U.S.-based pet specialty retailer PetSmart LLC's earnings weakened this year due to contracting sales and margins amid competitive pressures and softer industry conditions. We believe PetSmart's operating performance could remain under pressure in 2025 due to macroeconomic challenges and heightened competition that could cause credit protection metrics to erode. We now expect S&P Global Ratings-adjusted debt to EBITDA in the mid 4x area over the next 12 months. This is higher than our previous expectations of leverage maintained below 4x. Therefore, we revised our outlook to negative from stable and affirmed all of our ratings, including our 'B+' issuer credit rating. The negative outlook reflects the risk that PetSmart's performance challenges persist, resulting in weaker credit metrics and cash flow
