U.S.-based specialty pet retailer PetSmart Inc. performed weaker than we anticipated in third-quarter 2017 on more aggressive expansion of the Chewy customer base and negative comps at its brick–and-mortar stores that squeezed performance metrics. We believe the company will underperform our previous forecast. Our updated base-case forecast shows elevated leverage, declining fixed-charge coverage as well as weaker profits and cash flow. We are lowering our ratings on the company, including the corporate credit rating to 'CCC+' reflecting our view the capital structure is unsustainable unless EBITDA rises significantly, which we do not expect over the next year. The negative outlook reflects the possibility that PetSmart could continue to underperform our lower expectations leading us to believe that its debt service
