The ratings on PetsMart Inc. reflect the company's participation in the competitive and highly fragmented pet supplies retail industry. These risks are partially mitigated by the company's leading market position in the industry and its improved operating performance. This leading operator of specialty pet supply stores has made significant progress in turning around its operations over the past three years. PetsMart continued to post positive operating performance in 2004, as comparable-store sales increased 6.3% following a 7.0% advance in 2003. The gains are attributed to PetsMart's successful store reformatting and expanded focus on pet services. The reformatting of the company's store base into the Eagle format (which is desired to give customers an easier shopping experience) from its warehouse-style stores
