UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                          -----------------------------

                                    FORM 10-K

                  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)

                     OF THE SECURITIES EXCHANGE ACT OF 1934

                For the Fiscal Year Ended Commission File Number:
                  January 29, 2000                      0-23574

                           PETCO ANIMAL SUPPLIES, INC.

             (Exact Name of Registrant As Specified In Its Charter)

             Delaware                                    33-047990
------------------------------------        ------------------------------------
    (Sate or Other Jurisdiction             (I.R.S. Employer Identification No.)
 Of Incorporation or Organization)

                  9125 Rehco Road, San Diego, California 92121
          (Address, Including Zip Code, of Principal Executive Offices)

               Registrant's Telephone Number, Including Area Code:
                                 (858) 453-7845

        Securities registered pursuant to Section 12(b) of the Act: None

          Securities registered pursuant to Section 12(g) of the Act:
                         Common Stock, $. 0001 par value
                         -------------------------------
                                (Title of Class)

Indicate  by check  mark  whether  the  Registrant:  (1) has filed  all  reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days. YES X NO ___

Indicate by check mark if disclosure  of  delinquent  filers in response to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best  of  the  Registrant's   knowledge,  in  definitive  proxy  or  information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K: |X|

As  of  April  7,  2000,  there  were  outstanding   21,107,299  shares  of  the
Registrant's  Common Stock,  $0.0001 par value.  As of that date,  the aggregate
market value of the voting stock held by  non-affiliates  of the  Registrant was
approximately $253,947,191.

         Documents Incorporated By Reference: The information called for by Part
III is incorporated  by reference from the Proxy Statement  relating to the 2000
Annual Meeting of Stockholders of the Registrant.





                                     PART I

ITEM 1.  BUSINESS

     PETCO  Animal  Supplies,  Inc.  ("PETCO"  or the  "Company")  is a  leading
specialty retailer of premium pet food and supplies. As of January 29, 2000, the
Company  operated 490 stores in 39 states and the District of Columbia.  PETCO's
strategy is to be the leading category-dominant  national chain of community pet
food and supply  superstores by offering its customers a complete  assortment of
pet-related  products at competitive  prices,  with superior  levels of customer
service at convenient locations.

     The  Company's  expansion  strategy  is to open  and  acquire  superstores,
including relocations, expansions or remodels of existing, smaller format stores
into  superstores  (collectively  referred to herein as  "conversions"),  and to
close underperforming stores. During fiscal 1999, the Company opened or acquired
42 stores, including the conversion of 10 stores into superstores, and closed 18
stores.

     Unless  otherwise  indicated,  all  references  in this Annual  Report to a
fiscal year refer to the fiscal year ending on the  Saturday  closest to January
31 of the following  year.  For example,  references to fiscal 1999 refer to the
fiscal year beginning on January 31, 1999 and ending on January 29, 2000.

The Pet Food, Supply and Services Industry

     General. In 1998, retail sales in the United States of pet food,  supplies,
small  animals  (excluding  dogs and cats) and  services  were  estimated at $22
billion.  Pet food  accounted  for the majority of this market with an estimated
$11 billion in sales,  pet supply and small  animal  sales were  estimated at $5
billion,  while  sales  of pet  services,  which  include  veterinary  services,
obedience  training  and  grooming  services,  were  estimated  at  $6  billion.
According to recent estimates, approximately 60 million households in the United
States,  or over  half of all U.S.  households,  owned at least one pet and over
half of pet-owning households owned more than one pet.

     Pet  Food.  Historically,  the pet  food  industry  has been  dominated  by
national  supermarket  brands  such  as  Alpo,  Kal Kan and  Purina,  which  are
primarily sold through grocery stores, convenience stores and mass merchants. In
recent years, supermarkets' share of total pet food sales has steadily decreased
as a result of competition from superstores, warehouse clubs, mass merchandisers
and specialty  pet stores as well as the growing  proportion of premium pet food
sales.  Premium pet food brands such as Science Diet, Nutro,  Eukanuba and Iams,
which offer higher  levels of nutrition  than  non-premium  brands,  account for
approximately  30% of the total pet food market  according to recent  estimates.
Science Diet,  Nutro and Eukanuba  currently are not sold through  supermarkets,
warehouse clubs and mass  merchandisers due to  manufacturers'  restrictions but
are sold  primarily  through  superstores  like  PETCO,  specialty  pet  stores,
veterinarians and farm and feed stores.

   Pet Supplies.  The market for pet supplies  consists of items such as collars
and leashes,  cages and habitats,  toys, treats, aquatic supplies, pet carriers,
vitamins and supplements and grooming and veterinary  products.  The channels of
distribution  for pet supplies are highly  fragmented with products sold by many
types  of  retailers,   including  supermarkets,   discounters  and  other  mass
merchandisers, specialty pet stores, direct mail and veterinarians.  Superstores
such as PETCO,  with wide  assortments  of pet  supplies  and  higher  levels of
customer service, represent a growing channel for sales of pet supplies.

     Small  Animals.  The market for small  animals  (other  than dogs and cats)
includes sales of fish, birds, reptiles, rabbits, hamsters, mice and other small
pets.  Because  of the  overpopulation  of dogs and  cats and the  controversial
practices of some  breeders,  the Company has elected to limit its  selection of
animals to birds, fish,  reptiles and other small animals.  PETCO does, however,
participate in pet adoption  programs for dogs and cats,  which are administered
through local animal welfare programs.

     Pet Services.  The market for pet services  includes  veterinary  services,
obedience  training  and  grooming  services.  The  Company  offers  a range  of
veterinary  services  at only a selected  number of stores.  Limited  veterinary
services  such as routine  vaccinations  are offered at a number of stores.  The
Company does offer obedience  training in most of its stores and offers grooming
in many of its stores.  Although  such  services do not  generate a  significant
portion of the Company's  revenues,  the Company believes that offering selected
pet services does create increased customer traffic in the Company's stores.

Business Strategy

     PETCO's strategy is to be the leading  category-dominant  national chain of
community pet food and supply  superstores  by offering its customers a complete
assortment of pet-related  products at competitive  prices, with superior levels
of customer  service at  convenient  locations.  The key  components  of PETCO's
strategy are:

     Superstore   Expansion.   The  Company  believes  that   opportunities  for
additional  superstores  exist in both new and  existing  markets.  The  Company
intends to continue to increase the number of superstores it operates by opening
and acquiring superstores in new and existing markets.

     Acquisitions.  A significant part of the Company's  expansion  strategy has
been to capitalize on the  consolidation  of the  fragmented pet food and supply
industry.  Generally,  the Company has  acquired  established  and  well-located
stores or chains of stores that are similar in size and format to the  Company's
existing superstores.  Consistent with this strategy,  the Company has completed
21  acquisitions,  representing  216  stores  located  in 28  states,  since the
Company's initial public offering in March 1994. The Company believes that there
may be further  opportunistic  acquisition  opportunities  that would  allow the
Company to attract  new  customers,  enter new markets  and  leverage  operating
costs.

     Complete  Merchandise  Assortment.  PETCO's  prototype  15,000  square foot
superstores carry a complete  merchandise  assortment of more than 10,000 active
SKUs of high quality pet-related products.  PETCO's products include premium pet
food,  fish,  birds,  reptiles  and other small  animals  and  related  food and
supplies,  collars and leashes,  grooming  products,  toys,  pet  carriers,  cat
furniture, dog houses, vitamins, treats and veterinary supplies.

     Competitive  Prices.  PETCO's  pricing  strategy is to offer  everyday  low
prices on all food  items  which  are  important  in  attracting  and  retaining
customers.  The Company  believes in offering  value to  customers  through fair
prices  coupled with a complete  merchandise  assortment  and superior  customer
service.

     Superior  Customer Service.  Providing  knowledgeable and friendly customer
service is a key aspect of PETCO's business strategy. PETCO seeks store managers
and sales  associates who are pet owners and enthusiasts  themselves as they are
better able to assist customers with their needs.  PETCO provides  comprehensive
training to its  personnel,  and the Company  believes  that this  enables it to
attract and retain highly  motivated,  well-qualified  store  managers and sales
associates committed to providing superior levels of customer service.

     Convenient  Store  Locations.  PETCO's  stores are located in  high-traffic
retail areas with ample parking, often in community shopping centers anchored by
a large supermarket. The Company selects sites which are characterized by weekly
or more frequent shopping patterns. All stores offer extended shopping hours and
typically are open seven days a week.

     Enjoyable Shopping Experience.  PETCO's stores are attractively designed to
create a fun and exciting shopping environment for customers and their pets. The
Company's stores are brightly  illuminated  with colorful  fixtures and graphics
and feature  prominent  and  attractive  signage.  Stores  typically  feature an
assortment  of  aquatics,  reptiles,  birds and small  animals.  Birds and other
animals are available for  demonstration  by PETCO employees and for handling by
customers.  Many of the Company's stores also contain a glassed-in grooming area
that allows customers to observe the grooming process while they shop.

     Innovative Community Programs. PETCO's long-standing neighborhood marketing
programs  are  designed  to  introduce  consumers  to its  stores  and  maintain
long-term customer and community relationships. Due to the large numbers of dogs
and cats available at local animal  shelters,  PETCO's  long-standing  corporate
policy has been to  encourage  its  customers  to adopt  these pets from  animal
shelters. On designated days, in cooperation with animal welfare  organizations,
the Company  offers pet adoption  services at its stores.  The  Company's  other
community  programs include in-store  vaccination  clinics,  programs with local
pet-related charities, a product sample program to introduce consumers and their
pets to premium food and supplies and a preferred customer program. In addition,
the Company  maintains  referral  programs  and other  relationships  with local
breeders and veterinarians.

     Internet  Investment.  The  Company has a  strategic  alliance  with and an
investment in  Petopia.com,  a  comprehensive  pet commerce  destination  on the
Internet.  The relationship provides PETCO customers with content,  commerce and
community via the Internet,  while enabling  Petopia.com to benefit from PETCO's
industry leadership position,  strong customer base and supplier  relationships.
PETCO also  provides  order  fulfillment  services to  Petopia.com  at its three
central  distribution  centers.  PETCO  customers  can shop  on-line by visiting
PETCO's Petopia at www.petco.com.

Merchandising

     Complete  Merchandise  Assortment.  PETCO stores offer the pet owner one of
the  most  complete  and  exciting  assortments  of pet  products  and  services
available in the marketplace.  PETCO's products and services generally fall into
five main categories.

         Pet Food.  PETCO  offers a complete  assortment  of leading  name brand
     premium food for dogs and cats, such as Nutro,  Science Diet,  Eukanuba and
     Iams,  as  well  as  selected  mass  brand  foods.  Due  to  manufacturers'
     restrictions, Nutro, Science Diet and Eukanuba are sold exclusively through
     specialty  pet stores and  veterinarians.  The Company also offers  private
     label and  exclusive  label brands of premium dog and cat food. In addition
     to food for dogs and cats,  the  Company  features  a variety of treats and
     rawhide chew items.  The Company  also sells an extensive  variety of foods
     for fish, birds, reptiles and small animals.

         Pet Supplies.  PETCO's  broad  assortment of supplies for dogs and cats
     includes many private label items and offers collars and leashes,  grooming
     products, toys, pet carriers, cat furniture,  dog houses, vitamins,  treats
     and  veterinary  supplies.  The Company also offers broad lines of supplies
     for other pets,  including aquariums,  terrariums,  bird cages and supplies
     for small animals.

         Small Animals.  PETCO superstores  feature specialty  departments which
     stock a large  assortment of fish,  domestically  bred birds,  reptiles and
     other  small  pets.  The  stores'  animal  selection   typically   includes
     cockatiels,  parakeets and finches in the bird category;  iguanas,  turtles
     and snakes in the  reptile  category;  and  hamsters,  rats and mice in the
     small animal category.  The Company's superstores normally carry both fresh
     and saltwater fish. The Company believes that its interactive  small animal
     displays add excitement to shopping at PETCO.

         Grooming and Other Services. Professional grooming is available at many
     of the Company's superstores.  Grooming services are typically performed in
     glass-walled  stations in the stores to  increase  customer  awareness  and
     confidence in the service. In addition, the Company offers vaccinations and
     obedience training.

          Novelty Items. PETCO carries a variety of novelty items, including pet
     apparel,  calendars and other  pet-related  merchandise.  In addition,  the
     Company features a variety of seasonal and holiday pet items.

     Competitive  Prices.  PETCO's  pricing  strategy is to offer  everyday  low
prices on all food  items  which  are  important  in  attracting  and  retaining
customers.  The Company  believes in offering  value to  customers  through fair
prices  coupled with a complete  merchandise  assortment.  PETCO's  large buying
volume and sophisticated  distribution  network allows it to compete effectively
on price.  PETCO's  price  guarantee  program  offers to match all  competitors'
advertised prices.

