PetSmart Inc. (NASDAQ: PETM), the country's largest supplier of all types of pet needs, is taking a $4.7 million write down to exit the horse equipment business in its stores. From now on, PetSmart will concentrate on cats, dogs, ferrets and fish. The company released 3Q 2007 results last week. Net sales were up 1.4% to $1.12 billion, but net income was down $2 million to $29.5 million. PetSmart figures it can turn a bigger profit per square foot by concentrating on smaller sized pet needs, as well as by providing pet services such as grooming and training. Pet services income increased 23% to $111 million for the quarter.

PetSmart also operates in-store Banfield veterinary offices through MMI Holdings, but is in the process of changing the financial arrangements that govern that relationship. PetSmart sold its portion of MMI Holdings Inc. earlier in the year. The proceeds from the sale account for $0.48 per share for the full year projected EPS of $2.05-2.09. To bolster its bottom line, PetSmart has accelerated its stock buyback, purchasing 6.2 million shares for $225 million during 3Q 2007, with plans to purchase another $75 million worth of stock.

Unlike many retailers that are cautious about this holiday shopping season, CEO Phil Francis is optimistic. Shelves once given over to equine equipment are now filled with quicker selling gift items for household pets "to delight the customer."

In addition to its retail functions, PetSmart also operates PetSmart Charities, which sent pet rescue vans and supplies to California to assist with animal evacuations during the recent wildfires. To date, PetSmart's in-store pet adoption program has given the gift of a home and family to more than 3 million pets.