities for our team and closer emotional connections with our customers.”
Massey joins PetSmart with more than 25 years of experience in the retail industry, with specific expertise in using research and insights to develop a more personalized, holistic customer experience.

PetSmart, Petco account for 20% of all US pet product sales

PetSmart and Petco account for 20% of all pet product sales in the US, according to market research publisher Packaged Facts. The two pet retail stores had combined sales of about US$11 billion based on Packaged Facts' estimates, with sales of natural pet products an important factor in the strong performances.

"Although PetSmart is public and Petco privately held, the two companies share a number of similarities. This ranges from their pet parent pitch, to their focus on national brands and private labels alike, to their emphasis on higher-margin products and services, to their leading e-commerce websites," says David Sprinkle, Packaged Facts research director. "For both chains, factoring strongly among those higher-margin products are natural products."
Aside from superior customer service and a knowledgeable staff, an important differentiator for pet specialty retailers to separate them from lower-priced mass retailers is their focus on natural products, and an increase in all-natural private label brands. In Packaged Facts' April/May 2014 Pet Owner Survey, 39% of pet owners agreed that the natural products sold in the pet specialty channel are better than those sold at mass, up from 28% in a February/March 2013 survey.
For PetSmart and Petco, natural products are a major thrust, with Petco fielding its "store-within-store" It's All Natural departments, and PetSmart — which in December 2014 agreed to be acquired for more than $8 billion by a group led by BC Partners Inc. — calling itself "the most trusted source for natural pet solutions." Both chains feature a wide array of natural brands, with category leaders including Nutro, Blue Buffalo, WellPet, Natural Balance, Merrick and Natura. 

PetSmart announces preliminary fourth quarter results

PetSmart Inc. announced an increase of 2.6% in store sales for the fourth quarter of 2014, with average ticket increasing 2% and comparable transactions increasing 0.6%

Based on preliminary results, PetSmart says it expects to meet or exceed previously issued guidance for the quarter of between $1.34 and $1.38 per share on a non-GAAP adjusted diluted earnings per share basis.
As announced on December 14, 2014, the company entered into a definitive agreement to be acquired by a consortium led by BC Partners Inc. at a price of $83 per share in cash. The special meeting of shareholders to consider and vote on the transaction will be held March 6, 2015.
The company announced it will release its results for the fourth quarter and fiscal year 2014 before market open on Wednesday, March 4, 2015.

PetSmart to be bought by BC Partners for US$8.7 billion

Pet supply retailer PetSmart Inc. has made an agreement to be bought by a private equity consortium led by BC Partners Ltd. for US$8.7 billion, in the largest leveraged buyout of the year.

Activist investor Jana Partners LLC began pushing for a sale after disclosing a 9.9% stake in PetSmart in early July 2014, according to reports. PetSmart said BC Partners, as well as some of its fund investors, including La Caisse de dépôt et placement du Québec and StepStone, signed an agreement to buy the company for US$83 per share. Longview Asset Management, which has a 9% stake in PetSmart, will roll a third of its holding into the deal.
The buyout price represents a 39% premium to PetSmart's closing price of US$59.81 on July 2, 2014, the day before Jana disclosed its stake and called for PetSmart to explore a sale. Jana paid less than US$55 per share on average for its percent stake in PetSmart, according to regulatory filings.
PetSmart, which has about 54,000 employees and operates 1,387 pet stores, said in August 2014 it would explore a potential sale of the company. PetSmart faced mounting investor pressure at a time when fierce competition from large retailers, including Wal-Mart Stores Inc and Amazon, is squeezing specialty stores.

In November 2014, PetSmart reported flat third-quarter net income of US$92.2 million as net sales rose 2.6% to US$1.7 billion.

PetSmart to be bought by BC Partners for US$8.7 billion

Pet supply retailer PetSmart Inc. has made an agreement to be bought by a private equity consortium led by BC Partners Ltd. for US$8.7 billion, in the largest leveraged buyout of the year.

Activist investor Jana Partners LLC began pushing for a sale after disclosing a 9.9% stake in PetSmart in early July 2014, according to reports. PetSmart said BC Partners, as well as some of its fund investors, including La Caisse de dépôt et placement du Québec and StepStone, signed an agreement to buy the company for US$83 per share. Longview Asset Management, which has a 9% stake in PetSmart, will roll a third of its holding into the deal.
The buyout price represents a 39% premium to PetSmart's closing price of US$59.81 on July 2, 2014, the day before Jana disclosed its stake and called for PetSmart to explore a sale. Jana paid less than US$55 per share on average for its percent stake in PetSmart, according to regulatory filings.
PetSmart, which has about 54,000 employees and operates 1,387 pet stores, said in August 2014 it would explore a potential sale of the company. PetSmart faced mounting investor pressure at a time when fierce competition from large retailers, including Wal-Mart Stores Inc and Amazon, is squeezing specialty stores.

