PetSmart Conference Call Highlights

reported its fourth quarter earnings on Tuesday. Shares of the company are up 6 percent. Below are some key highlights form tis conference call.

• Comp store sales were flat with average ticket increasing 2.4%. • Comparable transactions decreasing 2.4%. • Non-GAAP adjusted diluted earnings per share of $1.02. • We took actions during the quarter to rebalance our grocery and mass foods by expanding the shelf space in our top 700 widely-distributed food stores. • And we also increased the presence of grocery and mass foods in key drive via locations in all of our stores. • From a marketing and messaging standpoint, we implemented more focused messaging, highlighting our broad assortment of widely distributed and channel-exclusive foods. • We also made changes to our media mix to shift more spend into digital and radio to allow more efficient targeting of specific key customer groups. • Although it's early days, we are encouraged to see stabilization in our grocery and mass foods sales trends as a result of these actions. • Going forward, you will see us continue to highlight these messages across specific target groups. • Proprietary and exclusive product sales grew double digits to 28.5% of merchandise sales, up more than 200 basis points from the third quarter last year, with improvement across all three divisions: consumables, hardgoods and specialty. • This improvement was driven by strong double-digit growth in consumables led by our own proprietary brand, Simply Nourish, as well as growth in hardgoods driven by our exclusive Bret Michaels and Martha Stewart assortments and in specialty led by National Geographic. • Based on our strong year-to-date performance and pipeline of innovation, we remain confident in our ability to deliver double-digit growth in proprietary and exclusive product sales over the next three to five years. • On the services side of the business, sales continue to outpace the core withgrowth of 6%. • We are targeting annual pre-tax cost savings of $200 million under our profit improvement program. • We expect to fully implement these profit improvement actions by the end of fiscal year 2015 which should result in the realization of approximately 60% of the annual savings in 2015 with a full value expected to be realized in 2016. • We have already begun taking action to achieve our targets under the program through overhead cost reductions undertaken during the third quarter, which Carrie will speak to shortly. • I'm confident that we have the right growth strategies and the operating plan in place through our profit improvement program to drive enhanced shareholder value going forward.

• We expect approximately 60% of the annualized savings to be realized in 2015, and the full value to be realized in 2016. • These savings will be realized within both cost of goods sold and OG&A expense. • We have already begun to achieve our targets under the program through overhead cost reductions taken during the third quarter. • This included the elimination of 176 positions or approximately 10% of our support group and field leadership positions as well as our corporate aviation department. • As a result of these actions, we realized approximately $2 million in savings during the quarter, and anticipate an additional $5 million in savings in the fourth quarter, with the total of $20 million in annualized savings related to these actions expected in 2015. • During the third quarter of 2014, our sales mix included consumables at 50.2%, hardgoods at 26.7%, specialty at 11.3%, services at 11.2%, and other revenue at 0.6%. • During the quarter, we also distributed $19 million in dividends and did not purchase any shares. • We ended the quarter with average inventory per store of $618,000 up 1.8% compared to the third quarter last year. • From a cash flow perspective we generated $125 million in cash flows from operating activities during the quarter.

• For fiscal year 2014, we are expecting comparable store sales growth to be relatively flat and total sales growth in the low-single digits. • We expect GAAP earnings before tax growth to be in the low-single digits, reflecting gross margin deleverage and OG&A leverage. • Non-GAAP adjusted earnings before tax growth is expected to be in the mid-single digits. • Non-GAAP adjusted diluted earnings per share is expected to be between $4.39 to $4.43. • Capital expenditures are now expected to be between $140 million to $150 million. • For the fourth quarter of 2014, we are expecting comparable store sales growth to be slightly positive. • GAAP earnings before tax growth is expected to be between flat to low-single digits, reflecting gross margin deleverage and OG&A leverage. • We anticipate the tax rate for the fourth quarter to be between 38% and 39%. • GAAP diluted earnings per share is expected to be between $1.30 to $1.34. And non-GAAP adjusted diluted earnings per share is expected to be between $1.34 to $1.38.