PetSmart, the nation’s largest pet products retailer and the home to most Banfield veterinary hospitals, may be on the sales block.
The Phoenix-based retailer reported Aug. 19 that it would consider a sale in light of claims by minority investor Jana Partners that PetSmart has “clearly underperformed for shareholders” and should “conduct a full review of all strategic alternatives including a sale.”
A longstanding corporate partnership allows nearly all 800 Banfield hospitals to operate inside a PetSmart store.
Veterinary clients would not see any meaningful change if a sale occurs, according to Portland, Ore.-based Banfield Pet Hospital.
“Banfield has an agreement that governs our relationship with PetSmart, and it will remain in effect regardless of any change in PetSmart ownership,” the hospital chain noted in a prepared statement.
Jana Partners, a New York hedge fund, in early August called on PetSmart to pursue a sale, saying the retailer has endured “years of underperformance” and that “multiple interested potential acquirers” exist.
Critics of PetSmart have little reason to grumble, chairman Gregory P. Josefowicz said.
“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,” Josefowicz said.
“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 added.
Nonetheless, Josefowicz said, “We have decided to explore options to maximize shareholder value, including a potential sale of the company.”
PetSmart, which operates 1,352 stores, also announced Aug. 19 an agreement to buy the online retailer Pet360 for at least $130 million.
Pet360, which is headquartered in suburban Philadelphia, operates nine websites, such as petMD.com and PetFoodDirect.com.
PetSmart’s second-quarter financial results showed net sales increasing by 1.4 percent, to $1.7 billion, compared to the same period in 2013. Net income rose by 5.1 percent, to $98.1 million.