Store Development

     PETCO plans to open  superstores  in the future and expects that these will
be the Company's  current  prototype  superstores  which  average  approximately
15,000 square feet.  These prototype  superstores  offer a complete  merchandise
assortment  and,  in  addition,  carry  fish,  birds,  reptiles  and other small
animals, and grooming services.

     The Company  intends to continue to increase the number of  superstores  it
operates by opening and acquiring  superstores  in new and existing  markets and
converting existing stores into superstores.  Although the Company plans to open
superstores  in  the  future,  it  will  continue  to  operate   profitable  and
well-situated stores with other formats.

     PETCO attempts to obtain convenient,  high-traffic  stores located in prime
community shopping centers.  The Company undertakes  substantial market research
prior to entering new markets.  Key factors in market and site selection include
high visibility,  easy access, ample parking,  population,  demographics and the
number and location of competitors.

     In fiscal 1999,  the Company  opened or acquired 42 stores,  including  the
conversion of 10 stores into superstores, and closed 18 stores.

Purchasing and Distribution

     The Company's centralized  purchasing and distribution system minimizes the
delivered cost of merchandise and maximizes the in-stock position of its stores.

     PETCO purchases most of its merchandise  directly from specialty  suppliers
and manufacturers of national brands.  The Company purchases the majority of its
pet food products  from three  vendors;  The Iams Company,  Hill's Pet Products,
Inc. (which produces Science Diet), and Nutro, Inc., the first of which supplied
products  that  accounted  for more than 10% and less than 15% of the  Company's
sales in fiscal  1999.  While the Company  does not  maintain  long-term  supply
contracts with any of its vendors, PETCO believes that it enjoys a favorable and
stable relationship with each of these vendors.

     PETCO  currently  operates  three  central and five  regional  distribution
centers. The central distribution centers are located in Mira Loma,  California;
Dayton, New Jersey; and Joliet,  Illinois.  Bulk items for all stores are either
shipped to regional distribution centers for redistribution or are sent directly
to  store  locations.  Manufacturers  ship  non-bulk  supplies  to  the  central
distribution  facilities which the Company then  distributes  either to regional
centers or directly to store locations. Management believes that its centralized
distribution  system  enables its stores to maximize  selling  space by reducing
necessary  levels of safety  stock  carried in each store.  PETCO also  provides
order  fulfillment  services to  Petopia.com  at its three central  distribution
centers.

Competition

     The pet food and supply business is highly  competitive.  This  competition
can be categorized into three different segments: (i) mass merchants,  including
supermarkets,  (ii) single store and  conventional pet shops and (iii) specialty
pet supply  chains.  Many of the premium pet food brands offered by the Company,
such as Nutro,  Science Diet, and Eukanuba,  are not available to grocery stores
or other mass merchants due to manufacturers' restrictions. The Company believes
that the principal  competitive  factors  influencing the Company's business are
product selection and quality, convenient store locations,  customer service and
price. The Company believes that PETCO competes  effectively  within its various
geographic areas;  however, some of the Company's competitors are much larger in
terms  of sales  volume  and have  access  to  greater  capital  and  management
resources than the Company.

     One of the  Company's  premium  pet food  vendors,  The Iams  Company,  was
purchased  by Procter & Gamble in fiscal  1999.  Through the end of fiscal 1999,
Iams brand pet food was not widely  available in supermarkets or mass merchants.
In  fiscal  2000,   Procter  &  Gamble  widened  the  distribution  of  Iams  to
supermarkets  and mass merchants  across the country.  The Eukanuba brand of pet
food, which is also  manufactured by The Iams Company,  remains not available to
grocery stores or other mass merchants.

     The pet food and supply industry has been  characterized in recent years by
the consolidation of a number of pet supply chains.  This consolidation has been
accomplished  through  the  acquisition  of  independent  pet  stores  by larger
specialty  pet  supply  chains and the  acquisition  of these  larger  chains by
similar  competitors.  The Company believes this consolidation  trend may have a
positive  impact on industry  conditions as store capacity may be  rationalized,
both in existing and in new units.

     The pet food and supply  industry has  recently  seen the growth of several
e-commerce  retailers  on the  Internet.  Sales of pet food and supplies via the
Internet have not been significant to date. However,  some e-commerce  retailers
have substantial financial and technical resources and some e-commerce retailers
have  strong  alliances  with  established  Internet  partners.  There can be no
assurance that in the future the Company will not face greater  competition from
e-commerce retailers or from land-based national or regional retailers.

Trademarks and Licenses

     The Company has registered  numerous  service marks and trademarks with the
United  States  Patent and  Trademark  Office.  The Company  believes  the PETCO
trademark has become an important  component in its  merchandising and marketing
strategy.  The Company  believes it has all  licenses  necessary  to conduct its
business.

Regulation

     The  transportation  and sale of small animals is governed by various state
and local regulations. To date, these regulations have not had a material effect
on the Company's  business or  operations.  The Company's  fish and small animal
buyers and real estate  department  are  responsible  for  compliance  with such
regulations.  Prior to the opening of each store,  the Company's  fish and small
animal buyers and real estate  department review the regulations of the relevant
state and local governments. The Company's fish and small animal buyers and real
estate department then ensure ongoing  compliance by keeping abreast of industry
publications  and maintaining  contacts with the Company's fish and small animal
suppliers and the appropriate regulatory agency within each such state and local
government.

Employees

     As  of  January  29,  2000,  the  Company  employed   approximately  10,200
associates,  of whom approximately 5,000 were employed full-time.  Approximately
92% of the  Company's  employees  were  employed  in stores  or in direct  field
supervision,  approximately 4% in distribution  centers and  approximately 4% in
the  National  Support  Center  in San  Diego.  Management  believes  its  labor
relations are generally good.

Certain Cautionary Statements

     Certain  statements in this Annual Report,  including,  but not limited to,
Item 7 -  "Management's  Discussion  and  Analysis of  Financial  Condition  and
Results of Operations," contain forward-looking statements within the meaning of
Section  27A of the  Securities  Act of 1933,  as  amended,  Section  21E of the
Securities Act of 1934, as amended, and the Private Securities Litigation Reform
Act  of  1995,  that  are  not  historical  facts  but  rather  reflect  current
expectations  concerning  future  results  and  events.  The  words  "believes,"
"expects,"  "intends,"  "plans,"  "anticipates,"  "likely,"  "will," and similar
expressions  identify such  forward-looking  statements.  These  forward-looking
statements are subject to risks, uncertainties, and other factors, some of which
are beyond the  Company's  control,  that could cause  actual  results to differ
materially   from  those  forecast  or   anticipated  in  such   forward-looking
statements.  Such risks,  uncertainties  and other factors include,  but are not
limited to, the following:

     Expansion Plans. The Company's  continued growth depends,  to a significant
degree, on its ability to open and operate new superstores on a profitable basis
and to increase  sales in existing  stores.  The Company's  performance  is also
dependent  upon a number of other  factors,  including its ability to locate and
obtain  favorable  superstore  sites and negotiate  acceptable  lease terms,  to
obtain and distribute adequate product supplies to its stores, to hire and train
employees and to upgrade its management  information and other operating systems
to control  the  anticipated  growth and  expanded  operations.  There can be no
assurance  that the Company  will  achieve its  planned  expansion  or that such
expansion  will be profitable.  The Company has previously  opened stores in new
markets and plans to open additional  stores in new markets.  The performance of
new  or  existing  stores  may  be  adversely   affected  by  regional  economic
conditions.  The Company's  expansion  strategy could have the effect of drawing
customers from its existing stores. In addition,  average store contribution and
operating margins may be adversely affected in the near term due to the level of
preopening  expenses and lower anticipated sales volumes of its immature stores.
The Company's existing Senior Credit Facility (the "Credit  Facility")  contains
certain  covenants  which may  restrict or impair the  Company's  growth  plans.
Management  continues to evaluate the Company's long-term  distribution needs to
accommodate  store and sales growth  beyond  fiscal 2000.  Either the  Company's
failure to expand its  distribution  facilities  in  accordance  with its growth
plans or difficulties  incurred in operating its  distribution  facilities could
adversely affect the Company's ability to deliver merchandise to its stores in a
timely fashion.

     Integration  of  Operations  as the Result of  Acquisitions.  Operations of
acquired  companies must be integrated and combined  efficiently for the Company
to  realize  the  anticipated  benefits  of its  acquisitions.  There  can be no
assurance  that  the  integration  process  has  been  successful  or  that  the
anticipated benefits of these acquisitions will be fully realized.  For example,
in fiscal 1998 the Company  experienced  disappointing  results from some of the
stores it acquired in fiscal 1997.  The  dedication of  management  resources to
acquisitions may detract attention from the day-to-day  business of the Company.
The  difficulties  of integration are increased by the necessity of coordinating
geographically  separated  organizations,  integrating  personnel with disparate
business  backgrounds and combining  different corporate cultures and accounting
and computer  systems.  There can be no assurance  that the Company will achieve
expected expense reductions with the acquired companies,  that there will not be
substantial costs associated with any such reductions, that such reductions will
not result in a decrease in  revenues  or that there will not be other  material
adverse  effects of these  integration  efforts.  Such effects could  materially
reduce the short-term  earnings of the Company.  In fiscal 1997 and 1998, merger
and business integration costs of $38.7 million and $23.0 million, respectively,
were recorded by the Company in connection with  acquisition  activities.  These
costs include  transaction  costs,  costs attributable to lease cancellation and
closure of duplicate or  inadequate  facilities  and  activities,  reformatting,
facility conversion and other integration costs, severance, and other costs. The
Company  recorded no merger and business  integration  costs in fiscal 1999. The
Company  acquired  two stores  during  fiscal  1999 in a  purchase  transaction,
without incurring charges for merger and business  acquisition  costs.  However,
the Company may make additional  acquisitions in the future, which may result in
additional  costs.  Acquisitions  require  significant  financial and management
resources  both  at the  time of the  transaction  and  during  the  process  of
integrating  the newly  acquired  business  into the Company's  operations.  The
Company's operating results could be adversely affected if the Company is unable
to  successfully  integrate  such  new  companies  into its  operations.  Future
acquisitions by the Company could also result in potentially  dilutive issuances
of securities,  additional  debt and contingent  liabilities,  and  amortization
expenses related to goodwill and other intangible assets, which could materially
adversely affect the Company's profitability.

     Reliance  on  Vendors  and  Product   Lines  and   Exclusive   Distribution
Arrangements.  The Company purchases  significant amounts of products from three
key vendors, The Iams Company, Hill's Pet Products, Inc. (which produces Science
Diet), and Nutro,  Inc., the first of which supplied products that accounted for
more  than 10% and less than 15% of the  Company's  sales in  fiscal  1999.  The
Company does not maintain long-term supply contracts with any of its vendors and
the loss of any of these  vendors or other  significant  vendors of premium  pet
food or pet supplies offered by the Company could have a material adverse effect
on the Company. In addition, it could materially adversely affect the Company if
any premium pet food manufacturers were to make premium pet food products widely
available in  supermarkets  or through other mass  merchants,  or if the premium
brands  currently  available to such  supermarkets  and mass  merchants  were to
increase  their  market  share at the  expense of the  premium  brands sold only
through specialty pet food and supply retailers. The Company's principal vendors
currently provide the Company with certain incentives such as volume purchasing,
trade  discounts,  cooperative  advertising  and  market  development  funds.  A
reduction  or  discontinuance  of these  incentives  could  also have a material
adverse effect on the Company.

     One of the Company's  primary  premium pet food vendors,  The Iams Company,
was  purchased  by Procter & Gamble in fiscal  1999.  Through  the end of fiscal
1999,  the premium pet food  brands  that the  Company  purchases  from The Iams
Company,  Hill's Pet Products,  Inc. (which produces  Science Diet),  and Nutro,
Inc., were not widely  available in  supermarkets  or mass merchants.  In fiscal
2000,   Procter  &  Gamble  widened  the  distribution  of  the  Iams  brand  to
supermarkets  and mass merchants  across the country.  The Eukanuba brand of pet
food, which is also  manufactured by The Iams Company,  remains not available to
grocery stores or other mass merchants.  This change in the  distribution of one
of the Company's most important products could have a material adverse effect on
the Company.

     Competition.   The  pet  food  and  supply  retailing  industry  is  highly
competitive.  The  Company  competes  with a number  of pet  superstore  chains,
smaller pet store chains and independent  pet stores.  The Company also competes
with supermarkets and other mass merchants (see "Reliance on Vendors and Product
Lines and Exclusive Distribution Arrangements," above). In addition, several pet
food and supply  e-commerce  retailers  commenced  business  in fiscal 1999 with
plans to gain substantial  market share.  Many of the Company's  competitors are
larger and have significantly  greater resources than the Company. If any of the
Company's  major  competitors  seek to gain or retain  market  share by reducing
prices or by  introducing  additional  products,  the Company may be required to
reduce  its prices on key items in order to remain  competitive,  which may have
the affect of reducing  its  profitability.  There is no  assurance  that in the
future the Company will not face greater  competition from e-commerce  retailers
or other land-based national, regional and local retailers.

     Performance of New Superstores;  Future Operating Results.  The Company has
recently  opened and acquired  superstores  in new markets and plans to open and
acquire additional  superstores in other new markets.  There can be no assurance
that these stores will be profitable in the near term or that profitability,  if
achieved,  will be sustained.  In addition,  there can be no assurance  that the
Company's  existing stores will maintain their  profitability or that new stores
will generate sales levels necessary to achieve store-level profitability,  much
less  profitability  comparable  to  that  of  existing  stores.  The  Company's
comparable  store net sales  increases  were 11.5%,  6.4%,  and 11.1% for fiscal
1997,  1998 and 1999,  respectively.  The Company  anticipates  that its rate of
comparable  stores sales  growth may be lower in future  periods than the growth
rates  previously  experienced due to maturation of the existing store base, the
effects  of  opening  additional  stores  in  existing  markets,  and the  wider
availability  of certain  premium  pet  foods.  Due in part to the effect of the
timing of store openings and acquisitions, changes in sales growth rates and the
changing  competitive  environment,  period-to-period  comparisons  of financial
results may not be  meaningful  and the  results of  operations  for  historical
periods may not be indicative of future results.

     Quarterly  and  Seasonal  Fluctuations.  The timing of new store  openings,
related  preopening  expenses and the amount of revenue  contributed  by new and
existing  stores may cause the  Company's  quarterly  results of  operations  to
fluctuate.  The  Company's  business is also  subject to  seasonal  fluctuation.
Historically,  the Company has realized a higher portion of its net sales during
the month of December than during the other months of the year.

     Dependence on Senior Management.  The Company is dependent upon the efforts
of its principal  executive  officers.  In particular,  the Company is dependent
upon the management and leadership of Brian K. Devine,  Chairman,  President and
Chief  Executive  Officer.  The loss of Mr.  Devine or certain of the  Company's
other  principal  executive  officers  could  materially  adversely  effect  the
Company's  business.  The Company has entered into an employment  agreement with
Mr. Devine which provides for an indefinite  term and which may be terminated by
Mr.  Devine on 90 days  notice.  The  Company has  obtained a key man  insurance
policy on the life of Mr.  Devine in the  amount of $1.0  million,  of which the
Company  is the sole  beneficiary.  The  Company's  success  will  depend on its
ability to retain its current  management  and to attract  and retain  qualified
personnel in the future.

     Possible  Volatility of Stock Price.  Since the initial public  offering of
the Company's  common stock in March 1994,  the market value of the common stock
has been  subject to  significant  fluctuations.  The market price of the common
stock may  continue  to be subject to  significant  fluctuations  in response to
operating  results  and other  factors.  In the past,  the  market  price of the
Company's  stock has  responded  to changes in outside  analysts'  expectations,
stock market movements relating to retailers particularly,  and to general stock
market  fluctuations.  In  addition,  the  stock  market  in  recent  years  has
experienced  price and volume  fluctuations  that often have been  unrelated  or
disproportionate to the operating performance of companies.  These fluctuations,
as well as general  economic and market  conditions,  may  adversely  affect the
market  price  of the  common  stock.  The  Company  is  currently  involved  in
stockholder class action  litigation  precipitated by a sudden drop in the price
of the Company's common stock. See "Legal Proceedings." Management believes that
future  fluctuations  in the  market  value of the  Company's  common  stock may
trigger  further  litigation.  Defending the Company in such  stockholder  class
action litigation is costly, and the outcome is unpredictable.

     Readers  are  cautioned  not to place  undue  reliance  on  forward-looking
statements  which reflect  management's  view only as of the date of this Annual
Report.  The Company  undertakes no obligation to publicly release the result of
any revisions to these  forward-looking  statements which may be made to reflect
events or  circumstances  after the date hereof or to reflect the  occurrence of
unanticipated events.

ITEM 2.  PROPERTIES

     The Company leases  substantially all of its store and warehouse locations.
Original lease terms for the Company's 490 stores  generally  range from five to
twenty years, many of which contain renewal options. Leases on 112 stores expire
within  the next  three  years,  with  leases on 74 of these  stores  containing
renewal options.

     The table below shows the location and number of the Company's stores as of
January 29, 2000.

                         Location                        Stores
                         --------                        ------
                         Alabama                            2
                         Arizona                           13
                         Arkansas                           3
                         California                       131
                         Colorado                          10
                         Connecticut                       13
                         Delaware                           1
                         District of Columbia               1
                         Idaho                              2
                         Illinois                          41
                         Indiana                            5
                         Iowa                               6
                         Kansas                             9
                         Kentucky                           1
                         Louisiana                          1
                         Maine                              1
                         Maryland                           7
                         Massachusetts                     21
                         Michigan                           7
                         Minnesota                         18
                         Missouri                          11
                         Montana                            1
                         Nebraska                           6
                         Nevada                             6
                         New Hampshire                      6
                         New Jersey                        14
                         New Mexico                         1
                         New York                          21
                         North Dakota                       2
                         Ohio                               3
                         Oregon                            13
                         Pennsylvania                      16
                         Rhode Island                       1
                         South Dakota                       1
                         Tennessee                          6
                         Texas                             43
                         Utah                               2
                         Virginia                           9
                         Washington                        26
                         Wisconsin                          9
                                                         ----
                                                          490
                                                         ====

     The  Company's  headquarters,  located  in San  Diego,  California,  occupy
approximately  70,000  square feet of office  space  which is financed  under an
obligation which expires February 2006. The Company's five regional distribution
centers  collectively  occupy over  200,000  square  feet of space in  Stockton,
California; Portland, Oregon; New Hope, Minnesota; Mansfield, Massachusetts; and
Garland, Texas under leases which expire in April 2001, February 2002, September
2002, December 2003, and August 2004, respectively.  The Company's three central
distribution centers  collectively occupy  approximately  800,000 square feet of
space in Dayton, New Jersey;  Joliet,  Illinois; and Mira Loma, California under
leases which expire in June 2002, April 2005, and September 2005,  respectively.
Each of the distribution center leases contains a renewal option.

ITEM 3.  LEGAL PROCEEDINGS

     The Company and certain of its officers  have been named as  defendants  in
several  virtually  identical  class action  lawsuits filed in the United States
District  Court for the  Southern  District  of  California  between  August and
November,  1998. These cases have been  consolidated and will be administered as
one case.  The  plaintiffs  purport  to  represent  a class of all  persons  who
purchased the Company's common stock between January 30, 1997 and July 10, 1998.
The complaints  allege that the defendants  violated various federal  securities
laws through material  misrepresentations and omissions during the class period,
and seek unspecified  monetary damages.  These matters have been tendered to the
Company's  insurance  carrier.   While  the  Company  believes  the  allegations
contained in these  lawsuits are without  merit,  the claims have not progressed
sufficiently for the Company to estimate a range of possible  exposure,  if any.
The Company and its officers intend to defend themselves vigorously.

     In addition,  the Company is involved in routine  litigation arising in the
ordinary course of its business.  While the results of such litigation cannot be
predicted with  certainty,  the Company  believes that the final outcome of such
matters will not have a material  adverse  effect on the Company's  consolidated
financial position or results of operations.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     No matters were  submitted to a vote of the Company's  stockholders  during
the fourth quarter of the fiscal year ended January 29, 2000.

ITEM 4.1.  EXECUTIVE OFFICERS OF THE COMPANY

     The executive officers of the Company are as follows:

      Name            Age                     Position
      ----            ---                     --------

Brian K. Devine        58   Chairman, President and Chief Executive Officer
Bruce C. Hall          55   Executive Vice President - Operations
Janet D. Mitchell      44   Senior Vice President - Human Resources and
                            Administration

James M. Myers         42   Senior Vice President and
                            Chief Financial Officer

William M. Woodard     51   Senior Vice President - Business Development

     BRIAN K. DEVINE,  Chairman,  President and Chief Executive Officer,  joined
the Company in August 1990 and has served as Chairman since January 1994.  Prior
to joining the Company,  Mr. Devine was  President of Krause's  Sofa Factory,  a
furniture  retailer and  manufacturer,  from 1988 to 1989. From 1970 until 1988,
Mr.  Devine held various  positions  with Toys 'R' Us, a retailer of  children's
toys,  including  Senior Vice  President,  Director  of Stores;  and Senior Vice
President,  Growth,  Development  and  Operations.  Mr.  Devine  graduated  from
Georgetown University with a degree in economics.

     BRUCE C. HALL, Executive Vice President,  Operations, joined the Company in
April  1997.  Mr.  Hall  spent 34 years  from  1963 to 1997  with Toys 'R' Us, a
retailer  of  children's  toys,  where  he  progressively  advanced  from  field
operations  through a number of positions,  including  Senior Vice  President of
Operations.

     JANET  D.   MITCHELL,   Senior  Vice   President,   Human   Resources   and
Administration,  joined the Company in  February  1989.  From 1989 to 1998,  Ms.
Mitchell  served as Vice  President,  Human  Resources.  From 1981 to 1989,  Ms.
Mitchell held various management positions in human resources with the Southland
Corporation's  7-Eleven  division.  From 1978 to 1981, Ms. Mitchell held various
positions  with  the  El  Torito  Restaurant  chain.  Ms.  Mitchell  received  a
bachelor's degree from California State University, San Diego.

     JAMES M. MYERS,  Senior Vice President and Chief Financial Officer,  joined
the  Company in May 1990.  From 1996 to 1998,  Mr.  Myers  served as Senior Vice
President,  Finance  and prior to that as Vice  President,  Finance  and as Vice
President  and  Controller  of the  Company.  From 1980 to 1990,  Mr. Myers held
various  positions  at the  accounting  firm KPMG LLP,  including  Senior  Audit
Manager.  Mr. Myers is a CPA and received an accounting degree from John Carroll
University.

     WILLIAM M. WOODARD, Senior Vice President, Business Development, joined the
Company in January 1991.  From 1991 to 1999,  Mr.  Woodard served as Senior Vice
President, Store Operations.  From 1987 to 1990, Mr. Woodard was Vice President,
Director of  Marketing at J. M. Jones,  Inc., a wholesale  division of SuperValu
Stores,  Inc.  From 1970 to 1987,  Mr.  Woodard was employed by Safeway  Stores,
Inc., a grocery retailer,  in a number of positions  including Retail Operations
Manager and Marketing  Operations  Manager.  Mr. Woodard holds an administrative
management degree from North Texas State University and an MBA in marketing from
the University of Southern California.

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS

     The  Company's  common  stock,  $.0001 par  value,  is quoted on the Nasdaq
National  Market  under the symbol  "PETC."  Public  trading of the common stock
commenced  on March 17,  1994.  The  following  table sets forth for the periods
indicated  the high and low reported  sale prices per share for the common stock
as reported by the Nasdaq National Market:

                                         High          Low
                                         ----          ---
    Fiscal 1998

    First Quarter                       $25.00       $13.13
    Second Quarter                       21.13         9.75
    Third Quarter                        10.63         5.38
    Fourth Quarter                       11.25         7.75

    Fiscal 1999

    First Quarter                       $13.50       $ 6.50
    Second Quarter                       18.38        12.44
    Third Quarter                        16.50         9.63
    Fourth Quarter                       15.50         9.38


     On April 7, 2000,  there were 660  stockholders  of record of the Company's
common stock.

     The Company has never paid cash dividends on its common stock.  The Company
currently  anticipates  that it will retain all  available  funds for use in the
operation and expansion of its business and does not anticipate  paying any cash
dividends in the foreseeable future.



ITEM 6.  SELECTED FINANCIAL DATA
         (in thousands, except per share and operating data)

     The  following  table  sets  forth  selected  consolidated   financial  and
operating data for the Company for the five fiscal years ended January 29, 2000.
The  selected  consolidated  financial  data  presented  below under the caption
"Income  Statement  Data" for the  five-year  period  ended  January 29, 2000 is
derived from the audited  consolidated  financial  statements of the Company and
its subsidiaries. The selected consolidated financial data presented below under
the caption  "Balance  Sheet  Data" as of  February 3, 1996 is derived  from the
unaudited  consolidated financial statements of the Company and its subsidiaries
as restated to reflect the poolings of interests during the years ended February
1, 1997 and January 31, 1998. The selected consolidated financial data presented
below under the caption "Balance Sheet Data" as of February 1, 1997, January 31,
1998,  January  30,  1999,  and  January  29,  2000 is derived  from the audited
consolidated  financial  statements  of the  Company and its  subsidiaries.  The
financial data set forth below should be read in conjunction with  "Management's
Discussion and Analysis of Financial  Condition and Results of  Operations"  and
the Consolidated Financial Statements as of January 29, 2000 and for each of the
years in the  three-year  period  ended  January  29,  2000 and the  independent
auditors' report thereon,  included and  incorporated by reference  elsewhere in
this Annual Report.

<TABLE>
<CAPTION>
                                                                       Fiscal Year Ended
                                                   ------------------------------------------------------
                                                    Feb. 3,    Feb. 1,   Jan. 31,   Jan. 30,   Jan. 29,
                                                     1996       1997       1998       1999       2000
                                                   --------   --------   --------   --------   --------
Income Statement Data:

<S>                                                <C>        <C>        <C>        <C>        <C>
Net sales                                          $443,585   $600,637   $749,789   $839,622   $990,289
Cost of sales and occupancy costs                   337,873    446,315    553,566    624,818    720,711
                                                    -------    -------    -------    -------    -------
  Gross profit                                      105,712    154,322    196,223    214,804    269,578
Selling, general and administrative expenses        101,760    132,745    173,667    187,938    220,800
Merger and business integration costs                 9,196     37,208     38,693     22,963         --
                                                    -------    -------    -------    -------    -------
  Operating income (loss)                            (5,244)   (15,631)   (16,137)     3,903     48,778
Loss on disposal of stores                            3,500         --         --         --         --
Interest expense, net                                    71        600      2,530      6,718      8,936
                                                    -------    -------    -------    -------    -------
  Earnings (loss) before Internet operations
  and equity in loss of unconsolidated
  affiliates and income taxes                        (8,815)   (16,231)   (18,667)    (2,815)    39,842
Internet operations and equity in loss of
  unconsolidated affiliates                              --         --         --         --     (1,254)
                                                    -------    -------    -------    -------    -------
  Earnings (loss) before income taxes                (8,815)   (16,231)   (18,667)    (2,815)    38,588
Income taxes (benefit) (1)                          (14,601)    (4,075)    (5,486)      (438)    16,831
                                                    -------    -------    -------    -------    -------
Net earnings (loss)                                $  5,786   $(12,156)  $(13,181)  $ (2,377)  $ 21,757
                                                    =======    =======    =======    =======    =======
Operating earnings  per common share, basic (2)          --         --         --         --   $   1.14
Operating earnings per common share, diluted (2)         --         --         --         --   $   1.13
Net earnings (loss) per common share, basic           $0.36     $(0.63)    $(0.64)    $(0.11)  $   1.03
Net earnings (loss) per common share, diluted         $0.35     $(0.63)    $(0.64)    $(0.11)  $   1.02
Weighted average common shares outstanding, basic    16,147     19,426     20,646     21,073     21,094
Weighted average common shares outstanding, diluted  16,427     19,426     20,646     21,073     21,338

Operating Data:

Total stores open end of period                         353        413        457        476        490
Aggregate gross square footage                    3,169,472  4,435,019  5,299,535  5,637,708  6,075,030
Average net sales per store (3)                  $1,183,000 $1,438,000 $1,696,000 $1,811,000 $2,042,000
Average net sales per gross square foot (4)      $      168 $      162 $      158 $      157 $      168
Percentage increase in comparable store net sales     16.5%      16.1%      11.5%       6.4%      11.1%

Balance Sheet Data:

Working capital                                    $ 29,064   $ 59,928   $ 33,360   $ 39,316   $ 68,883
Total assets                                        214,498    312,617    335,195    387,135    453,894
Long-term debt, excluding current portion                --         --     26,625     65,375     89,050
Capital lease and other obligations, excluding
  current portion                                    13,334     15,581     11,369     20,982     12,436
Total stockholders' equity                          130,040    196,499    186,057    183,841    205,890
</TABLE>

--------------

(1)  Includes $11.8 million  benefit from previously  unrecognized  deferred tax
     assets in fiscal 1995.

(2)  Operating  earnings  exclude  Internet  operations  and  equity  in loss of
     unconsolidated affiliates and $1.1 million of related tax effects.

(3)  Calculated using net sales divided by the number of stores  open,  weighted
     by the number of months stores are open during the period.

(4)  Calculated using net sales divided by gross square  footage of stores open,
     weighted by the number of months stores are open during the period.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

General

     At January 29, 2000,  the Company  operated 490 stores in 39 states and the
District of Columbia.  PETCO plans to open superstores in the future and follows
a strategy of converting and expanding its existing smaller format stores to the
superstore  format.  As a result of this  strategy,  the  Company has opened and
acquired  superstores,  has expanded and  relocated  smaller  format stores into
superstores and has closed underperforming  stores. As a result of the Company's
store  expansion  strategy,  operating  results may reflect  lower average store
contribution and operating  margins due to increased store  preopening  expenses
and lower anticipated sales volumes of immature stores.

     During fiscal 1997 the Company  completed four acquisitions of retailers of
pet  food  and  supplies,  operating  22  stores  which  were  accounted  for as
immaterial  poolings of  interests.  The Company also  acquired a retailer  that
operated 82 pet food and supply  stores under the trade name PetCare  located in
10  Midwestern  and  Southern  states  which was  accounted  for as a pooling of
interests.

     During fiscal 1998 the Company  completed two  acquisitions of retailers of
pet food and supplies  operating  four stores in  transactions  accounted for as
purchases.

     During fiscal 1999 the Company  completed one  acquisition of a retailer of
pet food and supplies  operating two stores in a transaction  accounted for as a
purchase.

  All  results of  operations  have been  restated  to reflect  the  poolings of
interests  and to  reflect  the  purchase  transactions  from  their  respective
acquisition dates.  Results of operations from immaterial poolings are reflected
from the beginning of the period from which these acquisitions were consummated.
(See footnote 2 to the consolidated financial statements).

Results of Operations

     The following  table sets forth certain items  expressed as a percentage of
net sales for the periods  indicated.  As a result of operational  and strategic
changes, period-to-period comparisons of financial results may not be meaningful
and the results of operations  for  historical  periods may not be indicative of
future results.

<TABLE>
<CAPTION>
                                                 Jan. 31,    Jan. 30,    Jan. 29,
                                                   1998        1999        2000
                                                 --------    --------    --------
<S>                                               <C>         <C>         <C>
Net sales                                         100.0%      100.0%      100.0%
Cost of sales and occupancy costs                  73.8        74.4        72.8
                                                  -----       -----       -----
  Gross profit                                     26.2        25.6        27.2
Selling, general and administrative expenses       23.2        22.4        22.3
Merger and business integration costs               5.2         2.7          --
                                                  -----       -----       -----
  Operating income (loss)                          (2.2)        0.5         4.9
Interest expense, net                               0.3         0.8         0.9
                                                  -----       -----       -----
  Earnings (loss) before internet operations
  and equity in loss of unconsolidated
  affiliates and income taxes                      (2.5)       (0.3)        4.0
Internet operations and equity in loss of
  unconsolidated affiliates                          --          --        (0.1)
                                                  -----       -----       -----
  Earnings (loss) before income taxes              (2.5)       (0.3)        3.9
Income taxes (benefit)                             (0.7)       (0.0)        1.7
                                                  -----       -----       -----
  Net earnings (loss)                              (1.8)       (0.3)        2.2
                                                  =====       =====       =====
</TABLE>

Fiscal Year Ended  January 29, 2000 Compared with Fiscal Year Ended  January 30,
1999

     Net sales  increased  17.9% to $990.3  million in fiscal  1999 from  $839.6
million  in fiscal  1998.  The  increase  in net sales in fiscal  1999  resulted
primarily from the addition of 42 stores,  including the conversion of 10 stores
into  superstores,  the closing of 18 stores,  and a comparable  store net sales
increase of 11.1%.  The comparable  store net sales increase was attributable to
maturing   superstores,   increased  marketing  and  merchandising  efforts  and
increased customer traffic. The increase in comparable store net sales accounted
for approximately $91.2 million, or 60.5%, of the net sales increase,  and $59.5
million,  or  39.5%  of the net  sales  increase,  was  attributable  to the net
increase in the Company's store base.

     Gross profit,  defined as net sales less the cost of sales  including store
occupancy costs,  increased $54.8 million, or 25.5%, to $269.6 million in fiscal
1999 from $214.8  million in fiscal 1998.  Gross  profit as a percentage  of net
sales  increased to 27.2% in fiscal 1999 from 25.6% in fiscal 1998. The majority
of this increase in gross margin is due to the continuing shift in the sales mix
from  lower-margin pet food sales to higher-margin  categories such as companion
animals,  toys and  supplies.  Also,  the fiscal 1998 gross margin was adversely
affected by increased  distribution  costs  resulting from the investment in two
new central  distribution centers and lower leverage of store occupancy costs in
the acquired stores during the conversion process.

     Selling,  general and administrative  expenses increased $32.9 million,  or
17.5%,  to $220.8 million in fiscal 1999 from $187.9 million in fiscal 1998. The
increase was due primarily to increased  personnel and related costs  associated
with supporting  increased sales and new store openings.  As a percentage of net
sales,  these  expenses  decreased  to 22.3% in fiscal 1999 from 22.4% in fiscal
1998.  Included in selling,  general and administrative  expenses in fiscal 1998
are a $1.4 million charge for severance and legal costs related to the Company's
management  realignment  and a $4.5 million  charge  related to the write-off of
assets in connection  with the  relocation of the  Company's  main  distribution
center and the replacement of point-of-sale equipment in a chain-wide conversion
of this equipment and other assets.  Excluding these charges,  selling,  general
and  administrative  expenses were 21.7% in fiscal 1998,  compared with 22.3% in
1999. The increase in 1999 was primarily due to increased  personnel and related
costs  associated  with  decentralization  of  field  staff,   depreciation  and
maintenance of the Company's  investments in  infrastructure  in the prior year,
and the accrual for management bonuses based on improved financial performance.

     Merger and business  integration  costs of $23.0  million were  recorded in
fiscal 1998 in connection with the conversion  activities of the stores acquired
in the last half of fiscal  1997.  These  costs  consisted  of $0.5  million  of
transaction costs, $2.0 million of costs attributable to lease cancellations and
closure of duplicate or inadequate  facilities and activities,  $19.1 million of
reformatting,  facility  conversion and other integration costs and $1.4 million
of severance and other costs.

     Operating  income was $48.8 million in fiscal 1999 compared with  operating
income of $3.9 million in fiscal 1998. Excluding merger and business integration
costs and other charges,  on a comparable basis, the Company would have reported
operating income of $32.8 million or 3.9% of net sales in fiscal 1998,  compared
with operating income of $48.8 million, or 4.9% of net sales in fiscal 1999.

     Internet  operations  and equity in loss of  unconsolidated  affiliates was
$1.3  million in fiscal  1999.  This  consists of $4.0  million of equity in the
losses of  Petopia.com,  partially  offset by $2.7 million earned by the Company
for its support of Petopia.com under the terms of its alliance agreement.

     Net  interest  expense was $8.9  million in fiscal 1999  compared  with net
interest expense of $6.7 million in fiscal 1998.  Increased borrowings in fiscal
1999 led to the increase in interest expense.

     Income  taxes were $16.8  million in fiscal 1999  compared  with income tax
benefit of $0.4 million in fiscal 1998.  Income tax benefit reflects the Federal
and state tax  benefits of the loss before  income  taxes,  net of the effect of
non-deductible  expenses. The Company has not recognized any tax benefit for its
equity share of the losses in Petopia.com,  which impacts the effective tax rate
in fiscal 1999. The Company's  effective tax rate before Internet operations and
equity in loss of unconsolidated affiliates was 39.5% in fiscal 1999.

     Net earnings  were $21.8  million,  or $1.02 per diluted  share,  in fiscal
1999,  compared with net loss of $2.4 million,  or $0.11 per diluted  share,  in
fiscal 1998. Net earnings,  excluding Internet  operations and equity in loss of
unconsolidated  affiliates, and related tax effects, increased to $24.1 million,
or $1.13 per  diluted  share,  compared  with net  earnings  in the prior  year,
excluding  merger and  business  integration  costs and related  charges and tax
benefits of $15.6 million, or $0.74 per diluted share.

Fiscal Year Ended  January 30, 1999 Compared with Fiscal Year Ended  January 31,
1998

     Net sales  increased  12.0% to $839.6  million in fiscal  1998 from  $749.8
million  in fiscal  1997.  The  increase  in net sales in fiscal  1998  resulted
primarily  from the addition of 40 stores,  including the conversion of 9 stores
into  superstores,  the closing of 12 stores,  and a comparable  store net sales
increase of 6.4%. The comparable  store net sales increase was  attributable  to
maturing  superstores,   increased  advertising  and  merchandising  efforts  in
existing  stores.  The net increase in the  Company's  store base  accounted for
approximately  $48.0  million,  or 53.5% of the net  sales  increase,  and $41.8
million, or 46.5% of the net sales increase, was attributable to the increase in
comparable store net sales.

