PetSmart Exiting Equine Business

Pet products merchant PetSmart is exploring strategic opportunities for its State Line Tack direct business. It is also removing the State Line Tack departments from the 180 PetSmart stores in which the brand has a presence.

State Line Tack represented just 2% of the Phoenix-based retailer’s $4.23 billion in sales last year. Bruce Richardson, director of external communications for PetSmart, says that the company’s core cat and dog business is much more profitable. And he admits that the company cannot service its equine customers as well as it can its other customers.

“It’s a great business with a strong customer base,” Richardson says. “It’s just not the right fit for us. Someone looking to get into the equine-care business could find plenty of things attractive about what it has to offer.”

David Solomon, co-CEO of New York investment bank Goldsmith, Agio, Helms, says the investment community has applauded PetSmart’s decision to explore its options with State Line tack.

“There is not a lot of synergy with dogs and cats and horses,” Solomon says. “It’s not a large percent of what PetSmart does, so the market reaction is pretty positive about them exiting the business.”

State Line Tack was founded as a store in New Hampshire and branched out to circulars and catalogs before being acquired by PetSmart in 1996. In addition to its print catalogs, State Line Tack has an e-commerce Website distinct from that of PetSmart. State Line Tack has its own distribution center and contact center in Brockport, NY.

One source, speaking on the condition of anonymity, says that Littleton, MA-based Dover Saddlery, a major cataloger/retailer of equine supplies, could make a play for State Line Tack. Dover had sales of $73 million for 2006. It acquired Dominion Saddlery, a four-store chain, last year.

The source notes that Dover president/CEO Stephen Day ran State Line Tack from 1991 until its sale to PetSmart. In addition, Dover Saddlery officers Jonathan A.R. Grylls and William Schmidt had at one time been officers of State Line Tack.

“Day knows the business well,” the source says. “But he may also let it go out of business.”

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