Petsmart 2007 Annual Report Download - page 11

Merchandise
Merchandise, which has been decreasing as a percentage of net sales due to the higher growth rate in services,
represented approximately 90.2% of our net sales in 2007, 91.1% in 2006 and 92.1% in 2005. Merchandise
generally falls into three main categories:
•Pet Food, Treats and Litter. We emphasize premium dog and cat foods, many of which are not available in
supermarkets, warehouse clubs or other mass and general retail merchandisers. We also offer quality
national brands traditionally found in supermarkets and pet stores. The sale of pet food, treats and litter
comprised 41%, 40% and 40% of our net sales in 2007, 2006 and 2005, respectively.
•Pet Supplies and Other Goods. Our broad assortment of pet supplies includes collars, leashes, health and
beauty aids, shampoos, medication, toys, pet carriers and pet houses. We also offer a complete line of
supplies for fish, birds, reptiles and small pets. These products include aquariums and habitats, filters and
birdcages. The sale of pet supplies and other goods comprised 47%, 48% and 49% of our net sales in 2007,
2006 and 2005, respectively.
•Pets. Our stores feature fresh-water tropical fish, birds, reptiles and small pets. Pets comprised 2%, 3% and
3% of our net sales in 2007, 2006 and 2005, respectively. We do not sell dogs or cats, but instead provide
space in most stores for adoption partners to use.
Pet Services
Pet services, which include grooming, training, boarding and day camp, represented 9.8%, 8.9% and 7.9% of
our net sales in 2007, 2006 and 2005, respectively. Net sales from pet services grew 22.0% from $376.0 million in
2006 to $458.7 million in 2007.
We offer full-service grooming and training services in virtually all our stores. We typically allocate an average
of 800 square feet per store for high-quality, full-service grooming, including precision cuts, baths, toenail trimming
and toothbrushing. Depending on their experience, our pet stylists are educated as part of a comprehensive program
that teaches exceptional grooming skills using safe and gentle techniques. Pet training services range from puppy
classes to advanced and private courses.
PetsHotels provide boarding for dogs and cats, 24-hour supervision by caregivers who are PetSmart trained to
provide personalized pet care, an on-call veterinarian, temperature controlled rooms and suites, daily specialty
treats and play time as well as day camp for dogs. In 2005, we began a national rollout of PetsHotels at selected
locations. As of February 3, 2008, we operated 97 PetsHotels, and we plan to open 45 PetsHotels in 2008.
Veterinary Services
The availability of comprehensive veterinary care in our stores further differentiates us, drives sales in our
stores and reflects our overall commitment to pet care. Full-service veterinary hospitals in 685 of our stores offer
routine examinations and vaccinations, dental care, a pharmacy and routine and complex surgical procedures. As of
February 3, 2008, Medical Management International, Inc. operated 673 of the hospitals under the registered trade
name of Banfield, The Pet Hospital. Medical Management International, Inc. is a wholly-owned subsidiary of MMI
Holdings, Inc., collectively referred to as MMIH. The remaining 12 hospitals are located in Canada and are operated
by other third parties. See Note 2 to the Notes to Consolidated Financial Statements for a discussion of our
ownership interest in MMIH.
PetSmart Charities and Adoptions
Through PetSmart Charities, Inc., an independent 501(c)(3) organization, we support the activities of animal
welfare organizations in North America. PetSmart Charities creates and supports programs to help find a lifelong
loving home for every pet, by:
• Raising awareness of companion animal welfare issues;
• Funding programs to further individual animal welfare organizations’ missions; and
• Facilitating adoptions through in-store programs and pet transport programs.
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