PetsMart buys 50 British stores

From ANIMAL PEOPLE, Jan/Feb 1997:

PHOENIX––PetsMart, only founded in
1989 but already operating 311 U.S. stores in 33
states, on October 25 expanded to Great Britain,
purchasing the 50-store Pet City Holdings chain for
$239 million. PetsMart CEO Mark Hansen said the
acquisition “provides a platform for expansion in
Europe,” which he said “represents a 900-to-1,000-
store opportunity,” about the same size as the niche
PetsMart seeks in the U.S. market.
One secret of PetsMart success is privatizing
and making profitable at affordable prices some
of the otherwise money-losing functions of nonprofit
humane societies. PetsMart stores provide local
humane societies with an adoption venue, rather
than selling purpose-bred dogs and cats, and frequently
include in-house low-cost neutering clinics.

London Times Business News c o r r e s p o ndent
Richard Thomson warned, however, that
PetsMart has “become one of the fastest-growing
store chains in the U.S. partly by paying what many
Wall Street analysts regard as inflated prices for
other store groups. As with the Pet City offer,
PetsMart paid for the purchases with shares rather
than cash or loans. Analysts pointed out that the
company’s strategy appeared to be that of a classic
high growth stock, keeping its share value high by
rapid expansion while constantly issuing new shares
to fuel its growth. Meanwhile, profits have lagged.
In 1995, the company incurred a loss of $2.8 million
on revenues of $1 billion. PetsMart has never made
any dividend payments.”
However, Thomson added, PetsMart is
succeeding in grabbing away from supermarkets a
huge share of the pet supply trade, worth $17 billion
a year in the U.S. and growing at 15% per year.