Petsmart 2010 Annual Report Download - page 20

we believe our vendor relationships are good, we have no material long-term supply commitments from our vendors
and any vendor could discontinue selling to us at any time.
Many factors relating to our vendors and the countries in which they are located are beyond our control,
including the stability of the political, economic and financial environments where they are located, their ability to
operate in challenging economic environments or meet our standards and applicable U.S. and local legal
requirements, the availability of labor and raw materials, labor unrest, merchandise quality issues, currency
exchange rates, trade restrictions, transport availability and cost, inflation and other factors. In addition, Canada’s
and the United States’ foreign trade policies, tariffs and other impositions on imported goods, trade sanctions
imposed on certain countries, the limitation on the import of certain types of goods or of goods containing certain
materials from other countries and other factors relating to foreign trade are beyond our control. These factors
affecting our vendors and our access to products could adversely affect our operations and our financial
performance.
Our expanded offering of proprietary branded products may not improve our financial performance and
may expose us to product liability claims.
We offer various proprietary branded products, for which we rely on third-party manufacturers. Such third-
party manufacturers may prove to be unreliable, or the quality of the products may not meet our expectations. In
addition, our proprietary branded products compete with other manufacturers’ branded items that we offer. As we
continue to evaluate the number and types of proprietary branded products that we sell, we may adversely affect our
relationships with our vendors, who may decide to reduce their product offerings through us and increase their
product offerings through our competitors. Finally, if any of our customers are harmed by our proprietary branded
products, they may bring product liability and other claims against us. Any of these circumstances could have an
adverse effect on our business and financial performance.
Food safety, quality and health concerns could affect our business.
We could be adversely affected if consumers lose confidence in the safety and quality of vendor-supplied food
products and hard-good products. Adverse publicity about these types of concerns, whether valid or not, may
discourage consumers from buying the products in our stores or cause vendor production and delivery disruptions.
The real or perceived sale of contaminated food products by us could result in product liability claims against our
vendors or us, expose us or our vendors to governmental enforcement action or private litigation, or lead to costly
recalls and a loss of consumer confidence, any of which could have an adverse effect on our sales and operations and
financial performance.
We depend on key executives, store managers and other personnel and may not be able to retain or replace
these employees or recruit additional qualified personnel, which could harm our business.
Our success is largely dependent on the efforts and abilities of our senior executive group and other key
personnel. The loss of the services of one or more of our key executives or personnel, or the increased demands
placed on our key executives and personnel by our continued growth, could adversely impact our financial
performance and our ability to execute our strategies. In addition, our future success depends on our ability to
attract, train, manage and retain highly skilled store managers and qualified services personnel such as pet trainers
and groomers. There is a high level of competition for these employees and our ability to operate our stores and
expand our services depends on our ability to attract and retain these personnel. Competition for qualified
management and services personnel could require us to pay higher wages or other compensation to attract a
sufficient number of employees. Turnover, which has historically been high among entry-level or part-time
associates at our stores and distribution centers, increases the risk associates will not have the training and
experience needed to provide competitive, high-quality customer service. Our ability to meet our labor needs while
controlling our labor costs is subject to numerous external factors, including unemployment levels, prevailing wage
rates, changing demographics and changes in employment legislation. If we are unable to retain qualified associates
or our labor costs increase significantly, our business operations and our financial performance could be adversely
impacted. In addition, there historically has been a shortage of qualified veterinarians. If third party veterinary
services providers cannot attract and retain a sufficient number of qualified veterinarians, their ability to provide
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