The ratings on Phoenix, Az.-based PetsMart Inc. reflect the risks associated with the company's participation in the competitive, and highly fragmented, pet supplies retail industry. These risks are only partially mitigated by the company's established market position in the industry and its improved operating performance. PetsMart has made significant progress in turning around its operations over the past three years. The company continued to show positive operating performance, as comparable-store sales grew 4.9% in the first half of 2005 and 6.3% and 7% in all 2004 and 2003, respectively. The gains are attributed to PetsMart's successful store reformatting and expanded focus on pet services. The company is expected to accelerate its new store openings to about 100 annually over the
