Features

PHOENIX — When Rick Piper wants to reward his 6-year-old, he says only one place will do. 

It has everything his boy could want — food, toys, clothing accessories and often same-sized friends to mingle with inside or outside the store. 

“We come at least once a month,” said Piper. “Anytime I want to get him all excited, I just have to say four words: Wanna go to PETsMART?” 

Piper, a local office worker, and his beloved border collie Rocky are exactly the customers PETsMART had in mind when the company opened its first pet supplies store here 15 years ago. 

The Phoenix-based retailing giant — whose motto is “Where pets are family” — now has more than 560 superstores across the United States and Canada, catering to all kinds of animals and the humans who adore them. 

A recent push by PETsMART to remodel most of its outlets and an added emphasis on in-store customer service also is paying off. 

After posting losses in 2001, the company’s stock has climbed nearly 188 percent in the past year with shares quadrupling in price, from $2.50 last March to almost $11 in recent weeks. 

Third-quarter earnings this year were at $5.8 million on sales of nearly $599 million, up 11 percent from the same period in 2001. 

Fourth-quarter earnings will be announced in mid-March. PETsMART Chairman and Chief Executive Phil Francis said the numbers should be strong again since “the fourth quarter is typically our best quarter.” 

A major factor in the upswing is the remodeling of PETsMART’s old stores — doing away with a warehouse look in favor of boldly decorated outlets with supplies neatly organized for pets ranging from cats and dogs to fish, birds and reptiles. 

Francis said more than 200 stores have been remodeled so far with another 180 targeted for next year. There also are plans for more new stores. 

“By November of 2003, we’ll have about 600 stores and all of them will be in the format we’ve recently gone to,” Francis said. “We think the store count we can eventually get to in North America is 1,100.” 

Analysts say PETsMART’s growth plan is not far-fetched despite the slowing national economy 

“The pet industry is almost recession resistant,” said David Mann, an analyst for New Orleans-based Johnson Rice & Co. “There’s a good tailwind behind the industry and it’s growing at a pretty healthy pace. It’s being helped by multiple-pet households. 

“I could see PETsMART growing by several hundred more stores. They have a new store format that’s very attractive.” 

Full-service pet styling salons now offer everything from baths to toenail trimming and teeth cleaning. 

PETsMART also has obedience classes and some stores provide veterinary care through animal hospitals and wellness clinics. 

And for those wanting to adopt a cat or dog, PETsMART has placed more than 1 million pets in new homes through its in-store adoption centers. 

“The main thrust of our business is the stores and the store customers,” Francis said. 

He said the company has changed the tone of its service. 

“Our e-commerce division is no longer a separate business. We’ve folded it in and integrated it. The Web site is still alive and you can still get information and some limited shopping there, but our main business is the stores. 

“We used to sell just food and stuff for pets,” said Francis. “Now, we think of ourselves as helping pet parents provide total lifetime care.” 

PETsMART began with just two stores in Phoenix in 1987. It expanded to Colorado and Texas the following year; then to California, Nevada, New Mexico, Missouri, Illinois and Oklahoma by 1991; and to Utah, Georgia, Florida and Idaho the next year. 

The company went public in 1993, raising more than $125 million through its initial stock sales. By year’s end, it had 107 stores in 19 states. 

Then came huge expansion years in 1994 and 1995 when PETsMART bought 29 PETZAZZ stores in five Midwestern states, 60 Petstuff superstores in the eastern United States and Canada; and The Pet Food Giant’s 10 superstores in New Jersey, Long Island and Philadelphia. 

PETsMART also acquired two worldwide catalog retailers — one for pet supplies and accessories and the other for discount brand-name tack, riding apparel and equine supplies. 

In 1999, the company launched its Web site and opened its 500th store. 

PETsMART’s biggest competitor is San Diego-based Petco Animal Supplies Inc., which was founded in 1965 and has 560 stores in 41 states and the District of Columbia. 

Petco also sells goods online and is seeking to become a publicly traded company again after losing $16 million for the 12 months ending Nov. 3 despite $1.3 billion in sales. 

Mann said PETsMART and Petco represent “a dual-opoly where both major players are doing well and there is not a third or fourth player going.” 

Francis said his company’s focus is just “doing a better job of taking care of the pet parent” and not worrying about Petco. 

Customers like Steven McDaniel have noticed. The Phoenix accountant has gone to both superstores to comparison shop and takes his business to PETsMART. 

“The prices are cheaper and the people are much friendlier,” McDaniel said as his dog made its way toward the PETsMART doors.