By a News Reporter-Staff News Editor at Veterinary Week -- PetSmart, Inc. (NASDAQ:PETM), the world's largest specialty retailer of pet supplies and the foremost authority for pet parents seeking services and solutions for the lifetime needs of their pets, announced that based on a thorough business review that began last spring, the Board of Directors has determined that it will explore strategic alternatives for the Company to maximize value for shareholders, including a possible sale of the Company. The Board has been working with JP Morgan Securities LLC and Wachtell, Lipton, Rosen & Katz to assist in the process.
Said Gregory P. Josefowicz, Chairman, "PetSmart has delivered superb returns for our investors over a long period of time, with our shares outperforming the S&P 500 in seven of the last 10 fiscal years, and five out of the last six. Indeed, 5-year total shareholder return as of our fiscal year ended February 2, 2014 was 259.3% versus 140.6% for the S&P 500. For the same period, we delivered EPS CAGR of 21%, with 272 basis points of operating income margin expansion, and we returned nearly $2 billion to shareholders through dividends and share repurchases. We are extremely proud of what our PetSmart team has accomplished and, despite recent headwinds affecting PetSmart and many retailers, firmly believe the Company is very well positioned for superior future performance."
He continued: "Notwithstanding our confidence in the Company's future prospects, following a detailed Board review of the Company over the last several months, including many constructive conversations with a wide range of shareholders, we have decided to explore options to maximize shareholder value, including a potential sale of the Company."
"Whatever the outcome of the process, we are as committed as ever to continuing to meet the needs of our customers and their pets, attracting and retaining world class talent, and driving sales and margins," said Josefowicz. "We are not providing a timetable for our process, nor do we intend to comment further or update the market until it is complete."
David K. Lenhardt, President and Chief Executive Officer, said, "The entire management team is dedicated to continuing to deliver value for our customers and our shareholders. We are focused on pursuing our strategic plans, including this afternoon's announcement that we have entered into a definitive agreement to acquire Pet360 which will allow PetSmart to enhance its omni-channel capabilities and provide customers a unique and leading 360-degree shopping experience. This afternoon's announcement about exploring alternatives will not distract the management team from continuing to pursue a broad range of performance improvement initiatives already underway." PetSmart Background PetSmart, Inc. (NASDAQ:PETM) is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. Since opening its first store in 1987 in Phoenix, PetSmart has had a long and distinguished history of industry leadership and innovation, including creating the original national chain of pet superstores, combining unique value-added services (including in-store pet training, boarding, day-care, grooming, veterinary care and adoption services) with the broadest and deepest merchandise assortment to create an unrivaled experience for pet parents in a single box.
The company today employs approximately 53,000 highly trained associates and operates approximately 1,352 pet stores in the United States, Canada and Puerto Rico, 200 in-store PetSmart® PetsHotel® dog and cat boarding facilities, and full-service veterinary hospitals in 856 stores.
The Company also has best in class CRM capabilities and a rich database of over 35 million active customers (who accounted for approximately 90% of fiscal 2013 sales). It is the leading online provider of pet supplies and pet care information (http://www.petsmart.com).
Over the past five fiscal years, the Company has averaged 4.2% annual same-store sales growth while delivering an EPS CAGR of 21% and 272 basis points of operating income margin expansion. It has also generated substantial excess free cash flow and prudently returned capital to our shareholders (nearly $2.0 billion over the past five years) through regular dividends and share repurchases. Additionally, it has doubled its return on invested capital from 18.1% in 2009 to 36.2% in 2013.
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