Petsmart 2011 Annual Report Download - page 14

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tribution centers handle both consumable and non-consumable products. We believe the combination distribution
centers drive efficiencies in transportation costs and store labor. Our suppliers generally ship merchandise to one
of our distribution centers, which receive and allocate merchandise to our stores. We contract the transportation
of merchandise from our distribution centers to stores through third-party vendors.
Merchandise
Merchandise sales, which have been decreasing as a percentage of net sales due to the higher growth rate in
services, represented approximately 88.4%, 88.5% and 89.2% of our net sales in 2011, 2010 and 2009,
respectively. Merchandise generally falls into three main categories:
•Consumables. Consumables merchandise sales includes pet food, treats and litter.We emphasize super-
premium, premium and therapeutic dog and cat foods, many of which are not available in grocery stores,
warehouse clubs or other mass and general retail merchandisers, as well as our private label foods. We
also offer quality national brands traditionally found in grocery stores, warehouse clubs or other mass
merchandisers, and pet stores. Consumables merchandise sales comprised 52.8%, 52.5% and 53.4% of our
net sales in 2011, 2010 and 2009, respectively.
•Hardgoods. Hardgoods merchandise sales includes pet supplies and other goods.Our broad assortment
of pet supplies, including exclusive and private label products, includes collars, leashes, health care sup-
plies, grooming and beauty aids, toys and apparel, as well as pet beds and carriers. We also offer a com-
plete line of supplies for fish, birds, reptiles and small pets. These products include aquariums and
habitats, as well as accessories, décor and filters. Hardgoods merchandise sales comprised 33.9%, 34.4%
and 34.0% of our net sales in 2011, 2010 and 2009, respectively.
•Pets. Our stores feature fresh-water fish, small birds, reptiles and small pets. Pets comprised 1.7%, 1.6%
and 1.8% of our net sales in 2011, 2010, and 2009, respectively. We do not sell dogs or cats, but provide
space in all stores for adoption and animal welfare organizations.
Pet Services
Pet services, which include grooming, training, boarding and day camp, represented 11.0%, 10.9% and
10.8% of our net sales in 2011, 2010 and 2009, respectively. Net sales from pet services increased 9.1% from
$618.8 million in 2010 to $674.9 million in 2011.
We offer full-service, high quality grooming and training services in all our stores. We typically allocate
approximately 900 square feet per store for grooming, including precision cuts, baths, nail trimming and grind-
ing, and teeth brushing. Depending upon experience, our pet stylists are educated as part of a comprehensive
program that teaches exceptional grooming skills using safe and gentle techniques. Pet training services range
from puppy classes to advanced or private courses, led by our accredited pet training instructors who are pas-
sionate about pets.
PetsHotels provide boarding for dogs and cats, which includes 24-hour supervision by caregivers who are
PetSmart trained to provide personalized pet care, an on-call veterinarian, temperature controlled rooms and
suites, daily specialty treats and play time, as well as day camp for dogs. As of January 29, 2012, we operated
192 PetsHotels, and we plan to open 5 net new PetsHotels in 2012.
Veterinary Services
The availability of comprehensive veterinary care in many of our stores further differentiates us, drives sales
in our stores and reflects our overall commitment to pet care. Full-service veterinary hospitals in 799 of our
stores offer routine examinations and vaccinations, dental care, a pharmacy and surgical procedures. As of
January 29, 2012, Banfield operated 791 of the hospitals under the registered trade name of “Banfield, The Pet
Hospital.” The remaining 8 hospitals are located in Canada and are operated by other third parties. See Note 5 in
the Notes to the Consolidated Financial Statements for a discussion of our ownership interest in Banfield.
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