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April 16, 2012
DearFellowStockholders:
2011wasayeartocelebrate.Tocelebratethe“HappinessinStore”experiencethatourknowledgeable,
caring associates deliver to our pet parents each and every day. Our passionate associates are the
foundation of our differentiated in-store experience, with a focus on providing solutions to our pet
parentstohelpthemhelptheirpetslivelong,healthy,happylives.Byprovidingthelargestassortment
withanunmatchedcustomerexperienceatagreatvalue,wesetourselvesapartfromthecompetition
andastheleadingpetspecialtyretailer.
Ournancialresultshaveneverbeenstronger.Wedrovecomparablestoresalesgrowthof5.4%,and
increasedtotalsalesby7%.Ourstrongsalesperformance,combinedwithourcontinuedcostandcapital
discipline,resultedinearningspersharegrowthof27%.
We’vecreatedadifferentiatedandcompellingproductassortment.Astheleaderinexpertrecommended
petnutrition,we’veexpandedourselectionofchannel-exclusivepetfoodandtreats,inordertodrive
increasedloyaltyandprotability.We’veincreasedthepenetrationofourexclusiveproprietarybrands
acrossthestore,and developedcategories thatwe cancontinue togrowwith keybrands including
Martha Stewart Pets™and GNC Pets.
™ By fostering this culture of innovation, we’ve developed new
partnerships, including Toys “R” Us Pets™ and the Bret Michaels Pets Rock™ collection, to fuel our
productinnovationpipelineanddrivelong-termgrowthwellintothefuture.
Ourfullrangeofservicesofferingsisanotherkeypointofdifferentiation.Wearetheonlypetretailer
to provide professional grooming, training, boarding, day camp, and veterinary care, all under one
roof.In2011,servicessalesincreased9%to$675million,or11%ofsales.Intheservicesbusiness,we
understandthatitisaboutrelationships,andpetparentswantthebestlevelofcarefortheirpets,who
arevaluedmembersofthefamily.
We’ve used compelling marketing and promotions to increase loyalty, communicate exclusivity and
value,andtodrivetrafcintoourstores.ThePetSmartbrandisstrong.Itisrecognizable,anditconnects
withtheconsumer.
Wegenerated$575millioninoperatingcashow,andspent$121millionincapitalexpenditures,adding
45 net new stores and 12 PetsHotels, ending the year with 1,232 stores and 192 PetsHotels in the United
States,Canada,andPuertoRico.Weboughtback$337millionofPetSmartstockunderour$450million
sharepurchaseprogram.Wealsoincreasedourquarterlydividend12%from12.5centsto14centsper
share,andpaid$60millionindividends.
Letter to the
Stockholders
Robert F. Moran, Chairman and
Chief Executive Ofcer with Tatum