In November 2014, PetSmart reported flat third-quarter net income of US$92.2 million as net sales rose 2.6% to US$1.7 billion.

PetSmart to acquire online pet retailer Pet360

PetSmart will acquire Pet360, an online pet specialty retailer, for US$130 million with the possibility of additional performance-based payments totaling up to US$30 million by the end of 2016.

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“We are delighted to announce our planned acquisition of Pet360, the most comprehensive online resource for pet parents," said David Lenhardt, PetSmart president and CEO. "This transaction is a smart and efficient way to make PetSmart a leader in the online retail space. [A]lthough online sales are still a relatively small part of the pet products industry, we expect them to become a more relevant source of revenue in the future. Combining PetSmart’s unparalleled strengths in traditional outlets with Pet360’s established digital footprint will perfectly position PetSmart to capitalize on this evolution and enhance our ability to serve pet parents across all distribution channels.”
 Pet360 is an integrated media company dedicated to connecting pet parents with the information, products and advice they need to raise happy, healthy pets, according tot he company. The Pet360 network is comprised of more than nine of the top pet websites and reaches over 12 million pet parents per month, making Pet360 the most comprehensive source for online pet information and products in the US. Its family of brands includes Pet360.com, petMD.com, PetFoodDirect.com and BlogPaws. The company is headquartered outside Philadelphia, Pennsylvania.
Combining Pet360’s family of e-commerce websites, digital media programs and content sites, with PetSmart’s existing web platform and store network, will allow PetSmart to provide customers with an omni-channel information and shopping experience, according to PetSmart. It also brings cost savings opportunities through increased scale, merchandise assortment and valuable web platform and fulfillment capabilities.
 The transaction is expected to close in September 2014.

PetSmart Inspiration Waggin' Tour to bring 'pet-inspired' moments to everyday life

PetSmart's Inspiration Waggin' Tour aims to transform everyday moments into pet-inspired ones with a six-city tour in the US and Canada.

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During the tour, dogs, puppies and cats will visit retirement centers, university campuses and local spots so people "can benefit from a wagging tail and and some unconditional love to make even the most regular of days better," said PetSmart. “The purpose of the Inspiration Waggin’ tour is to bring pet-inspired moments to people across the country,” said David Lenhardt, PetSmart president and CEO. “PetSmart is all about creating more moments for people to be inspired by pets with our unique products, services and experiences, and the Inspiration Waggin’ is a great example of our commitment to this mission.”
The Inspiration Waggin' will make stops in:

• Los Angeles – May 9
• Phoenix – May 12
• Dallas – May 14
• Chicago – May 15
• Toronto – May 20
• New York City – May 22

PetSmart increases quarterly dividend by 18 percent

Petfood and supplies retailer PetSmart Inc. announced its board of directors approved an increase in its quarterly dividend by 18 percent from US$0.165 to US$0.195 per share beginning in the third quarter of fiscal 2013. The dividend of US$0.195 will be paid on November 15 to stockholders of record at the close of business on November 1. This is equivalent to an annual rate of US$0.78 per share.
The board of directors also authorized a new US$535 million share purchase authorization that expires on January 31, 2015. This new share purchase authorization will commence on October 1 and will be in addition to any unused amount remaining under the June 2012 share purchase authorization as of that date.
"We believe the stability and predictability of our cash flow demonstrates the continued strength of our business," said David Lenhardt, CEO, "and today's announcement reaffirms our commitment to returning excess cash to our shareholders through a combination of dividends and share repurchases."

PetSmart reports 5.3 percent increase in sales in second-quarter 2013

Petfood and supplies retailer PetSmart increased its sales by 5.3 percent in the second quarter of 2013 to US$1.7 billion.
Comparable store sales, or sales in stores open at least a year, grew by 3.4 percent. Services sales, which are included in total sales, grew by 7.3 percent to US$205 million. Carrie Teffner, senior vice president and chief financial officer, anticipates comparable store sales growth of 3-4 percent for fiscal 2013.

