Buying some food for Fido? How about a chew toy while you're here? It's not revolutionary retailing, but Timothy Kullman, the new CFO of PetsMart Inc., the $2.5 billion chain of pet superstores, says reformatting the company's store design–putting dog toys and accessories right by the dog food, for instance–has begun to pay off. The company is about midway through the process of renovating all 570 of its stores, which used to be organized by product, with pet food in one section and accessories in another. "So a customer would come in to buy dog food and very seldom would buy something else," Kullman says. Now, products are organized by species: Pet owners find all the products for their pet of choice in one place.

And for PetsMart's customers–what the company calls its "pet parents"–toys are a must. Kullman attributes the company's recent good numbers in part to its focus on pet parents–pet owners who are so devoted that they consider their pets members of the family. These customers provide PetsMart some protection against the weakening in consumer spending, says 46-year-old Kullman, who joined Phoenix-based PetsMart in June, because pet parents do not see spending on their "children" as discretionary.

While other retailers have posted mediocre results so far this year, PetsMart enjoyed a 12.1% increase in comparable store sales in the three months ended in April and an 11.4% increase in the three months ended in July. Its stock was trading above $17 in early September, up from $9.84 at the end of 2001. That rise compares with the S&P 500′s slight dip over the same time period. And this summer Standard & Poor's added PetsMart to its midcap index, the S&P 400, which increased interest in the company among Wall Street analysts and institutional investors.

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