This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

PetSmart Shares Surge on Jana Stake

NEW YORK (The Deal) -- Jana Partners on Thursday disclosed a 9.9% stake in PetSmart (PETM) saying in a regulatory filing it intends to hold discussions with the retailer's board about options including a potential sale of the company.

New York-based Jana said in a filing that it has acquired 9.8 million shares, including 4.7 million options, because it believes the shares are undervalued.

Jana in its filing said it intends to talk to PetSmart's board about "exploring a sale, improving operating performance, the company's capital structure" and management and board composition.

Phoenix-based PetSmart operates more than 1,300 pet stores and about 200 dog and cat boarding facilities in the U.S., Puerto Rico and Canada. The company as of May 4 had $236.9 million in cash on its balance sheet and total debt of $519.4 million.

Pet stores are generally considered a safe haven during a recession, as spending on pets tends to hold up even as other economic indicators falter. But PetSmart shares have been under pressure of late on fears that growth at the company is playing dead.

The company reported that comparable-store sales declined by 0.6% during its fiscal first quarter, versus 3.5% comparable-store sales growth in the same three months of 2013 and a 7% uptick two years ago. Analysts have voiced concern that PetSmart's sales are being hurt by online retailers including Amazon.com(AMZN - Get Report), which has made a major push into the pet retail market.

PetSmart shares had fallen by more than 10% in the first half of 2014 before getting a pop Thursday after Jana's disclosure. The stock traded up more than 14%, or $8.53 apiece, to $68.34 on Thursday morning.

Pet stores have been popular among investors of late. Philip Falcone's Harbinger Partners last month launched a $505 million offer to acquire Central Garden & Pet (CENT - Get Report), sending shares of the pet and lawn products company up nearly 10%.

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
SYM TRADE IT LAST %CHG
AMZN $505.29 -1.50%
CENT $12.40 1.10%
PETM $82.98 0.04%
AAPL $110.91 -1.60%
FB $88.41 -1.10%

Markets

Chart of I:DJI
DOW 16,181.28 -346.75 -2.10%
S&P 500 1,934.21 -37.97 -1.93%
NASDAQ 4,704.7330 -71.7750 -1.50%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs