Petsmart

Petsmart

In spite of a weak economy PetSmart’s business was able to grow because of PetSmart’s strategy which includes a broad selection of products, growing pet services, full-service veterinary services, and competitive prices. Expanding services are important to PetSmart’s overall business success because it gives the company a competitive advantage as well as a larger margin than on products. PetSmart’s success tells me that the company has been able to identify trends between people’s age, race, household, and pets in which the company is able to provide the supplies and services to satisfy the consumer. In particular PetSmart has been able to provide products for US customers’ pets in which other countries would not find necessary. During the past two years, PetSmart’s services segment grew from $300 million per year to $525 million per year. Today, the services segment represents approximately 10% of total revenues.PetSmart is focusing on growing its services segment. If the services segment continues to grow at the same rate in the next two years as it did in the past two years, and if total sales remain “flat”, what percent of total sales will be from the services segment by the end of the 2nd year going forward? Services segment for the past 2 years grows at a rate of $300 million to $525 million.  
Growth percentage =   (525 million)/(300 million) = 1.75% for past 2 years.   Services segment growth for the next 2 years =1.75% ($525 million) = $919 million. If the total sales remain “flat” at $5 billion in overall sales, the percent of services segment will be ($919 million)/($5 billion) = 18%. If the services segment does grow as indicated in #1, I think there is justification for a projection of overall sales to grow beyond the $5.1 billion level. The 8% growth of services segment accounts for $394 million in sales for the services segment alone. The $394 million or $0.39 billion will put the overall sales over the $5.1 billion level even if the other 3 segments...

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