PETCO Reports Results for the Fourth Quarter and Fiscal Year 2003

PETCO Reports Results for the Fourth Quarter and Fiscal Year 2003
* Pro Forma Net Earnings, Excluding Debt Retirement Costs, Increase 29% to $0.47
Per Diluted Share


SAN DIEGO, March 11  /PRNewswire-FirstCall/ -- PETCO Animal Supplies, Inc. 
today reported financial results for the fourth quarter and fiscal year 2003
ended January 31, 2004.  The Company also provided its guidance for the first
quarter and full fiscal year 2004.

  (Logo:  http://www.newscom.com/cgi-bin/prnh/20030603/PETCOLOGO )

  Fourth Quarter Results


Net sales in the fourth quarter of 2003 were $455.7 million with a comparable
store net sales increase of 5.6%.  The comparable store net sales increase in
the period comes on top of a 6.0% increase in the prior year's fourth quarter. 
Overall, net sales increased 12.4% over the fourth quarter of fiscal 2002.

Net earnings for the fourth quarter were $20.9 million, or $0.36 per diluted
share, including a charge of $10.6 million, or $0.11 per diluted share, for debt
retirement costs associated with the successful tender offer for $50 million in
principal amount of the Company's 10 3/4% senior subordinated notes, compared
with net earnings of $19.4 million, or $0.33 per diluted share, in the
prior-year fourth quarter.  The fourth quarter of fiscal 2002 included a charge
of $3.5 million related to a litigation settlement.

Excluding the previously mentioned items and related tax effects, pro forma net
earnings for the fourth quarter of fiscal 2003 increased 29% to $27.4 million,
or $0.47 per diluted share, compared to pro forma net earnings for the fourth
quarter of fiscal 2002 of $21.3 million, or $0.37 per diluted share.

Commenting on PETCO's fourth quarter performance, Brian K. Devine, Chairman of
the Board, said: "The 5.6% comparable store net sales increase we achieved in
the fourth quarter again illustrates the exceptional and consistent growth PETCO
has achieved for more than a decade.  We are also pleased to report a 29%
increase to pro forma net earnings for the period, or $0.47 per diluted share. 
Strong operating performance and cash flows funded over $96 million in capital
expenditures during fiscal 2003 to continue growing the business while reducing
debt by over $100 million.  We enjoy significant financialflexibility to take
advantage of opportunities as they arise."

Full Year 2003 Results

Net sales in fiscal 2003 were $1.65 billion with a comparable store net sales
increase of 5.6%.  The comparable store net sales increase comes on top of an
8.0% increase in the prior-year period.  Overall, net sales increased 12% over
fiscal 2002.

Net earnings available to common stockholders in fiscal 2003 were $64.7 million,
or $1.11 per diluted share, compared with $11.7 million, or $0.20 per diluted
share, inthe prior-year.  Fiscal 2003 includes a charge of $12.2 million, or
$0.07 per diluted share, for debt retirement costs associated with the
successful tender offer for $50 million in principal amount of the Company's 10
3/4% senior subordinated notes and the early retirement of $50 million of
long-term debt.  In the first quarter of fiscal 2002, PETCO completed an initial
public offering, and the 2002 results include the following items that were
recorded in the first quarter: $12.8 million in management fees and termination
costs related to the termination in February 2002 of a management services
agreement that was entered in conjunction with the Company's leveraged
recapitalization; $8.4 million in stock-based compensation expense and other
primarily financing and legal costs of $1.2 million related to the Company's
initial public offering; debt retirement costs of $3.3 million related to the
early repurchase of senior subordinated notes with proceeds of the offering;
and, an increase in the carrying amount and premium on redemption of previously
outstanding preferred stock of $20.5 million.  Additionally, the results for the
fourth quarter of fiscal 2002 include a charge of $3.5 million related to a
litigation settlement.

Excluding the previously mentioned items and related tax effects, pro forma net
earnings for fiscal 2003 increased to $68.8 million, or $1.18 per diluted share,
a 32% increase over the $52.0 million, or $0.90 per diluted share, in the prior
year.

Improved Gross Profit Margins

Gross profit margin improved 290 basis points to 35.9% in the fourth quarter of
2003 compared to 33.0% for the fourth quarter of 2002.  The gross profit
improvement was driven by the continuing change in mix from lower margin pet
food sales to higher margin categories, such as pet accessories, supplies and
services which accounted for 90 basis points of the improvement. The balance of
the improvement is a result of the adoption of Emerging Issues Task Force
Consensus No. 02-16 ("EITF 02-16"), an accounting change related to the
treatment of vendor consideration.  As a percentage of net sales, the net
benefit consisted of the initial reclassification of 250 basis points from
selling, general and administrative expenses, before the deferral of50 basis
points to inventory.

Store Expansion Program

PETCO opened 63 new stores during fiscal 2003.  The addition of approximately 50
new stores, net of relocations and closings, during the period has increased the
store base to 654 stores.  With 65-70 new stores, or approximately 55-60 new
stores net of relocations and closings, planned for 2004, PETCO will continue to
advance its national brand presence.

In addition to its new store openings in fiscal 2003, PETCO completed 50
remodels of existing stores to its latest store format. In fiscal 2004, the
Company plans to maintain its commitment to this initiative by remodeling up to
an additional 75 existing stores to the latest store format.

Outlook

The Company currently expects a comparable store net sales increase of
approximately 5% - 6% in the first quarter of fiscal 2004.  This increase in
comparable store net sales would come on top of the 4.6% increase achieved in
the first quarter of fiscal 2003.  Accordingly, the Company currently expects
first quarter earnings per diluted share in the range of $0.24 - $0.25, which
would represent an increase of more than 25% over the $0.19 per diluted share
reported in the first quarter of fiscal 2003.

For fiscal 2004, the Company currently expects a comparable store net sales
increase of approximately 5% - 6%.  Including additional expansion costs
associated with its planned store openings and remodels, the Company currently
expects diluted earnings per common share in the range of $1.45 - $1.46 for the
full fiscal year 2004, an increase of more than 20% over the pro forma net
earnings of $1.18 per common share which the Company is reporting today for the
full fiscal year 2003.

About PETCO Animal Supplies

PETCO is a leading specialty retailer of premium pet food, supplies and
services.  PETCO's vision is to best promote, through its people, the highest
level of well-being for companion animals, and to support the human-animal bond.
PETCO generated net sales of  $1.65 billion in fiscal 2003. It operates 654
stores in 43 states and the District of Columbia, as well as a leading
destination for on-line pet food and supplies at http://www.petco.com/.  Since
its inception in 1999, The PETCO Foundation, PETCO's non-profit organization,
has raised more than $15 million in support of more than 1,900 non-profit
grassroots animal welfare organizations around the nation.

Certain statements in this news release that are not historical fact constitute
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995.  Stockholders and other readers are cautioned not
to place undue reliance on these forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors, which may cause the actual results of PETCO to be materially
different from historical results or from any results expressed or implied by
such forward-looking statements.  These factors, such as performance of new
stores, ability to execute expansion strategy and sustain growth, debt levels,
reliance on vendors and exclusive distribution arrangements, competition,
integration of operations as a result of acquisitions, compliance with various
state and local regulations and dependence on senior management, are discussed
from time to time in the reports filed by PETCO with the Securities and Exchange
Commission, including the Annual Report on Form 10-K for the fiscal year ended
February 1, 2003.

                          PETCO Animal Supplies, Inc.
                     Consolidated Statements of Operations
               (Unaudited, in thousands, except per share data)

                               As Reported               Pro Forma
                          Quarter      Quarter     Quarter       Quarter
                           Ended        Ended       Ended         Ended
                        01/31/2004   02/01/2003  01/31/2004    02/01/2003

   Net sales             $455,651     $405,423    $455,651     $405,423
   Cost of sales and
    occupancy costs       292,113      271,438     292,113      271,438
     Gross profit         163,538      133,985     163,538      133,985

   Selling, general
    and administrative
    expenses              113,122       91,412   113,122       91,412
   Stock based
    compensation and
     other costs               --          212          --          212
   Litigation Settlement       --        3,497          --           --
     Operating income      50,416       38,864    50,416       42,361

   Interest expense, net    6,073        7,398       6,073        7,398
   Debt retirement costs   10,617           --          --           --

     Earnings before
      income taxes         33,726       31,466      44,343      34,963

   Income taxes            12,779       12,034      16,920       13,636

     Net earnings         $20,947      $19,432     $27,423      $21,327

   Net earnings per
    common share, basic     $0.36        $0.34       $0.48        $0.37
   Netearnings per
    common share, diluted   $0.36        $0.33       $0.47        $0.37

   Basic weighted
    average number
    of common shares       57,454       57,373      57,454       57,373
   Diluted weighted
    average number
    of common shares       58,496       58,007      58,496       58,007

  This earnings release includes information presented on a pro forma basis.
  These pro forma financial measures are considered "non-GAAP" financial
  measures within the meaning of SEC Regulation G.  The Company believes
  that this presentation of pro forma results provides useful information to
  both management and investors by excluding specific costs and expenses
  that we believe are not indicative of core operating results.  The
  presentation of this additional information should not be considered in
  isolation or as a substitute for results prepared in accordance with
  generally accepted accounting principles.  The reconciliation set forth
  below is provided in accordance with Regulation G and reconciles the pro
  forma financial measure with the most directly comparable GAAP-based
  financial measure.


                         PETCO Animal Supplies, Inc.
      Reconciliation of GAAP to Pro Forma Net Earnings per Common Share
  (Unaudited, in thousands, except per share data)

                                                Quarter        Quarter
                                                 Ended          Ended
                                               01/31/2004     02/01/2003

   GAAP net earnings available to
    common stockholders                        $20,947        $19,432
   Adjustments:
      Litigation Settlement                         --          3,497
      Debt retirement costs           10,617             --
      Tax effect (Note 1)                       (4,141)        (1,602)

   Pro forma net earnings available to
    common stockholders                        $27,423        $21,327

   GAAP net earnings per common share,
diluted                                      $0.36          $0.33
   Pro forma net earnings per
    common share, diluted                        $0.47          $0.37

   GAAP diluted weighted average number
    of shares                             58,496         58,007

   Note 1 - The Company used a standard tax rate of 39% for pro forma
   purposes in the current year.


                          PETCO Animal Supplies, Inc.
                     Consolidated Statements of Operations
      (Unaudited, in thousands, except per share data)

                              As Reported                Pro Forma
                          Year         Year        Year          Year
                          Ended        Ended       Ended Ended
                       01/31/2004   02/01/2003  01/31/2004    02/01/2003

   Net sales           $1,654,138   $1,476,634  $1,654,138   $1,476,634
   Cost of sales and
    occupancy costs     1,104,649    1,016,249   1,104,649    1,014,789
Gross profit         549,489      460,385     549,489      461,845

   Selling, general
    and administrative
    expenses              411,816      343,752     411,816      343,752
   Management fees and
    termination costs          --       12,760          --           --
   Stock based
    compensation and
    other costs                --        8,388          --          212
   Litigation settlement       --        3,497          --           --
     Operating income     137,673       91,988     137,673      117,881

   Interest expense, net   26,115       32,666      26,115       32,666
   Debt retirement costs   12,189        3,336          --           --

     Earnings before
      income taxes         99,369       55,986     111,558       85,215

   Income taxes            34,656       23,845      42,782       33,234
     Net earnings          64,713       32,141      68,776       51,981