     Gross profit increased $18.6 million,  or 9.5%, to $214.8 million in fiscal
1998 from $196.2  million in fiscal 1997.  Gross  profit as a percentage  of net
sales decreased to 25.6% in fiscal 1998 from 26.2% in fiscal 1997. This decrease
reflects lower gross margins  generated from sales in the stores acquired in the
last  half  of  fiscal  1997,  which  were  undergoing  conversions  to  PETCO's
assortment  and  selling  through  non-continuing  inventory  at  reduced  gross
margins. Also, increased distribution costs resulting from the investment in two
new central  distribution  centers and lower leverage of store occupancy  costs,
particularly in the acquired stores during the conversion  process,  contributed
to this decline.

     Selling,  general and administrative  expenses increased $14.2 million,  or
8.2%,  to $187.9  million in fiscal  1998 from  $173.7  million in fiscal  1997.
Selling,  general and administrative expenses increased primarily as a result of
higher  personnel  and related  costs  associated  with new store  openings  and
acquisitions. As a percentage of net sales, these expenses decreased to 22.4% in
fiscal  1998  from  23.2% in fiscal  1997.  Included  in  selling,  general  and
administrative  expenses in fiscal 1998 are a $1.4 million  charge for severance
and legal  costs  related to the  Company's  management  realignment  and a $4.5
million  charge  related  to the  write-off  of  assets in  connection  with the
relocation of the Company's  main  distribution  center and the  replacement  of
point-of-sale  equipment in a chain-wide  conversion of this equipment and other
assets.  Selling,  general and  administrative  expenses in fiscal 1997 included
charges of $11.0 million related to the acquisition of PetCare.  Excluding these
charges,  these  expenses were unchanged at 21.7% in both fiscal 1998 and fiscal
1997.

     Merger and business  integration  costs of $23.0  million were  recorded in
fiscal 1998 in connection with the conversion  activities of the stores acquired
in the last half of fiscal  1997.  These  costs  consisted  of $0.5  million  of
transaction costs, $2.0 million of costs attributable to lease cancellations and
closure of duplicate or inadequate  facilities and activities,  $19.1 million of
reformatting,  facility  conversion and other integration costs and $1.4 million
of severance and other costs.  In fiscal 1997,  merger and business  integration
costs of $38.7 million were recorded in connection with acquisition  activities.
These costs  consisted of $4.5 million of  transaction  costs,  $17.8 million of
costs attributable to lease cancellations and closure of duplicate or inadequate
facilities and activities,  $12.2 million of reformatting,  facility  conversion
and other integration costs and $4.2 million of severance and other costs.

     Operating income was $3.9 million in fiscal 1998 compared with an operating
loss of $16.1 million in fiscal 1997.  Excluding merger and business integration
costs and other charges,  on a comparable basis, the Company would have reported
operating  income of $32.8 million or 3.9% of net sales in fiscal 1998 and $33.6
million or 4.5% of net sales in fiscal 1997.

     Net  interest  expense was $6.7  million in fiscal 1998  compared  with net
interest expense of $2.5 million in fiscal 1997.  Increased borrowings in fiscal
1998 led to the increase in interest expense.

     Income tax benefit was $0.4 million in fiscal 1998 compared with income tax
benefit of $5.5 million in fiscal 1997.  Income tax benefit reflects the Federal
and state tax  benefits of the loss before  income  taxes,  net of the effect of
non-deductible expenses.

     Net loss was $2.4  million in fiscal 1998  compared  with net loss of $13.2
million in fiscal  1997.  Excluding  merger and business  integration  costs and
related  charges and tax benefits,  net earnings for fiscal 1998 would have been
$15.6 million, or $0.74 per diluted share, compared with $18.6 million, or $0.88
per diluted share in fiscal 1997.

Quarterly Data

     The  following  tables  set  forth  the  unaudited   quarterly  results  of
operations  for fiscal  1998 and fiscal  1999.  This  information  includes  all
adjustments  management  considers necessary for fair presentation of such data.
The results of operations for historical periods are not necessarily  indicative
of results for any future  period.  The  Company  expects  quarterly  results of
operations  to  fluctuate   depending  on  the  timing  and  amount  of  revenue
contributed by new stores.

     The Company  believes  that its business is moderately  seasonal,  with net
sales and earnings generally higher in the fourth fiscal quarter due to year-end
holiday purchases.

<TABLE>
<CAPTION>
                                                              Fiscal Quarter Ended
                                                   -------------------------------------------
                                                     May 2,     Aug. 1,   Oct. 31,   Jan. 30,
Fiscal 1998                                           1998       1998       1998       1999
-----------                                        ---------  ---------  ---------  ---------
<S>                                                <C>        <C>        <C>        <C>
Net sales                                          $ 196,296  $ 197,318  $ 204,785  $ 241,223
Gross profit                                          46,676     48,343     51,955     67,830
Operating income (loss)                                 (338)   (10,130)      (819)    15,190
Net earnings (loss)                                   (1,068)    (7,261)    (1,849)     7,801
Net earnings (loss) per share, basic and diluted   $   (0.05) $   (0.34) $   (0.09) $    0.37

Stores open at end of period                             458        461        467        476
Aggregate gross square footage                     5,328,996  5,420,586  5,602,596  5,637,708
Percentage increase in comparable store net sales        5.7%       5.4%      5.0%        8.7%

                                                              Fiscal Quarter Ended
                                                   -------------------------------------------
                                                     May 1,    Jul. 31,   Oct. 30,   Jan. 29,
Fiscal 1999                                           1999       1999       1999       2000
-----------                                        ---------  ---------  ---------  ---------
Net sales                                          $ 229,657  $ 236,184  $ 249,007  $ 275,441
Gross profit                                          59,122     61,880     67,638     80,938
Operating income                                       7,812      8,889     11,387     20,690
Net earnings                                           3,562      4,121      4,889      9,185
Operating earnings                                     3,562      4,121      5,349     11,072
Operating earnings per share, basic (1)            $    0.17  $    0.20  $    0.25  $    0.52
Operating earnings per share, diluted (1)          $    0.17  $    0.19  $    0.25  $    0.52
Net earnings per share, basic                      $    0.17  $    0.20  $    0.23  $    0.44
Net earnings per share, diluted                    $    0.17  $    0.19  $    0.23  $    0.43

Stores open at end of period                             482        485        494        490
Aggregate gross square footage                     5,773,881  5,889,004  6,068,222  6,075,030
Percentage increase in comparable store net sales       10.9%      12.1%      13.2%       8.5%
</TABLE>

(1)  Operating  earnings  exclude  Internet  operations  and  equity  in loss of
     unconsolidated affiliates, net of tax effects.

Year 2000 Issues

     In 1997,  the Company  implemented a  comprehensive  risk-based  program to
assure that both its information  technology  ("IT") and non-IT systems are Year
2000 compliant. Many Year 2000 IT issues have been resolved through hardware and
software  updates and  upgrades  undertaken  for other  reasons.  As part of the
Company's  ongoing IT upgrade  plans,  in fiscal 1998 the Company  completed the
conversion of its store  point-of-sale  systems to a Year 2000 compliant version
at a cost of approximately  $20 million,  which has been capitalized and will be
depreciated  over the  components'  estimated  useful  lives.  This  conversion,
although not undertaken  specifically for Year 2000 purposes, was accelerated in
order to achieve Year 2000 compliance in this critical area. The amount of other
expenditures  for updates and  upgrades  that relate  specifically  to Year 2000
compliance is not separable from the total, but is not believed to be a material
amount.

     The change from  calendar  year 1999 to 2000  passed  without any Year 2000
problems for the  Company.  The  potential  does exist,  however,  for Year 2000
problems to arise at various  dates in the  future.  The  Company  continues  to
monitor  the  issue.  There can be no  assurance,  however,  that the  Company's
assessment of the impact of Year 2000 is complete and that further  analysis and
study, as well as the testing and implementation of planned solutions,  will not
reveal  the need for  additional  remedial  work.  The  Company  is  potentially
vulnerable to mistakes  made by key  suppliers of products and services,  and to
operational  difficulties  in  the  Company's  corporate  offices,  distribution
centers or store  locations.  The  financial  magnitude  of these  risks  cannot
currently be estimated.

     The foregoing  statements as to the Company's Year 2000 efforts are forward
looking and, along with all other forward-looking statements herein, are made in
reliance  on the safe harbor  provisions  discussed  under the caption  "Certain
Cautionary Statements" in Item 1, above.

New Accounting Standards

     In June 1998 the Financial  Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities"(the "Statement").
The Statement  establishes  accounting  and reporting  standards  requiring that
every derivative  instrument be recorded in the balance sheet as either an asset
or  liability  measured at its fair value.  The  Statement  also  requires  that
changes in the  derivative's  fair value be  recognized  currently  in  earnings
unless specific hedge accounting criteria are met. The Statement, as amended, is
effective for fiscal years  beginning after June 15, 2000 and is not expected to
have a material impact on the Company's consolidated financial statements.

Liquidity and Capital Resources

     The Company has financed  its  operations  and  expansion  program  through
internal cash flow,  external  borrowings and the sale of equity securities.  At
January 29, 2000, total assets were $453.9 million, $185.2 million of which were
current  assets.  Net cash provided by operating  activities  was $14.5 million,
$27.9  million and $77.1 million for fiscal 1997,  1998 and 1999,  respectively.
The Company's  sales are  substantially  on a cash basis.  Therefore,  cash flow
generated from operating  stores  provides a significant  source of liquidity to
the  Company.  The  principal  use of  operating  cash  is for the  purchase  of
merchandise  inventories.  A portion of the  Company's  inventory  purchases  is
financed through vendor credit terms.

     The Company uses cash in investing  activities to purchase fixed assets for
new stores, to acquire stores and, to a lesser extent, to purchase warehouse and
office fixtures,  equipment and computer hardware and software in support of its
distribution  and  administrative  functions.  During  fiscal  1999 the  Company
invested $18.5 million in affiliates.  The affiliates  include  Petopia.com,  an
e-commerce  destination  for the sales of pet food and  supplies,  and a limited
partnership  that operates  retail pet food and supply stores in Canada.  During
fiscal 1998 the Company  invested  $4.9 million in the limited  partnership  and
made loans of $6.5 million to a limited partner in the limited partnership. Cash
used in investing activities was $69.5 million,  $62.3 million and $62.3 million
for fiscal 1997, 1998 and 1999, respectively.

     The Company also  finances  some of its purchases of equipment and fixtures
through capital lease and other  obligations.  No purchases of fixed assets were
financed in this manner during fiscal 1999.  Purchases of $1.3 million and $20.3
million of fixed  assets were  financed in this  manner  during  fiscal 1997 and
1998, respectively. The Company believes additional sources of capital lease and
other obligation  financing are available on a cost-effective basis and plans to
use them, as necessary, in connection with its expansion program.

     During fiscal 1996, the Company  completed two acquisitions of retailers of
pet food and  supplies in purchase  transactions.  The  aggregate  fair value of
assets acquired was $14.4 million and assumed liabilities were $1.4 million with
$13.0 million of net cash invested in the  acquisition of these  businesses,  of
which $6.0 was expended in fiscal 1997.

     During fiscal 1998, the Company  completed two acquisitions of retailers of
pet food and  supplies in purchase  transactions.  The  aggregate  fair value of
assets acquired and the net cash invested in the acquisition of these businesses
was $2.1 million, of which $0.3 million was expended in fiscal 1999.

     During fiscal 1999, the Company  completed the acquisition of a retailer of
pet food and supplies in a purchase  transaction.  The  aggregate  fair value of
assets  acquired and the net cash invested in the  acquisition  of this business
was $2.6 million.

     The Company's  primary  long-term  capital  requirement  is funding for the
opening  or  acquisition  of  superstores.  Cash  flows  provided  by  financing
activities  were $13.5 million,  $33.3 million and $18.9 million in fiscal 1997,
1998 and 1999,  respectively.  In fiscal 1997,  1998,  and 1999, net proceeds of
$2.4 million, $0.1 million, and $0.3 million, respectively,  were generated from
sales of common stock.  Remaining  cash flows  provided by financing  activities
were borrowings under long-term debt  agreements,  net of repayment of long-term
debt agreements and other obligations. Cash flows from financing activities were
used to fund the Company's  expansion  program,  investment  in  affiliates  and
working capital requirements.

