Changes to State Line Tack® - February 28, 2007
What did PetSmart announce?
. In our fourth quarter earnings call, we announced we will exit our equine business. This means we'll close the 180 State Line Tack departments inside our stores and use the space to offer a bigger selection of pet products or to add PetsHotels, both of which are in high demand from our customers and are quite profitable.
. The company also is evaluating strategic alternatives for its equine catalog and e-commerce business, including all the inventory, the State Line Tack brand name, website and our customer contact lists, as well as our facility and store in Brockport.
. We plan to outsource our distribution and call center operations, transitioning out of these operations by August 31, 2007. We also plan to close the store here in Brockport.
Why did PetSmart make this decision?
. The equine business is much different from our core pet product and services business and we are not organized to focus on it. We've concluded that exiting State Line Tack and focusing solely on our core pet product and services is the best thing for our business. With equine out of the equation, it does not make economic sense to operate the Brockport distribution center solely for our pet e-commerce business.
. We felt it was in the best interest of our shareholders, our customers and our associates to focus our energy and our investments and the areas of the business where we have the best opportunities to grow and create value over the long term.
. This change leaves us with a strong, growing core business. It allows us to continue to focus on and invest in products and services for dogs, cats, birds and critters. These pieces of the business work well together and we have no plans to exit any of them.
What's next?
. We'll close the 180 State Line Tack departments inside our stores by Dec. 1, and we'll use the space to offer a bigger selection of pet products or to add PetsHotels, our overnight pet boarding facilities which are in high demand from our customers.
What will happen to the associates?
. We have about 425 associates working in State Line Tack departments inside our stores. We'll make every effort to offer them jobs in other areas of the store or in nearby PetSmart stores. In the cases where there isn't a job available for a displaced associate, or the associate chooses not to take a job, we'll offer severance benefits to those who remain with PetSmart through the closure of the State Line Tack at their store.
. About 270 people work in our Brockport, New York facility. The impact on these associates will depend entirely on the outcome of our strategic review of the business. If for some reason there is not a job available for any of these associates, they'll be eligible for severance pay and outplacement services.
What will happen to Lollypop Farm?
. We're working with our friends at Lollypop Farm, which has been a great adoption partner. We truly value and appreciate all that they have done in the community. They've created a strong program in partnership with our store and we're committed to doing what we can to help them continue their great work after we're gone. We'll be meeting with them to understand their needs so we can work in partnership to ease the transition for them and the community.
About State Line Tack
. State Line Tack opened a single retail outlet in 1980 in Plaistow, New Hampshire. In an effort to generate more business, the company began sending discount circulars to its customers. Those circulars grew into extensive catalogs, laying the groundwork for State Line's primary sales tool - direct mail.
. On January 30, 1996, PetSmart acquired State Line Tack, the leading worldwide catalog operator specializing in discount brand name tack, riding apparel and equine supplies.
. PetSmart continues to operate that catalog business, as well as an e-commerce equine business and 180 equine departments inside its stores.
About the PetSmart facility in Brockport, NY
. The Brockport facility covers approximately 396,000 square feet. It houses our equine and pet catalog and e-commerce businesses, including all of the inventory, the call center, and a PetSmart retail store.
. In May 1995, PetSmart acquired its Brockport warehouse and catalog fulfillment center from Sporting Dog, a catalog retailer of pet and animal supplies and accessories.
. After the acquisition of State Line Tack was finalized in 1996, PetSmart integrated the State Line Tack warehouse and catalog fulfillment facilities into the Brockport, New York facility.
. The retail store, which is part of the Brockport facility, opened in February of 2002.
About PetSmart in the state of New York
. PetSmart currently operates 28 stores in the state of New York, employing 1106 associates.
. We plan to open an additional 10 PetSmart stores in New York in 2007 and 2008, which will bring 300-400 new jobs to the state.
