Petsmart.com fetches $30 million in funding
Brick-and-mortar retailer Petsmart plans to pump $30 million into its namesake Web site and to take a controlling stake in the operation as well.
The Phoenix, Ariz.-based company announced Wednesday that it plans to pump $30 million into its namesake Web site and to take a controlling stake in the operation as well.
Through the transaction, Petsmart will increase its ownership of the Internet company to 81 percent, from a minority share of 48 percent.
The investment will come in two parts: a cash injection of $20 million and the contribution of its pet catalog business, which Petsmart values around $10 million. The cash will come in two $10 million installments, with the first being paid after the deal is signed.
Other terms of the transaction, which is expected to close this month, were not disclosed.
Petsmart.com has an opportunity to become the pick of the litter among pet-focused e-tailers. Just a week ago, rival Pets.com ceased retail operations and laid off the bulk of its employees. Another site, Petopia, laid off 60 percent of its staff in October.
But the company may be hard pressed for profits. In other news Wednesday, Petsmart said that it expects to report lower-than-expected financial results for its third quarter, which ended Oct. 29, with earnings per share in the range of 2 cents to 3 cents. The consensus estimate of analysts at First Call/Thomson Financial was 7 cents.
For the current fiscal year, Petsmart expects sales through the Web site of approximately $50 million.
The retailer operates more than 525 superstores in the United States and Canada and has a pet and equine catalog business in addition to its e-commerce site.
Petsmart.com, of Pasadena, Calif., offers pet owners a range of supplies, information and educational tools. The company launched in June 1999 and filed for its initial public offering in February of this year.