The ratings on Phoenix, Ariz.-based PetSmart Inc. reflect the risks associated with the highly fragmented pet supplies retail industry, increasing competition from discounters and supermarkets, and the company's aggressive store growth. These factors are only partially mitigated by the company's established market position in the industry and solid operating performance and good credit protection measures. 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. So far, the company has successfully managed its operations during this difficult economic environment. For the first time in seven quarters PetSmart's store traffic turned slightly positive as the company maintained its focus on better customer experience and increased promotional activity.
