Petsmart 2011 Annual Report Download - page 19

markets, warehouse clubs and other mass and retail merchandisers and the entrance of other specialty retailers
into the pet food and pet supply market, some of which have developed store formats similar to ours. We can
make no assurances we will not face greater competition from these or other retailers in the future, and changes
in their merchandising and operational strategies could impact our sales and profitability. In particular, if super-
market, warehouse club or other mass and retail merchandiser competitors seek to gain or retain market share by
reducing prices, we would likely reduce our prices on similar product offerings in order to remain competitive,
which may result in a decrease in our market share, sales, operating results and profitability and require a change
in our operating strategies.
We also have been able to compete successfully by differentiating ourselves from our competitors through
providing a careful combination of product assortment, competitive pricing, service offerings and unique
customer experience. If changes in consumer preferences decrease the competitive advantage attributable to these
factors, or if we fail to otherwise positively differentiate our customer experience from our competitors, our
business and results of operations could be adversely affected.
Comparable store sales growth may decrease. If we are unable to increase sales at our existing stores, our
results of operations could be harmed.
We can make no assurances that our stores will meet forecasted levels of sales and profitability. As a result
of new store openings in existing markets, and because older stores will represent an increasing proportion of our
store base over time, our comparable store sales performance may be materially impacted in future periods. In
addition, a portion of a typical new store’s sales comes from customers who previously shopped at other
PetSmart stores in the existing market.
We may be unable to continue to open new stores and enter new markets successfully. If we are unable to
successfully reformat existing stores and open new stores, our results of operations could be harmed. Also,
store development may place increasing demands on management and operating systems and may erode sales
at existing stores.
We currently operate stores in most of the major market areas of the United States and Canada. Our ability
to be successful with our store development efforts is dependent on various factors, some of which are outside
our control, including:
• Identifying store sites that offer attractive returns on our investment notwithstanding the impact of canni-
balization of our existing stores;
• Competition for those sites;
• Successfully negotiating with landlords to achieve acceptable lease terms and obtaining any necessary
governmental, regulatory or private approvals;
• Timely construction of stores;
• Our ability to attract and retain qualified store personnel; and
• Our ability to reformat existing stores in a manner that achieves appropriate returns on our investment.
To the extent we are unable to accomplish any of the above, our ability to open new stores and hotels or
reformat existing ones may be harmed and our future sales and profits may be adversely affected. In addition, we
can make no assurances that we will be able to meet the forecasted level of sales or operate our new stores or
hotels profitably.
The increased demands placed on existing systems and procedures, and on management by our store devel-
opment plans, also could result in operational inefficiencies and less effective management of our business and
associates, which could in turn adversely affect our financial performance. Opening new stores in a market will
attract some customers away from other stores already operated by us in that market and diminish their sales. An
increase in construction costs and/or building material costs could also adversely affect our financial perform-
ance.
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