PetSmart reports first-quarter 2013 earnings

PetSmart Inc. reported earnings of US$0.98 per share, up 15 percent compared to US$0.85 per share in the first quarter of 2012. Net income totaled US$102 million in the first quarter of 2013, compared to US$95 million in the first quarter of 2012.
Total sales for the first quarter of 2013 increased 5 percent to US$1.7 billion, partially impacted by US$2 million in unfavorable foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 3.5 percent, benefitting from comparable transactions growth of 0.8 percent. Services sales, which are included in total sales, grew 5.8 percent to US$192 million.
During the first quarter, the company generated US$147 million in cash flows from operating activities, spent US$35 million in capital expenditures and repurchased US$180 million of PetSmart stock. The company ended the quarter with US$324 million in cash, cash equivalents and restricted cash, and zero borrowings on its credit facility.
The company expects comparable store sales growth in the range of 3-4 percent and earnings per share between US$0.82 to US$0.86.
“As a reminder, the annual guidance for 2013 is for 52 weeks versus 53 weeks in 2012. For fiscal year 2013, we anticipate comparable store sales growth of 3 percent-4 percent, and total sales growth of 3 percent-4 percent. We are raising our earnings per share guidance from a previous range of US$3.76 to US$3.92, to our current expectations of US$3.82 to US$3.94,” said Chip Molloy, executive vice president and chief financial officer.

PetSmart reports fourth-quarter, fiscal 2012 financial results

Petfood and suppliers retailer PetSmart reported financial results for the fourth-quarter and fiscal-year 2012, and provided an outlook for 2013.
For the fourth quarter, earnings per share rose 36 percent to US$1.24. Comparable store sales, or sales in stores open at least a year, grew 4.6 percent, thanks to comparable transactions growth of 1.2 percent. Total sales for the quarter rose 15 percent to US$1.9 billion, partially impacted by US$3 million in favorable foreign currency fluctuations. Services sales, which are included in total sales, grew 15 percent to US$194 million.
For fiscal 2012, the company delivered earnings per share of US$3.55, up 39 percent compared to US$2.55 in fiscal 2011. Comparable store sales grew 6.3 percent, benefitting from comparable transactions growth of 2.4 percent. Total sales for the year rose 11 percent to US$6.8 billion, including an unfavorable impact from foreign currency fluctuations of US$2 million, and services sales grew 10 percent to US$740 million.
According to Chip Molloy, executive vice president and chief financial officer: “Guidance for 2013 will be on a GAAP basis; therefore all comparisons will be 52 weeks for fiscal-year 2013 versus 53 weeks for fiscal-year 2012. For 2013, we anticipate comparable store sales growth of 2 percent to 4 percent and total sales growth of 2 percent to 4 percent. We expect earnings per share between US$3.76 to US$3.92, and spending for capital expenditures projects to be between US$140 million to US$150 million.
"For the first quarter of 2013, we are expecting comparable store sales growth of 2 percent to 4 percent, and earnings per share between US$0.92 to US$0.98.”
The fourth-quarter and fiscal-year 2012 results include an extra week in 2012 compared to 2011. The fourth quarter of fiscal-year 2012 was a 14-week quarter versus the fourth quarter of fiscal-year 2011, which was a 13-week quarter. Fiscal-year 2012 was a 53-week year versus fiscal-year 2011, which was a 52-week year. Both the fourth-quarter and fiscal-year 2012 ended on February 3, 2013. The fourth-quarter and fiscal-year 2011 ended on January 29, 2012.  

PetSmart reports total sales of US$1.6 billion in second-quarter 2012

Pet food and pet supplies retailer PetSmart Inc. reported earnings of US$0.71 per share, up 31 percent compared to US$0.54 per share in the second quarter of 2011. Net income totaled US$79 million in the second quarter of 2012, compared to US$61 million in the second quarter of 2011.
Total sales for the second quarter of 2012 increased 9 percent to US$1.6 billion. The increase in net sales was partially impacted by US$4 million in unfavorable foreign currency fluctuations. Comparable store sales, or sales in stores open at least a year, grew 7.0 percent, benefitting from comparable transactions growth of 2.9 percent. Services sales, which are included in total sales, grew 7 percent to US$191 million.
During the second quarter, the company generated US$104 million in operating cash flow, spent US$35 million in capital expenditures, distributed US$15 million in dividends and repurchased US$47 million of PetSmart stock. The company ended the second quarter with $354 million in cash, cash equivalents and restricted cash, and zero borrowings on its credit facility.
“As a reminder, 2012 contains a 53rd week. For all of 2012, we anticipate comparable store sales growth in the mid-single digit range, and total sales growth in the 10 percent to 11 percent range. We are raising our earnings per share guidance from a previous range of US$3.19 to US$3.31, to our current expectations of US$3.30 to US$3.40. The impact of the extra week is estimated to be US$120 million in sales and US$0.16 in EPS,” said Chip Molloy, executive vice president and chief financial officer. "For the third quarter of 2012, we are expecting comparable store sales growth in the mid-single digit range, and earnings per share between US$0.59 to US$0.63.”