     The  Company  has a  credit  facility  with a  syndicate  of  banks  with a
commitment of up to $150.0  million that expires  between July 15, 2004 and July
15, 2006.  The credit  facility  provides  for $100.0  million in term loans and
$50.0  million in  revolving  loans.  Borrowings  under the credit  facility are
secured by substantially all of the assets of the Company and bear interest,  at
the Company's  option, at the agent bank's corporate base rate plus up to 0.50%,
or LIBOR plus 1.00% to 3.25%, based on the Company's leverage ratio at the time.
The credit agreement contains certain affirmative and negative covenants related
to indebtedness, interest and fixed charges coverage and consolidated net worth.
The Company was in full  compliance with all such covenants at January 29, 2000.
As of January  29,  2000,  the  Company  had $50.0  million of  revolving  loans
available under the credit facility.

     As of January 29,  2000,  the  Company had  available  net  operating  loss
carryforwards  of $47.9  million for federal  income tax  purposes,  which begin
expiring in 2012,  and $24.0 million for state income tax purposes,  which begin
expiring in 2005.

     The Company anticipates that funds generated by operations, funds available
under the credit facility and currently  available  vendor financing and capital
lease and other obligation financing will be sufficient to finance its continued
operations and planned store openings at least through fiscal 2000.

Inflation

     Although the Company cannot  accurately  anticipate the effect of inflation
on its  operations,  it does not believe that inflation has had, or is likely in
the foreseeable future to have, a material impact on its net sales or results of
operations.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Market risks  relating to the Company's  operations  result  primarily from
changes in short-term interest rates as the Company's credit facility utilizes a
portfolio  of  short-term  LIBOR  contracts.  LIBOR  contracts  are  fixed  rate
instruments  for a  period  of  between  one and six  months,  at the  Company's
discretion.  The  Company's  portfolio  of LIBOR  contracts  vary in length  and
interest  rate,  such that adverse  changes in short-term  interest  rates could
affect the Company's  overall  borrowing  rate when  contracts are renewed.  The
lengths of contracts  within the portfolio are adjusted to balance the Company's
working  capital  requirements,  fixed asset  purchases  and  general  corporate
purposes. The Company continuously evaluates the portfolio with respect to total
debt, including an assessment of the current and future economic environment.

     As of January 29,  2000,  the  Company had $98.2  million in debt under the
credit  facility.  The average  debt  outstanding  for the fiscal year was $92.2
million.  Based on this average debt level, a hypothetical 10% adverse change in
LIBOR rates would increase net interest expense by approximately $0.6 million on
an annual  basis,  and likewise  would  decrease  earnings  and cash flows.  The
Company cannot predict market fluctuations in interest rates and their impact on
debt,  nor can there be any assurance  that  long-term  fixed-rate  debt will be
available at favorable rates, if at all. Consequently, future results may differ
materially  from the estimated  results due to adverse changes in interest rates
or debt availability.

     The Company did not have any material foreign exchange or other significant
market risk or any derivative financial instruments at January 29, 2000.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

     The Consolidated  Financial  Statements required by this Item are set forth
at the pages indicated in Item 14(a) hereof.

ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE

     None.





                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

     Incorporated by reference from the Company's  Proxy  Statement  relating to
the 2000  Annual  Meeting  of  Stockholders  to be  filed  pursuant  to  General
Instruction  G(3) to Form 10-K,  except  information  concerning  the  executive
officers of the Company which is set forth in Item 4.1 hereof.

ITEM 11.  EXECUTIVE COMPENSATION

     Incorporated by reference from the Company's  Proxy  Statement  relating to
the 2000  Annual  Meeting  of  Stockholders  to be  filed  pursuant  to  General
Instruction G(3) to Form 10-K.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     Incorporated by reference from the Company's  Proxy  Statement  relating to
the 2000  Annual  Meeting  of  Stockholders  to be  filed  pursuant  to  General
Instruction G(3) to Form 10-K.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

     Incorporated by reference from the Company's  Proxy  Statement  relating to
the 2000  Annual  Meeting  of  Stockholders  to be  filed  pursuant  to  General
Instruction G(3) to Form 10-K.

                                     PART IV

ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

(a)  Financial Statements

                                                                       Page

     Independent Auditors' Report                                       23
     Consolidated Balance Sheets                                        24
     Consolidated Statements of Operations                              25
     Consolidated Statements of Stockholders' Equity                    26
     Consolidated Statements of Cash Flows                              27
     Notes to Consolidated Financial Statements                         28

(b) Reports on Form 8-K

     None

(c) Exhibits

     The exhibits listed on the accompanying  Exhibit Index are filed as part of
this Annual Report.





                          INDEPENDENT AUDITORS' REPORT

The Board of Directors and Stockholders
Petco Animal Supplies, Inc.:

We have audited the  accompanying  consolidated  balance  sheets of Petco Animal
Supplies,  Inc. and subsidiaries as of January 30,1999 and January 29, 2000, and
the related  consolidated  statements of operations,  stockholders'  equity, and
cash flows for each of the years in the  three-year  period  ended  January  29,
2000. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated  financial statements referred to above present
fairly,  in all  material  respects,  the  financial  position  of Petco  Animal
Supplies,  Inc. and subsidiaries as of January 30, 1999 and January 29, 2000 and
the  results of their  operations  and their cash flows for each of the years in
the  three-year  period ended  January 29, 2000, in  conformity  with  generally
accepted accounting principles.

                                    KPMG LLP

San Diego, California
March 7, 2000







                           PETCO ANIMAL SUPPLIES, INC.

                           CONSOLIDATED BALANCE SHEETS
                      (in thousands, except per share data)

                                     ASSETS

<TABLE>
<CAPTION>
                                                           January 30, January 29,
                                                              1999        2000
                                                           ----------- -----------

Current assets:
<S>                                                       <C>           <C>
  Cash and cash equivalents                               $   2,324     $  36,059
  Receivables                                                 7,638         8,721
  Inventories                                               104,789       116,913
  Deferred tax assets (note 7)                               16,769        18,686
  Other                                                       5,993         4,844
                                                           --------      --------
    Total current assets                                    137,513       185,223

Fixed assets (note 5):

  Equipment                                                  76,992        96,324
  Furniture and fixtures                                     58,963        62,901
  Leasehold improvements                                    123,761       134,429
                                                           --------      --------
                                                            259,716       293,654
  Less accumulated depreciation and amortization            (72,206)     (101,251)
                                                           --------      --------
                                                            187,510       192,403

Goodwill                                                     37,804        36,362
Deferred tax assets (note 7)                                  9,681            --
Investment in affiliates (note 3)                             3,862        26,360
Other assets                                                 10,765        13,546
                                                           --------      --------
                                                          $ 387,135     $ 453,894
                                                           ========      ========

                      LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
  Accounts payable                                        $  51,099     $  52,147
  Accrued expenses                                           23,783        31,929
  Accrued salaries and employee benefits                      9,792        15,285
  Current portion of long-term debt (note 4)                  4,500         9,125
  Current portion of capital lease and other
    obligations (note 5)                                      9,023         7,854
                                                           --------      --------
    Total current liabilities                                98,197       116,340
Long-term debt, excluding current portion (note 4)           65,375        89,050
Capital lease and other obligations, excluding current
  portion (note 5)                                           20,982        12,436
Accrued store closing costs                                   7,005         5,378
Deferred tax liability (note 7)                                  --         7,083
Deferred rent and other liabilities                          11,735        17,717

Stockholders' equity (note 6):
  Common stock, $.0001 par value, 100,000 shares
    authorized, 21,074 and 21,107 shares issued
    and outstanding, respectively                                 2             2
  Additional paid-in capital                                270,916       271,208
  Accumulated deficit                                       (87,077)      (65,320)
                                                           --------      --------
    Total stockholders' equity                              183,841       205,890
Commitments and contingencies (notes 5, 6, and 9)

                                                           --------      ---------
                                                          $ 387,135     $ 453,894
                                                           ========      ========
</TABLE>


          See accompanying notes to consolidated financial statements.




                           PETCO ANIMAL SUPPLIES, INC.

                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (in thousands, except per share data)

<TABLE>
<CAPTION>
                                                           Years Ended
                                               -----------------------------------
                                               January 31, January 30, January 29,
                                                  1998        1999        2000
                                               ----------  ----------  ----------

<S>                                            <C>         <C>         <C>
Net sales                                      $  749,789  $  839,622  $  990,289

Cost of sales and occupancy costs                 553,566     624,818     720,711
                                                ---------   ---------   ---------

      Gross profit                                196,223     214,804     269,578

Selling, general and administrative expenses      173,667     187,938     220,800

Merger and business integration costs (note 2)     38,693      22,963          --
                                                ---------   ---------   ---------

      Operating income (loss)                     (16,137)      3,903      48,778

Interest income                                      (588)       (176)       (863)

Interest expense                                    3,118       6,894       9,799
                                                ---------   ---------   ---------

      Earnings (loss) before Internet
        operations and equity in loss of
        unconsolidated affiliates
        and income taxes                          (18,667)     (2,815)     39,842

Internet operations and equity in loss
  of unconsolidated affiliates (note 3)                --          --      (1,254)
                                                ---------   ---------   ---------

      Earnings (loss) before income taxes         (18,667)     (2,815)     38,588

Income taxes (benefit) (note 7)                    (5,486)       (438)     16,831
                                                ---------   ---------   ---------

      Net earnings (loss)                      $  (13,181) $   (2,377) $   21,757
                                                =========   =========   =========


Earnings (loss) per common share:

      Basic                                    $    (0.64) $    (0.11) $     1.03
                                                =========   =========   =========

      Diluted                                  $    (0.64) $    (0.11) $     1.02
                                                =========   =========   =========

Weighted average common shares:

      Basic                                        20,646      21,073      21,094

      Diluted                                      20,646      21,073      21,338

</TABLE>




          See accompanying notes to consolidated financial statements.






                           PETCO ANIMAL SUPPLIES, INC.

                 CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
                                 (in thousands)

                                            Additional                Total
                              Common Stock    Paid-in  Accumulated Stockholders'
                        -------------------
                            Shares   Amount   Capital    Deficit      Equity
                        ------------------- ---------- ----------- ------------
Balances at

 February 1, 1997           20,153   $    2  $265,971    $(69,474)    $196,499

Beginning balance of
 immaterial poolings

 of interests (note 2)         613       --     2,311      (2,045)         266

Exercise of options            293       --     2,449          --        2,449

Issuance of stock

 for services                    1       --        24          --           24

Net loss                        --       --        --     (13,181)     (13,181)
                          --------    -----   -------     -------      -------

Balances at

 January 31, 1998           21,060   $    2  $270,755    $(84,700)    $186,057

Exercise of options             13       --       143          --          143

Issuance of stock

 for services                    1       --        18          --           18

Net loss                        --       --        --     ( 2,377)     ( 2,377)
                          --------    -----   -------     -------      -------

Balances at

 January 30, 1999           21,074   $    2  $270,916    $(87,077)    $183,841

Exercise of options             33       --       292          --          292

Net earnings                    --       --        --      21,757       21,757
                          --------    -----   -------    --------      -------

Balances at

 January 29, 2000           21,107   $    2  $271,208    $(65,320)    $205,890
                          ========    =====   =======     =======      =======





          See accompanying notes to consolidated financial statements.






                           PETCO ANIMAL SUPPLIES, INC.

