Petsmart 2012 Annual Report Download - page 4

April 17, 2013
DearFellowStockholders:
2012wasamilestoneyearforPetSmartaswecelebratedour25thanniversaryofhelpingPetParents
providethebestcarefortheirpetswithourpromiseofTotalLifetimeCare.
SMOurfocusisonproviding
solutions through developing innovative products and services, engaging with our customers in
an authentic way, and driving consistent execution in all that we do. All of these things create the
differentiationthatmakesusthepetspecialtyleader.Overtheyears,we’vebeenfortunatetobeable
to lead industry trends that have changed the pet shopping experience, most notably through exclusive
productsandservices,awidefoodassortmentfocusedonnaturalingredients,andprovidingfreespace
tofacilitatemorethan5millionpetadoptionsinourstores.
Ourfinancialframeworkdefinestheparametersofhowweoperateourbusinesswiththegoalofdriving
topquartilereturnsof13%to18%totalshareholderreturns.In2012,wecontinuedtodeliverstrong
financialresults.Wedrovecomparablestoresalesgrowthof6.3%,andincreasedtotalsalesby11%.Our
strongsalesperformance,combinedwithourcontinuedcostandcapitaldiscipline,createdearningsper
sharegrowthof39%.
Duringtheyear,wegenerated$653millioninoperatingcashflow,andspent$138millionincapital
expenditures,adding46netnewstoresand4PetsHotels.Weendedtheyearwith1,278storesand
196PetsHotelsintheUnitedStates,CanadaandPuertoRico.Weboughtback$457millionofPetSmart
stockand receivedapprovalforanew $525million sharepurchaseprogram.We alsoincreasedour
quarterlydividend18%from14centsto16.5centspershare,andpaid$84millionindividends.
Weunderstandthatourdifferentiationandstrengthcomesfromknowingourcustomersandthepassion
thattheyhavefortheirpets.ThatiswhyweofferourPetParentssolutionsthroughinnovativeproducts
andhighlydifferentiatedservices.Wehavemorethan10,000distinctitemsofdog,cat,fish,bird,reptile,
small animal and other specialty products in our stores, including many well known and recognized
brandsandagrowingportfolioofinnovativeandexclusivebrandsthatresonatewithourPetParents.
Wecontinuetofuelourpipelineofinnovationwiththeadditionofnewexclusivepartnershipsincluding
Toys“R”UsPets,
™BretMichaelsPetsRock™andDisney. ™
Ourhighlydifferentiatedservicesofferingsincludeprofessionalgrooming,training,boarding,daycamp
andfullserviceveterinarycareallunderoneroof.Theseservicesareanintegralpartofourstrategyto
engageourPetParents,understandtheirneeds,andprovidesolutionsthatpromotecustomerloyalty.
WecontinuetoinvestinourservicesbusinesseswiththePetSmartGroomingLookGreatGuarantee,
which has inspired new customers to try our grooming services and improved loyalty with our existing
customers.TobetterserveourPetsHotelcustomersandimproveouroperationalefficiencies,thisyear
wecompletedtherolloutofourPetsHotelcallcenternationallytoallofourhotels.In2012,services
salesincreased10%to$740million,or11%ofnetsales.OurservicesofferingsfulfillPetParents’desire
totreattheirpetslikefamily.
2012
Letter to the Stockholders