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Initiation of Research Coverage: PetSmart, Inc.

CHICAGO, October 2, 2009 - William Blair & Company initiated research coverage of PetSmart, Inc. (Nasdaq: PETM) ($21.75), the largest pet specialty retailer, with a Market Perform rating and a Core Growth company profile.

Associate Analyst Daniel Hofkin and Analyst Mark Miller estimated the company would earn $1.42 per share in fiscal 2009 (fiscal year ends the following January) and $1.52 per share in fiscal 2010.

“In our view, PetSmart has key advantages that differentiate it from other specialty and mass retailers,” Hofkin said. “These include a uniquely broad and deep merchandise assortment (as detailed in our in-depth merchandising and pricing study in our initiation of coverage report), a wide array of service offerings, and on-site veterinary hospitals of an established operator. We believe the company’s ability to attract and retain store associates who are knowledgeable and passionate about animals, along with an emphasis on employee training, particularly sets it apart from competitors.”

Hofkin continued, “The pet products/services market continues to have a bright long-term outlook, in our view, notwithstanding the current economic speed bump, and we believe the leading pet specialty retailers such as PetSmart should continue to gain solid share over time. In the long term, we project a return to double-digit earnings growth for PetSmart, with solid, growing free cash flow. That said, we look for clearer evidence of stabilization and improvement in the higher-margin hard-goods business and diminishing headwinds from food deflation before becoming more aggressive in our recommendation.”

William Blair & Company, L.L.C. is a global investment firm offering investment banking, asset management, equity research, institutional and private brokerage, and private capital to individual, institutional, and issuing clients. Since 1935, we have been committed to helping clients achieve their financial objectives. As an independent, employee-owned firm, our philosophy is to serve our clients' interests first and foremost. We place a high value on the enduring nature of our client relationships, the quality of our products and services, and the continuity and integrity of our people. William Blair & Company is based in Chicago, with office locations including Boston, London, New York, San Francisco, Shanghai, Tokyo, and Zurich.

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