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                 (in thousands)

<TABLE>
<CAPTION>
                                                                  Years Ended
                                                    -----------------------------------------
                                                    January 31,    January 30,    January 29,
                                                       1998           1999           2000
                                                    -----------    -----------    -----------
Cash flows from operating activities:

<S>                                                  <C>            <C>            <C>
  Net earnings (loss)                                $(13,181)      $ (2,377)      $ 21,757
  Depreciation and amortization                        24,289         30,382         39,280
  Deferred taxes                                       (5,391)          (211)        14,847
  Equity in loss of unconsolidated affiliates              --             --          1,254
  Loss on retirement of fixed assets                    5,908          1,743             30
  Issuance of stock for services                           24             18             --
  Changes in assets and liabilities, net of effects
    of purchase acquisitions:
    Receivables                                        (2,845)         3,241         (1,083)
    Inventories                                        (7,992)        (7,916)       (11,975)
    Other assets                                       (3,378)          (767)          (784)
    Accounts payable                                   12,667           (695)         1,048
    Accrued expenses                                      567          2,225          6,937
    Accrued salaries and employee benefits                145            550          5,493
    Accrued store closing costs                         2,489         (1,069)        (1,544)
    Deferred rent                                       1,170          2,822          1,856
                                                      -------        -------        -------
      Net cash provided by operating activities        14,472         27,946         77,116
                                                      -------        -------        -------

Cash flows from investing activities:

  Additions to fixed assets                           (59,633)       (51,689)       (40,050)
  Investment in affiliates                                 --         (4,879)       (18,459)
  Net cash invested in acquisitions of businesses      (6,028)        (1,813)        (2,927)
  Loan to affiliate                                        --         (6,545)            --
  Change in other assets                               (3,869)         2,622           (822)
                                                      -------        -------        -------
      Net cash used in investing activities           (69,530)       (62,304)       (62,258)
                                                      -------        -------        --------

Cash flows from financing activities:

  Borrowings under long-term debt agreements           28,591         43,250         32,375
  Repayment of long-term debt agreements              (10,335)        (3,375)        (4,075)
  Repayment of capital lease and other obligations     (7,221)        (6,690)        (9,715)
  Proceeds from the issuance of common stock            2,449            143            292
                                                      -------        -------        -------
      Net cash provided by financing activities        13,484         33,328         18,877
                                                      -------        -------        -------

Net increase (decrease) in cash and cash equivalents  (41,574)        (1,030)        33,735
Cash and cash equivalents at beginning of year         44,338          3,354          2,324
Beginning cash and cash equivalents of immaterial
  poolings of interests                                   590             --             --
                                                      -------        -------        -------
Cash and cash equivalents at end of year             $  3,354       $  2,324       $ 36,059
                                                      =======        =======        =======

Supplemental cash flow disclosures:

  Interest paid on debt                              $  3,105       $  5,684       $  9,481
  Income taxes paid                                  $    920       $    141       $  1,101
Supplemental disclosure of noncash financing
  activities:
  Additions to capital leases                        $  1,268       $ 20,253       $     --

</TABLE>



          See accompanying notes to consolidated financial statements.




                           PETCO ANIMAL SUPPLIES, INC.

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                      (in thousands, except per share data)

1.   Summary of Significant Accounting Policies

     (a)  Description of Business:

     PETCO Animal Supplies, Inc., (the Company or PETCO) a Delaware corporation,
is a national specialty retailer of premium pet food and supplies with stores in
39 states and the District of Columbia.

     (b)  Basis of Presentation:

     The consolidated  financial  statements include the accounts of the Company
and its wholly-owned  subsidiaries.  Investments in affiliates are accounted for
on the equity method.  All significant  intercompany  accounts and  transactions
have been eliminated.

     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of contingent  assets and liabilities at the date of the consolidated
financial  statements and the reported  amounts of revenues and expenses  during
the reporting period. Actual results could differ from those estimates.

     (c)  Fiscal Year:

     The  Company's  fiscal  year ends on the  Saturday  closest to January  31,
resulting in years of either 52 or 53 weeks.  All fiscal years presented  herein
consisted of 52 weeks.  All references to a fiscal year refer to the fiscal year
ending on the Saturday closest to January 31 of the following year.

     (d)  Cash Equivalents:

     The Company  considers all liquid  investments with original  maturities of
three months or less to be cash equivalents.

     (e)  Inventories:

     Inventories  are stated at the lower of cost,  determined  by the first-in,
first-out method, or market.

     (f)  Pre-opening Costs:

     Costs  incurred  in  connection  with  opening  new stores are  expensed as
incurred.

     (g)  Fixed Assets:

     Fixed  assets  are  stated  at cost.  Depreciation  is  computed  using the
straight-line  method over the estimated  useful lives of the assets,  generally
three to ten years.  Equipment  under  capital  leases is stated at the  present
value of minimum lease payments at the inception of the lease.  Amortization  is
computed using the straight-line method over the lesser of the lease term or the
estimated useful lives of the assets, generally five to fifteen years.

     (h)  Goodwill and Long-Lived Assets:

     Costs in excess of net assets of acquired  businesses  is  amortized on the
straight-line  method over 15 years.  The carrying value of goodwill is reviewed
on a  periodic  basis  for  recoverability  based  on  expectations  for  future
undiscounted cash flows from the related operations.  Should the review indicate
that goodwill is not recoverable, the Company adjusts the goodwill to the extent
carrying value exceeds the fair value of the goodwill.  Accumulated amortization
at January 30, 1999 and January 29, 2000 was $9,569 and $12,790, respectively.

     In  addition,  the  Company  periodically  assesses  long-lived  assets for
impairment  under SFAS No. 121,  "Accounting  for the  Impairment  of Long-Lived
Assets and for Long-Lived  Assets to Be Disposed Of," based on  expectations  of
future   undiscounted  cash  flows  from  the  related   operations,   and  when
circumstances  dictate,  adjusts the asset to the extent  carrying value exceeds
the fair value of the asset.  These factors,  along with management's plans with
respect to the  operations,  are considered in assessing the  recoverability  of
goodwill, other purchased intangibles and property and equipment.

     (i)  Other Assets:

     The  Company  has a secured  loan to another  limited  partner in a limited
partnership which operates retail pet food and supply stores in Canada. The loan
bears  interest  at 7.5% and  matures on October  1, 2003.  The loan  balance at
January 30,  1999 and  January  29,  2000 was  $6,545,  and is included in other
assets on the accompanying balance sheet.

     The  remainder  of other  assets  consists  primarily  of  lease  deposits,
non-compete  agreements,  debt issuance costs and prepaid expenses.  Non-compete
agreements are amortized using the straight-line  method over the periods of the
agreements,  generally five to seven years. Debt issuance costs are amortized to
interest  expense  using  the  effective  interest  method  over the life of the
related debt,  generally  five years.  Accumulated  amortization  for intangible
other  assets at January  30,  1999 and  January  29,  2000 was $802 and $1,580,
respectively.

     (j)  Store Closing Costs:

     Management  continually  reviews the ability of stores to provide  positive
contributions  to the Company's  results.  The Company charges costs  associated
with store closures,  consisting  primarily of lease obligations,  to operations
upon commitment to close a store within the next 12 months.

     (k)  Income Taxes:

     Income  taxes are  accounted  for under  the  asset and  liability  method.
Deferred  tax  assets  and   liabilities  are  recognized  for  the  future  tax
consequences   attributable  to  differences  between  the  financial  statement
carrying  amounts of existing assets and  liabilities  and their  respective tax
bases.

     Deferred tax assets and  liabilities  are measured  using enacted tax rates
expected  to apply to  taxable  income  in the  years in which  those  temporary
differences are expected to be recovered or settled.  The effect on deferred tax
assets and  liabilities  of a change in tax rates is recognized in operations in
the period that includes the enactment date.

     (l)  Fair Value of Financial Instruments:

     Because of their short  maturities,  the carrying amounts for cash and cash
equivalents,  receivables,  accounts  payable,  accrued  expenses,  and  accrued
salaries and employee benefits  approximate fair value. The carrying amounts for
long-term debt, other  obligations and loan to affiliate  approximate fair value
as the interest rates and terms are substantially similar to those that could be
obtained currently for similar instruments.

     (m)  Stock Options:

     The  Company  accounts  for  stock  option  plans  in  accordance  with the
provisions of Accounting  Principles  Board ("APB") Opinion No. 25,  "Accounting
for Stock Issued to Employees,"  which  recognizes  compensation  expense on the
grant date if the current market price of the stock exceeds the exercise  price.
In 1996, the Company elected to adopt the disclosure  provisions of Statement of
Accounting   Standards   ("SFAS")   No.   123,   "Accounting   for   Stock-Based
Compensation."

     (n)  Earnings (Loss) Per Share:

     The consolidated financial statements are presented in accordance with SFAS
No. 128,  "Earnings  per Share."  Basic net earnings  (loss) per common share is
computed using the weighted average number of common shares  outstanding  during
the period.  Diluted net earnings per common share  incorporates the incremental
shares issuable upon the assumed exercise of stock options.

     Dilutive  effect of stock options of 581 and 84 shares were not included in
computing  diluted loss per share for fiscal years 1997 and 1998,  respectively,
because  the  effect  would  have been  antidilutive.  In  addition,  options to
purchase  common  shares  that were  outstanding  but were not  included  in the
computation  of diluted  net  earnings  (loss) per share  because  the  options'
exercise  price was greater than the average  market price of the common  shares
were  942,  1,995  and  1,621  for  the  fiscal  years  1997,   1998  and  1999,
respectively.

     (o)  Comprehensive Income:

     SFAS No. 130, "Reporting  Comprehensive Income" requires that certain items
of  comprehensive  income  other than net  earnings  or loss be  reported in the
financial statements.  For the three years ended January 29, 2000, the Company's
comprehensive income (loss) equaled net earnings (loss).

     (p)  Segment Reporting:

     SFAS No. 131,  "Disclosures  about  Segments of an  Enterprise  and Related
Information,"   requires  annual  and  interim  reporting  for  an  enterprise's
operating  segments  and  related  disclosures  about  its  products,  services,
geographic  areas and major  customers.  An  operating  segment  is defined as a
component of an enterprise that engages in business activities from which it may
earn revenues and incur expenses, and about which separate financial information
is regularly  evaluated by the chief operating decision maker in deciding how to
allocate  resources.  All  of the  Company's  stores  are  aggregated  into  one
reportable  segment given the similarities of economic  characteristics  between
the operations  represented by the stores and the common nature of the products,
customers and methods of distribution.

     (q)  Reclassifications:

     Certain previously  reported amounts have been reclassified to conform with
the current period presentation.

2.   Business Combinations

     The Company acquired all of the outstanding equity securities of a retailer
with four pet food and supply stores  operated under the tradename Super Pets in
August 1997, a retailer with nine pet food and supply stores  operated under the
tradename  Paws in October 1997, a retailer with five pet food and supply stores
operated under the tradename The PetCare Company in October 1997, and a retailer
with four pet food and  supply  stores  operated  under the  tradename  Pet Food
Savemart in October  1997,  in exchange  for an  aggregate  613 shares of common
stock. These acquisitions were accounted for as poolings of interests with their
financial  positions  and results of  operations  included  in the  accompanying
consolidated financial statements from the beginning of the period in which each
immaterial pooling was completed.  Previously reported financial statements have
not been restated to include the results of these  acquisitions  as revenues and
results  of  operations  prior  to the  acquisition  were  not  material  to the
consolidated financial position or results of operations of the Company.

     The Company acquired all of the outstanding equity securities of a retailer
with eighty-two pet food and supply stores operated under the tradename  PetCare
("PetCare") in November 1997, in exchange for 1,543 shares of common stock. This
transaction has been accounted for as a pooling of interests,  and  accordingly,
the consolidated  financial statements for the periods presented have previously
been restated to include the accounts of PetCare.

     During fiscal 1998, the Company completed two acquisitions  of retailers of
pet food and supplies in transactions accounted for as purchases.  The aggregate
fair value of assets acquired and the net cash invested in these  businesses was
$2,088,  of which $275 was expended in fiscal 1999.  The excess of the aggregate
cost over the fair value of net assets  acquired was $1,814,  which was recorded
as goodwill and is being amortized over fifteen years.

     During fiscal 1999,  the Company completed one acquisition of a retailer of
pet  food  and  supplies  in a  transaction  accounted  for as a  purchase.  The
aggregate  fair  value of  assets  acquired  and the net cash  invested  in this
business was $2,616. The excess of the aggregate cost over the fair value of net
assets  acquired  was  $1,468,  which  was  recorded  as  goodwill  and is being
amortized over fifteen years.

     The consolidated  financial  statements  include the operating results from
the  closing  date  for  each  respective  purchase  acquisition.  The  purchase
acquisitions during fiscal years 1998 and 1999 did not materially affect results
of operations and accordingly, pro-forma results are not presented.

     In fiscal  1997,  merger and  business  integration  costs of $38,693  were
recorded in connection  with  acquisition  activities.  These costs consisted of
$4,470  of  transaction   costs,   $17,790  of  costs   attributable   to  lease
cancellations and closure of duplicate or inadequate  facilities and activities,
$12,216 of reformatting,  facility  conversion and other  integration  costs and
$4,217 of severance and other costs.

     In fiscal  1998,  merger and  business  integration  costs of $22,963  were
recorded related to fiscal 1997 acquisition  activity.  These costs consisted of
$522 of transaction costs,  $1,995 of costs attributable to lease  cancellations
and closure of duplicate or inadequate  facilities  and  activities,  $19,088 of
reformatting,  facility  conversion  and other  integration  costs and $1,358 of
severance and other costs.

