Petsmart 2003 Annual Report Download - page 19

PART I
This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of
the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future
events or our future Ñnancial performance. We have attempted to identify forward-looking statements by
terminology including ""anticipate,'' ""believe,'' ""can,'' ""continue,'' ""could,'' ""estimate,'' ""expect,'' ""intend,'' ""may,''
""plan,'' ""potential,'' ""predict,'' ""should,'' or ""will'' or the negative of these terms or other comparable terminology.
These statements are only predictions and involve known and unknown risks, uncertainties, and other factors,
including the risks outlined under ""Business Risks'' contained in Part I of this Annual Report that may cause our
actual results, levels of activity, performance, or achievements to be materially diÅerent from any future results,
levels of activity, performance, or achievements expressed or implied by these forward-looking statements.
Although we believe the expectations reÖected in the forward-looking statements are reasonable, we cannot
guarantee future results, levels of activity, performance, or achievements. Our expectations are as of the date this
Annual Report on Form 10-K is Ñled, and we do not intend to update any of the forward-looking statements after
the date this Annual Report on Form 10-K is Ñled to conform these statements to actual results, unless required by
law.
Our Ñscal year consists of the 52 or 53 weeks ending on the Sunday nearest January 31 of the following year.
Unless otherwise speciÑed, all references in this Annual Report on Form 10-K to years are to Ñscal years. The 2003
and 2002 Ñscal years were 52-week years, and the 2001 Ñscal year was a 53-week year.
Item 1. Business
General
PETsMART was incorporated in Delaware on August 11, 1986, and opened its Ñrst two stores in March 1987.
In Ñscal 2003, we generated sales of $3.0 billion, making PETsMART the leading provider of products, services, and
solutions for the lifetime needs of pets in North America. We opened 60 net new stores in Ñscal 2003 and, as of
February 1, 2004, operated 643 retail stores in North America. Our stores typically range in size from 19,000 to
27,000 square feet. We also reach customers through our direct marketing channels, including PETsMART.com,
the internet's most popular pet e-commerce site, a separate web site dedicated to equine products, and two major
branded catalogs. Our stores carry a broad and deep selection of high quality pet supplies at everyday low prices. We
oÅer more than 12,000 distinct items, including nationally recognized brand names, as well as an extensive selection
of private brands across a range of product categories.
We complement our extensive product assortment with a wide selection of value-added pet services, including
grooming and pet training. Virtually all our stores oÅer complete pet training services and feature pet styling salons
that provide high quality grooming services. Through our strategic relationship with BanÑeld, The Pet Hospital,
operating under the registered trademark of BanÑeld, full-service veterinary care is available in approximately 350 of
our stores. We also continue to test the PETsMART PETsHOTEL
SM
boarding and daycamp concept, and, as of
February 1, 2004, we operated nine PETsHOTELs within our retail stores and one stand-alone location.
We have identiÑed a large group of pet owners we call ""pet parents,'' who are passionately committed to their
pets and consider their pets family members. Our strategy is to attract and keep these customers by becoming the
preferred provider of total lifetime care for pets. As part of this strategy, we focus on driving eÇciencies in our
stores, on our processes and our systems, on growing our pet services business, and on delighting our customers by
providing a superior store environment, a superior shopping experience, and superior service. We have improved our
distribution capabilities, implemented new management information systems, focused on developing our pet services
business, and worked to develop a culture of customer service. In addition, we completed the reformatting of our
stores in 2003. Our new store design creates a specialty store environment by organizing store layout by pet species,
placing a greater emphasis on pet services, and eliminating most of the high steel shelving, resulting in a brighter
and more open store. The new format, combined with our enhanced distribution and information systems
capabilities, has reduced inventories, made the store easier to shop, and allowed our associates to spend more time
serving customers. We believe these strategic initiatives will continue to drive enhanced comparable store sales
growth, proÑtability, and return on investment.
The Pet Food and Pet Supply Industry
The pet product industry serves a large and growing market. The American Pet Products Manufacturers
Association or APPMA, estimates the 2003 market at approximately $31.0 billion, an increase of approximately
1