The ratings reflect PetsMart Inc.'s (PetsMart) participation in the competitive and highly fragmented pet supplies retail industry and its improving but still inconsistent operating history. These risks are mitigated somewhat by the company's leading position in the industry and its significantly improved operating performance. As the leading operator of specialty pet supply stores, Phoenix, Ariz.-based PetsMart has made significant progress in turning around its operations, resulting in solid same-store sales increases over the past three years. Petsmart continues to post positive operating performance in 2004 with comparable store sales increasing 8.7% in the first quarter. This is attributed to PetsMart's successful store reformatting, expanded focus on pet services, and improved operating efficiency. The reformatting of the company's store base into
