ormation that
investors liked to hear.  We've grabbed a quote from their Q3
earnings press release: "Improvements in key areas such as in-
stocks, inventory management and distribution efficiency, coupled
with the continued growth in our pet services business, drove
sales and profitability during the third quarter," said Phil
Francis, chairman, president and chief executive officer of
PETsMART, Inc. "We've gained a good deal of momentum, and are
positioned for a solid fourth quarter and a strong 2002, when
we'll bring our new store format to 200 existing stores, open 25
to 30 new stores, and continue to drive a company-wide culture of
customer care."

Phil has reason to be positive if the company's numbers keep up
their current pace.  The same Q3 report showed that gross margins
had risen to 28.6 percent, up 390 basis points compared with the
third quarter the year before.  Total sales for the quarter had
jumped 10.6% to $598.6 million while comparable store sales added
7.6 percent over the Q3 of 2000.

The company recently announced that they had bought the remaining
16.3 percent interest in PETsMART.com that they didn't own for
$9.5 million.  In addition to the purchase they would consolidate
the dot.com business and their PETsMART Direct, an equine direct
marketing business, into their overall operations.  Part of this
plan would close certain offices in California and move the
operations to their Phoenix, AZ headquarters.

This announcement came out after the bell on Tuesday, January
22nd and investors were unsure how to interpret the news, which
caused some volatility in the stock price the next day.  Since
then we've seen some selling in the stock but we feel the pull
back towards the $10 level has merely offered us a better entry
point.

On a positive note, the same announcement revealed that the
company had raised their sales growth outlook for the January
quarter from 6 to 7 percent to about 9 percent.  We could not
confirm an actual date but believe PETM will announce its Q4
earnings in late February.

