PetSmart is the latest highly-leveraged — and sales challenged — retailer to be struggling under debt accumulated in a private equity buyout.
The pet supplies retailer has hired investment bank Houlihan Lokey Inc. to help it explore way to trim its debt load of more than $8 billion, reported
Reuters. BC Partners Inc. acquired PetSmart for $8.7 billion in 2014. Since then, the retailer has faced increased competition, especially online. Amazon has been turning up the heat, launching its own private-label pet food line under the Wag label. To beef up its digital offerings,
PetSmart acquired its fast-growing online rival, Chewy, in April 2017 for $3.35 billion, which added another $2 billion to the chain’s debt load.
PetSmart recently transferred over a third of Chewy.com’s equity to separate entities, putting the stake out of creditors’ reach. The move is similar to asset transfers undertaken by other debt-distressed retailers, which have created subsidiaries to hold assets, protecting them from creditors.