The ratings on Phoenix, Ariz.-based PetSmart Inc. reflect the risks associated with the company's participation in the highly fragmented pet supplies retail industry and its aggressive store growth. These risks are only partially mitigated by the company's established market position in the industry and its improving operating trends and credit measures. PetSmart has made significant progress in improving its operations over the past three years. The company continued to show positive operating performance, as comparable-store sales grew 3.7% in the first quarter of 2006, following gains of 4.2% in all 2005 and 6.3% in all of 2004. The gains are attributed to PetSmart's successful store reformatting and expanded focus on pet services. The company is expected to accelerate its new
