The ratings on Phoenix, Ariz.-based PetSmart Inc. reflect the risks associated with the highly fragmented pet supplies retail industry and the company's aggressive store growth. The company's established market position in the industry, solid operating performance, and good credit protection measures only partially mitigate those factors. PetSmart is the leading specialty retailer of products, services, and solutions for the lifetime needs of pets in the $41.2 billion pet products industry. PetSmart's operating performance has been stable for the past several years. Positive sales trends are attributed to the company's successful store reformatting and expanded focus on pet services. The company maintains solid profitability amid a tougher economic and retail environment through better inventory and expense management. Operating margins for the
