Petsmart 2000 Annual Report Download - page 7

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PETsMART Direct
PETsMART Direct, the Company’ s catalog operation, is the leading direct marketing retailer of pet related
and equine products in North America. Direct sells pet supplies through three catalogs: R.C. Steele, Pedigrees
and Groomer Direct. Direct also offers discount brand name tack, riding apparel and equine supplies through
four additional catalogs: State Line Tack Western, State Line Tack English, Wiese Equine Supply and National
Bridle Shop. In fiscal 1999, PETsMART Direct circulated more than 33 million catalogs. Direct’ s marketing and
customer database management is designed to attract new customers and to generate additional sales from
existing catalog or retail customers. Direct’ s proprietary customer database currently contains the names of
approximately 1,184,000 million customers who have made a purchase from Direct catalogs within the past
24 months. In fiscal 1999, Direct’ s average transaction was approximately $89. Also during fiscal 1999, Direct
recorded sales of $1.0 million through statelinetack.com and rcsteele.com, which offer equine and pet- related
products over the Internet. Direct has an agreement with PETsMART.com to service their fulfillment needs
utilizing Direct’ s Brockport, N ew York distribution facility. Additionally, Direct has a contract to provide
PETsMART.com with the procurement and shipping services related to merchandise ordered on the Internet. In
fiscal year 1999, 370,000 orders were fulfilled and shipped by Direct for PETsMART.com.
Distribution
The Company currently employs a hybrid distribution system including, as appropriate, full truckload
shipments to individual superstores, the splitting of full truckloads among several closely located superstores,
consolidation centers to service regional clusters of superstores and central distribution centers. The Company
leases and operates a 594,000 square foot distribution center in Columbus, O hio utilizing four separate buildings
at that location, and a 430,000 square foot distribution center in Phoenix, Arizona. The Company has a 230,000
square foot leased facility in Ennis, Texas, which was redesigned in N ovember 1999, as a forward distribution
center. This distribution center will handle fast turn consumables for rapid replenishment and improved inventory
productivity in an efficient, cost effective manner. A new 613,000 square foot distribution center is currently
under construction in Columbus, O hio which will replace the existing facility in September 2000. O ne of the
existing C olumbus buildings (approximately 240,000 sq. ft.) will be retrofitted into a forward distribution center.
A total of five forward distribution centers are planned through fiscal year 2001. As these new facilities are
opened, the 13 leased regional consolidation centers will be phased out of operation and closed. In addition,
PETsMART Direct owns and operates a 392,000 square foot catalog fulfillment and equine distribution center in
Brockport, New York. This facility was expanded in 1999 to
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accommodate anticipated additional volume from the Company’ s expanded electronic commerce activities. See
“Business Risks — Electronic Commerce Initiatives”.
Information Systems
The Company’ s systems initiatives in 1999 included new in-store point of sale and support systems,
warehousing systems, communication systems, and SAP Retail management information systems. The
implementation of various applications began in the summer of 1999. The Company estimates that its costs in
connection with the development, implementation, training and maintenance of these new systems since inception,
9/16/2010 www.sec.gov/Archives/edgar/data/86…
sec.gov/…/0000950153-00-000575-d1.… 7/70