The ratings on PetsMart Inc. reflect its inconsistent historic operating performance and a highly competitive and fragmented pet food supplies and services industry. These risks are somewhat mitigated by PetsMart's leading industry position. Phoenix, Ariz.-based PetsMart is the leading operator of superstores specializing in pet food, supplies, and services in North America. As of Aug. 4, 2002, the company was operating 570 stores in North America. Merchandise sales consist of pet food, treats, and litter; pet supplies; and small animals. After a period of weak operating performance due to store overexpansion and operating challenges in its warehouse-style stores, PetsMart turned around its operations in 2001 by achieving significantly better same-store sales growth of 6.5% followed by an increase of 10.8%