   Increase in carrying
    amount and premium
    on redemption of
    preferred stock     --      (20,487)         --           --

     Net earnings
      available to
      common stockholders $64,713      $11,654     $68,776      $51,981

   Net earnings per
    common share, basic     $1.13        $0.21       $1.20        $0.91
  Net earnings per
   common share, diluted    $1.11        $0.20       $1.18        $0.90

   Basic weighted
    average number
    of common shares       57,422       56,094      57,422       57,298
   Diluted weighted
    average number
    of common shares       58,299       56,906      58,299       57,985

  This earnings release includes information presented on a pro forma basis.
  These pro forma financial measures are considered "non-GAAP" financial
  measures within the meaning of SEC Regulation G.  The Company believes
  that this presentation of pro forma results provides useful information to
  both management and investors by excluding specific costs and expenses
  that we believe are not indicative of core operating results.  The
  presentation of this additional information should not be considered in
  isolation or as a substitute for results prepared in accordance with
  generally accepted accounting principles.  The reconciliation set forth
  below is provided in accordance with Regulation G and reconciles the pro
  forma financial measure with the most directly comparable GAAP-based
  financial measure.


                         PETCO Animal Supplies, Inc.
      Reconciliation of GAAP to Pro Forma Net Earnings per Common Share
               (Unaudited, in thousands, except per share data)

                                                Year           Year
                                                Ended          Ended
                                             01/31/2004     02/01/2003

   GAAP net earnings available to
    common stockholders                        $64,713        $11,654
   Adjustments:
     Management fees and termination costs          --         12,760
     Stock based compensation and other costs
      (including 0 and $1,460, respectively,
      in cost of sales and occupancy costs)         --         13,133
     Debt retirement costs                      12,189          3,336
     Increase in carrying amount and premium
      on redemption of preferred stock              --         20,487
     Resolution of income tax accrual           (3,372)            --
     Tax effect (Note 1)                        (4,754)        (9,389)

   Pro forma net earnings available
    to common stockholders                     $68,776        $51,981

   GAAP net earnings per common share,
    diluted                                      $1.11          $0.20
   Pro forma net earnings per common share,
    diluted                                      $1.18          $0.90

   GAAP diluted weighted average number
    of shares                                   58,299         56,906
     Incremental shares from assumed
      conversion of stock options
      and warrants                                  --          1,079

   Pro forma diluted weighted average
    number of common shares                     58,299         57,985

   Note 1 - The Company used a standard tax rate of 39% for pro forma
   purposes in the current year.


                    PETCO Animal Supplies, Inc.
                    Condensed Consolidated Balance Sheets
                                (In thousands)

                                             January 31,    February 1,
                                          2004           2003
                                             (Unaudited)
   ASSETS

   Cash and cash equivalents                   $62,201       $108,937
   Receivables                                  12,514         14,303
   Inventories     139,513        138,410
   Deferred tax assets                          12,047         14,492
   Other current assets                         12,907          7,459
   Total current assets                        239,182        283,601

   Fixed assets, net                           256,347        218,442
   Goodwill                                     40,289         40,644
   Other assets                                 16,044         12,168
                                  $551,862       $554,855

   LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

   Accounts payable                            $63,773        $61,308
   Accrued expenses & other liabilities        126,403        109,242
   Total current liabilities                   190,176        170,550

   Long-term debt, excluding current portion   139,370        190,500
   Senior subordinated notes payable           120,000        170,000
   Deferred rent and other liabilities          49,183         34,888
   Total liabilities                           498,729        565,938

   Stockholders' equity (deficit)               53,133        (11,083)
                                              $551,862       $554,855


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DATASOURCE: PETCO Animal Supplies, Inc.



CONTACT:  Rodney Carter, Senior Vice President and Chief Financial

Officer of PETCO Animal Supplies, Inc., [phone], option #2



Web site:  http://www.petco.com/

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