PetSmart to increase quarterly dividend amount

PetSmart Inc., a pet product retailer, announced the board of directors' approval to increase its quarterly dividend by 18 percent from US$0.14 to US$0.165 per share beginning in the second quarter of fiscal 2012. A new US$525 million share purchase was also authorized that expires in January 2014, and begins on July 30.
“The return of excess cash to our shareholders through a combination of dividends and share repurchases reaffirms our commitment to the creation of shareholder value through effectively managing the capital in our business,” said Bob Moran, chairman and CEO. “We believe the stability and predictability of our cash flow demonstrates the continued strength of our business.”
The dividend of US$0.165 will be paid on August 10 to stockholders of record at the close of business on July 27, equivalent to an annual rate of US$0.66 per share.

Purina launches small animal treats in PetSmart stores

Pet food maker Purina recently launched two new lines of food and treats for small animals, available in US PetSmart stores. 
The new products, Purina Garden Recipe and Purina Small Animals, are specially formulated diets for gerbils, hamsters, guinea pigs, rabbits, rats and mice, Purina says, made from ingredients like seeds, nuts, vegetables and fruits. Products include Purina Garden Recipe Rabbit Diet, Purina Garden Recipe Rat and Mouse Diet, Purina Garden Recipe Guinea Pig Diet, Purina Garden Recipe Gerbil and Hamster Diet, Purina Apple-Flavored Flips, Purina Gourmet Bites with Tasty Vegetables, and Purina Treat Sticks varieties for guinea pigs, hamsters and rabbits.
"All pets, no matter how small, quickly become cherished family members,” said Gabriela Bonadonna, senior marketing manager for Land O’Lakes Purina Feed. “With years of experience feeding animals large and small, people have trusted Purina to provide quality products backed by more than a century of scientific research and an abiding passion for the health and well-being of animals of all sizes. With the launch of Purina Small Animals, we can be sure that even the smallest family members are getting the nutrition they need, the variety they love, and treats that taste good and satisfy.”

PetSmart reports higher earnings for fourth quarter, fiscal year 2011

Pet product retailer PetSmart Inc. reported its earnings per share rose 18 percent to US$0.91 in the fourth quarter of 2011, while earnings per share rose 27 percent over 2010 to US$2.55 for full-year 2011. 
For the fourth quarter of 2011, PetSmart reported comparable store sales, or sales in stores open for at least one year, grew by 5.5 percent, benefitting by comparable transactions growth of 2.9 percent. Total sales for the fourth quarter of 2011 rose 8 percent to US$1.6 billion, partially impacted by US$1 million in unfavorable foreign currency fluctuations. Services sales, which are included in total sales, grew 11 percent to US$168 million. For the 2011 fiscal year, PetSmart's comparable store sales grew by 5.4 percent, benefitting from comparable transactions growth of 2.5 percent. Total sales for the year rose 7 percent over 2010 to US$6.1 billion, including a favorable impact from foreign currency fluctuations of US$11 million, and services sales grew by 9 percent to US$675 million. During 2011, the company generated US$575 million in operating cash flow and spent US$121 million in capital expenditures. “Based on our fiscal year calendar, 2012 will contain a 53rd week. For all of 2012, we anticipate comparable store sales growth in the 3 percent to 4 percent range, and total sales growth in the 7.5 percent to 8.5 percent range. We expect earnings per share between US$3.02 to US$3.16, and spending for capital expenditures projects to be between US$130 million to US$140 million. The impact of the extra week is estimated to be US$120 million in sales and US$0.16 in EPS,” said Chip Molloy, executive vice president and chief financial officer. "For the first quarter of 2012, we are expecting comparable store sales growth in the low- to mid-single digits range, and earnings per share between US$0.70 to US$0.74.” 

PetSmart reports growth in first quarter 2011 financial earnings

PetSmart reported its financial results for the first quarter of 2011, announcing growth in total pet sales and net income over the first quarter of 2010.
The company reported a net income of US$71 million in the first quarter of 2011, compared to US$56 million in the first quarter of 2010. Total sales for the first quarter of 2011 increased by 6.8% to US$1.5 billion. Comparable store sales, or sales in stores open at least a year, grew by 5%, helped by 2.7% growth in comparable transactions, according to the company. Services sales, which are included in total sales, increased 9% to US$167 million.