863157--4/10/2006--PETSMART

related topics

{cost, operation, labor}

{system, service, information}

{acquisition, growth, future}

{operation, natural, condition}

{condition, economic, financial}

{regulation, change, law}

{customer, product, revenue}

{product, market, service}

{personnel, key, retain}

{provision, law, control}

{operation, international, foreign}

{product, liability, claim}

New stores may place increasing demands on management and operating systems, may erode sales at existing stores and comparable store sales growth may decrease as stores grow older. Our operating margins at new stores may be lower than those of existing stores. A disruption, malfunction, or increased costs in the operation or expansion of our distribution centers or our supply chain would impact our ability to deliver merchandise to our stores or increase our expenses, which could harm our sales and results of operations. If our information systems fail to perform as designed or are interrupted for any reason for a significant period of time, our business could be harmed. If we accidentally disclose sensitive customer information, our business could be harmed. A decline in consumers discretionary spending could reduce our sales and harm our business. Our results may fluctuate due to seasonal changes associated with the pet food and pet supply retailing industry and the timing of expenses, new store openings and store closures. The pet food and pet supply retail industry is very competitive, and continued competitive forces may reduce our sales and profitability. The loss of any of our key vendors, a decision by our vendors to make their products available in supermarkets or through warehouse clubs and other mass and retail merchandisers, or the inability of our vendors to provide products in a timely or cost-effective manner, could harm our business. We depend on key personnel and may not be able to retain or replace these employees or recruit additional qualified personnel, which could harm our business. Our international operations may result in additional market risks, which may harm our business. Our business may be harmed if the operation of veterinary hospitals at our stores is limited or fails to continue. Our business would be harmed if we were unable to raise any needed additional capital on acceptable terms. A determination of a violation of any contractual obligations or government regulations could result in a disruption to our operations and could harm our business. A determination by tax regulators may cause our provision for income and other taxes to be inadequate and may result in a material impact to our financial position. Our business exposes us to claims that could result in adverse publicity, harm to our brand and a reduction in our sales. Pending legislation, weather, disease or other factors could disrupt the supply of the small pets and products we sell, which could harm our reputation and decrease sales. Fluctuations in the stock market, as well as general economic and market conditions, including but not limited to fuel costs, may harm the market price of our common stock. We have implemented some anti-takeover provisions, including a stockholder rights plan that may prevent or delay an acquisition of us that may not be beneficial to our stockholders.

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863157--4/10/2006--PETSMART_INC