SOURCE: PetSmart

PetSmart

June 23, 2009 16:30 ET

PetSmart Announces a 233% Increase to Its Quarterly Dividend and $350 Million Stock Purchase Plan

Reaffirms Commitment to Growth and Maximizing Store Productivity

PHOENIX, AZ--(Marketwire - June 23, 2009) - PetSmart, Inc. (NASDAQ: PETM), the leader in pet specialty retail, announced the Board of Directors' approval to increase its quarterly dividend by 233% from $0.03 to $0.10 per share beginning in the second quarter of fiscal 2009. The Board of Directors also authorized a $350 million stock purchase plan that expires in January 2012.

"PetSmart continues to perform well, even in this economic environment, and is generating significant free cash flow," said Bob Moran, Chief Executive Officer and President. "The stability and predictability of our cash flow demonstrates the continued strength of our business. While we are significantly increasing our dividend and share purchase program, we remain committed to delivering a great customer experience and continuing to drive growth through investing in our existing stores and the opening of new stores."

PetSmart's dividend increase and share purchase authorization follow an extensive analysis of PetSmart's expected free cash flows that confirmed our confidence in our current operating plan to:

-- Continue to grow the business, which includes growing new stores by about 40 per year for the foreseeable future with further room to grow in the footprint as well as continuing to reinvest in our existing stores to improve our comparable stores sales growth and gross margins.

-- Return significant cash to shareholders after investing in existing and new stores by increasing the quarterly dividend to $0.10 per share from $0.03, payable August 14, 2009, to shareholders of record at the close of business on July 31, 2009. This increase results in an indicated annual rate of $0.40 per share. In addition, the Board authorized a share purchase program allowing the company to opportunistically purchase shares of up to $350 million over the next 2.5 years.

"We are focused on increasing our returns on capital, maintaining expense discipline, improving our existing store base and seeking opportunities to invest in growth with high returns," said Chip Molloy, Senior Vice President and Chief Financial Officer. "We are unique in our ability to return significant amounts of capital to our shareholders without having to reduce our revenue or earnings growth expectations, or the customer experience."

"We are confident that these actions will allow us to react quickly in this ever changing retail environment," said Mr. Moran. "This mix of dividends and share purchases, along with our existing capital plan, demonstrates our ability to continue to deliver the best possible customer experience while also increasing our total shareholder returns."

About PetSmart

PetSmart, Inc. is the largest specialty pet retailer of services and solutions for the lifetime needs of pets. The company operates more than 1,137 pet stores in the United States and Canada, 152 in-store PetSmart PetsHotel® cat and dog boarding facilities, and is a leading online provider of pet supplies and pet care information (www.petsmart.com). PetSmart provides a broad range of competitively priced pet food and pet products; and offers complete pet training, pet grooming, pet boarding, Doggie Day Camp(SM) pet day care services and pet adoption services. Since 1994, PetSmart Charities, Inc., an independent 501(c)(3) non-profit animal welfare organization, has funded more than $87 million in grants and programs benefiting animal welfare organizations and, through its in-store pet adoption programs, has helped save the lives of more than 3.6 million pets.

Forward-looking statements

This news release contains forward-looking statements, including statements relating to future revenue growth and goals, our expectations regarding the reduction of outstanding shares as a result of our share purchase program and future business opportunities that involve substantial risks and uncertainties. Such risks and uncertainties include, but are not limited to: changes in general economic conditions; conditions affecting customer transactions and average ticket including, but not limited to, weather conditions or other seasonal events; our ability to compete effectively; disruption of our supply chain; our ability to effectively manage our growth and operations; changes in our cost structure; and changes in the legal or regulatory environment. Undue reliance should not be placed on such forward-looking statements as they speak only as of the date hereof, and we undertake no obligation to update these statements to reflect subsequent events or circumstances except as may be required by law. For additional information on these and other factors that arise when investing in PetSmart, please see our filings with the Securities and Exchange Commission, including our most recent annual report on Form 10-K and subsequent reports on Forms 10-Q and 8-K.

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