3.   Investment in Affiliates

     During fiscal 1999, the Company acquired an equity interest in Petopia.com,
an e-commerce  destination for the sale of pet food and supplies. At January 29,
2000,   the  Company  owned  4,335  shares  of  Petopia.com   preferred   stock,
representing an ownership interest of 10.0%, and warrants to purchase additional
preferred  shares.  The Company accounts for its investment in Petopia.com using
the equity  method and  records  its  proportionate  share of  earnings or loss.
Because the financial  statements of Petopia.com are recorded on a calendar year
basis,  the Company records its  proportionate  share of earnings or loss with a
lag of one month. The Company  recognized  $4,021 in equity in losses for fiscal
1999. The Company also provides  certain  marketing and fulfillment  services to
Petopia.com  according  to the terms of a strategic  alliance  agreement,  under
which the  Company  may earn an  additional  3,843  Series C  preferred  shares.
Including these shares,  the Company's  ownership interest would have been 17.4%
at January  29,  2000,  prior to the  exercise  of any  warrants  granted to the
Company.  The Company earned $2,767 from Petopia.com,  primarily under the terms
of the  agreement  in  fiscal  1999.  These  items  are  reflected  as  Internet
operations and equity in loss of  unconsolidated  affiliates in the accompanying
statements of operations.

     The  Company has a 60% limited  partner  interest in a limited  partnership
(the "LP") which operates retail pet food and supply stores in Canada.  Pursuant
to the terms of an option  agreement,  the Company may  increase its interest in
the LP.  The  Company  accounts  for its  investment  in the LP using the equity
method as it does not exercise control over the LP and records its proportionate
share of earnings or loss according to the  partnership  agreement.  The Company
did not record any  earnings  or loss for the years  ended  January 30, 1999 and
January 29, 2000.  The  Company's  investment  in the LP at January 30, 1999 and
January 29, 2000 was $5,862 and $12,415, respectively.

4.   Long-Term Debt

     The  Company  has a  credit  facility  with a  syndicate  of  banks  with a
commitment of up to $150.0  million that expires  between July 15, 2004 and July
15, 2006.  The credit  facility  provides  for $100.0  million in term loans and
$50.0  million in  revolving  loans.  Borrowings  under the credit  facility are
secured by substantially all of the assets of the Company and bear interest,  at
the Company's  option, at the agent bank's corporate base rate plus up to 0.50%,
or LIBOR plus 1.00% to 3.25%, based on the Company's leverage ratio at the time.
The effective interest rate of these borrowings at January 29, 2000 was 8.18% to
9.74%. The credit agreement contains certain  affirmative and negative covenants
related to indebtedness,  interest and fixed charges coverage,  and consolidated
net worth.

        Long-term debt consists of:
                                          January 30,  January 29,
                                             1999         2000
                                          -----------  -----------
        Revolving loans                     $43,250      $    --
        Term loan                            26,625       98,175
                                             ------       ------
                                             69,875       98,175
        Less current portion                  4,500        9,125
                                             ------       ------
                                            $65,375      $89,050
                                             ======       ======

     Annual  maturities of long-term  debt for the next five fiscal years are as
follows: $9,125, $8,425, $10,675, $11,800 and $15,525.

5.   Lease Commitments and Other Obligations

     The Company finances  certain fixed assets under capital leases.  There are
approximately  $42,753  and $37,272 in fixed  assets  financed  through  capital
leases at January  30,  1999 and January  29,  2000,  respectively.  Accumulated
amortization  related to these  financed  assets was  approximately  $12,866 and
$16,690 at January 30, 1999 and January 29, 2000, respectively.

     The Company  leases  warehouse and store  facilities  and  equipment  under
operating leases.  These operating leases generally have terms from three to ten
years.  Certain  store leases  include  additional  contingent  rental  payments
ranging from 2% to 6% of store revenues above defined levels. Contingent rentals
during fiscal years 1997, 1998, and 1999 were $33, $44 and $68, respectively.

     At January 29,  2000,  the present  value of future  minimum  payments  for
capital  lease  and  other   obligations,   and  minimum  lease  payments  under
noncancelable operating leases were as follows:

                                               Capital Leases
                                                  and Other      Operating

      Years                                      Obligations       Leases
      -----                                     -------------    -----------
      2000                                         $ 9,246       $ 97,211
      2001                                           7,036         96,270
      2002                                           4,409         87,356
      2003                                             314         81,952
      2004                                             276         73,397
      Thereafter                                     2,021        319,772
                                                    ------        -------

      Total minimum payments                        23,302       $755,958
                                                                  =======

      Less amount representing interest              3,012
                                                    ------

      Present value of net minimum capital
         lease and other obligations payments       20,290

      Less current portion of capital lease
         and other obligations                       7,854
                                                    ------

      Capital lease and other obligations          $12,436
                                                    ======

     Rent expense under operating  leases for fiscal years 1997,  1998, and 1999
was approximately $70,506, $79,672, and $89,352, respectively.

6.   Equity

     (a) Common Stock:

     The authorized number of shares is 100,000.

     (b) Stock Options:

     In February 1994, the Company's stockholders approved the 1994 Stock Option
Plan ("1994  Company  Plan") which  provides for the granting of stock  options,
stock  appreciation  rights or restricted stock with respect to shares of common
stock to executives and other key employees. Stock options may be granted in the
form  of  incentive  stock  options  or  non-statutory  stock  options  and  are
exercisable  for up to ten  years  following  the date of  grant.  Stock  option
exercise  prices must be equal to or greater  than the fair market  value of the
common  stock on the  grant  date.  In June  1996,  the  Company's  stockholders
approved an  amendment to the 1994 Company Plan to increase the number of shares
available for issuance  under the plan for each of the next five fiscal years by
3.0% of the number of shares of common  stock issued and  outstanding  as of the
end of the immediately preceding fiscal year.

     In February  1994, the Company's  stockholders  approved the Directors 1994
Stock Option Plan  ("Directors  Plan") which provides for the granting of common
stock options to directors.  Stock option  exercise  prices must be equal to the
fair  market  value of the common  stock on the grant  date.  In June 1995,  the
Company's  stockholders  approved an amendment to the Directors Plan to increase
the number of shares  available for issuance under the plan for each of the next
five  fiscal  years by 0.1% of the number of shares of common  stock  issued and
outstanding as of the end of the immediately preceding fiscal year.

     In 1996,  the Company  assumed an employee stock option plan ("1993 Company
Plan") from Pet Food Warehouse  which provided for the granting of incentive and
nonqualified  stock  options  with  exercise  prices  equal to their fair market
values on their grant dates that become  exercisable  over  various  periods and
expire five or six years after the date of grant. The common shares and exercise
prices under this plan were adjusted based on the common share  conversion  rate
per the merger agreement with Pet Food Warehouse. No further grants will be made
under this plan.

     In 1997,  the Company  assumed an employee stock option plan ("1989 Company
Plan")  from  PetCare   which   provided  for  the  granting  of  incentive  and
non-qualified  stock  options  with  exercise  prices equal to their fair market
values on their grant dates that became  exercisable  over  various  periods and
expire up to ten years after the date of grant.  The common  shares and exercise
prices under this plan were adjusted in accordance  with the terms of the merger
agreement with PetCare. No further grants will be made under this plan.

     Information regarding the stock option plans follows:

<TABLE>
<CAPTION>
                                1994 Company Plan                 1993 Company Plan
                       --------------------------------   --------------------------------
                                               Weighted                           Weighted
                                               Average                            Average
                                Option Price   Exercise           Option Price    Exercise
                       Shares    Per Share      Price     Shares   Per Share       Price
                       ------   ------------   --------   ------  ------------    -------

<S>                      <C>   <C>             <C>          <C>   <C>             <C>
Outstanding at
  February 1, 1997       926   $10.33-$23.17   $ 14.77      209   $14.95-$42.27   $ 19.52
Granted                  645   $22.50-$30.31   $ 23.17       --   $          --   $    --
Exercised               (164)  $       10.33   $ 10.33      (75)  $15.24-$27.21   $ 20.11
Cancelled                (85)  $10.33-$23.17   $ 20.52      (13)  $14.95-$42.27   $ 23.71
                       -----                              -----
Outstanding at
   January 31, 1998    1,322   $10.33-$30.31   $ 18.89      121   $14.95-$27.73   $ 18.74
Granted                  715   $17.44-$18.44   $ 17.47       --   $          --   $    --
Exercised                 (4)  $10.33-$12.33   $ 12.23       (1)  $18.40-$20.70   $ 18.67
Cancelled               (170)  $10.33-$23.17   $ 19.74       (4)  $14.95-$24.73   $ 20.53
                       -----                              -----
Outstanding at
   January 30, 1999    1,863   $10.33-$30.31   $ 18.28      116   $14.95-$27.73   $ 18.67
Granted                  649   $ 7.31-$15.50   $  7.43       --   $          --   $    --
Exercised                (12)  $10.33-$12.33   $ 10.77       --   $          --   $    --
Cancelled               (211)  $ 7.31-$27.50   $ 13.81       (4)  $14.95-$27.21   $ 23.67
                       -----                              -----
Outstanding at
   January 29, 2000    2,289   $ 7.31-$30.31   $ 15.66      112   $14.95-$27.73   $ 18.49
                       =====                              =====

Exercisable at

  January 31, 1998       372   $10.33-$30.25   $ 12.55      111   $14.95-$27.73   $ 18.63
Exercisable at
  January 30, 1999       512   $10.33-$30.31   $ 12.88      112   $14.95-$27.73   $ 18.65
Exercisable at
  January 29, 2000       742   $10.33-$30.31   $ 16.27      112   $14.95-$27.73   $ 18.49

Available for grant at
  January 29, 2000     1,067                                 --
</TABLE>
<TABLE>
<CAPTION>
                               Directors' Plan                    1989 Company Plan
                       --------------------------------   --------------------------------
                                               Weighted                           Weighted
                                               Average                            Average
                                Option Price   Exercise            Option Price   Exercise
                       Shares     Per Share      Price     Shares    Per Share      Price
                       ------   ------------   --------    ------  ------------   --------
<S>                       <C>  <C>             <C>          <C>   <C>             <C>
Outstanding at
   February 1, 1997       14   $10.33-$31.67   $ 15.96      188   $ 7.70-$11.54   $  9.40
Granted                   12   $21.38-$22.50   $ 21.67       --   $       11.54   $ 11.54
Exercised                 --   $          --   $    --     (134)  $ 7.70-$11.54   $  9.61
Cancelled                 --   $          --   $    --       --   $          --   $    --
                       -----                              -----
Outstanding at
  January 31, 1998        26   $10.33-$31.67   $ 18.64       54   $ 7.70-$11.54   $  8.89
Granted                   35   $ 4.78-$17.44   $  8.60       --   $          --   $    --
Exercised                 --   $          --   $    --      (13)  $       11.54   $ 11.54
Cancelled                 --   $          --   $    --       (2)  $       11.54   $ 11.54
                       -----                              -----
Outstanding at
  January 30, 1999        61   $ 4.78-$31.67   $ 13.02       39   $ 7.70-$11.54   $  7.87
Granted                   50   $ 6.22-$14.03   $  9.12       --   $          --   $    --
Exercised                 --   $          --   $    --      (21)  $        7.70   $  7.70
Cancelled                 --   $          --   $    --       --   $          --   $    --
                       -----                              -----
Outstanding at
  January 29, 2000       111   $ 4.78-$31.67   $ 11.26       18   $ 7.70-$11.54   $  8.06
                       =====                              =====

Exercisable at

  January 31, 1998        26   $10.33-$31.67   $ 18.64       54   $ 7.70-$11.54   $  8.89
Exercisable at
  January 30, 1999        61   $ 4.78-$31.67   $ 13.02       39   $ 7.70-$11.54   $  7.87
Exercisable at
  January 29, 2000       111   $ 4.78-$31.67   $ 11.26       18   $ 7.70-$11.54   $  8.06

Available for grant at
  January 29, 2000        22                                 --
</TABLE>


     In March 2000,  options for 737 shares were granted  under the 1994 Company
Plan  which  vest in March 2003 and are  exercisable  at $12.44  per  share.  In
February and March 2000,  options for 15 shares were granted under the Directors
Plan that were immediately exercisable at a range of $10.20 to $12.44 per share.

     (c) Accounting for Stock Options:

     The  Company  accounts  for stock  option  plans  under APB Opinion No. 25,
"Accounting for Stock Issued to Employees," and related  interpretations,  under
which no compensation  expense was recognized.  Had  compensation  costs for the
Company's  stock option plans been  determined  based upon the fair value at the
grant  date for  awards  under  these  plans,  consistent  with the  methodology
prescribed under SFAS No. 123,  "Accounting for Stock-Based  Compensation,"  the
Company's  net loss and loss per share would have been  increased by $3,850,  or
$0.18 per share,  during 1997,  the  Company's net loss and loss per share would
have  been  increased  by  $3,749,  or $0.18 per  share,  during  1998,  and the
Company's  net  earnings  and  earnings  per share would have been  decreased by
$3,521,  or $0.17 per share,  during 1999.  The pro forma change in net earnings
(loss) reflects only options granted since 1995.  Therefore,  the full impact of
calculating  compensation  costs for stock  options  under  SFAS No.  123 is not
reflected in the pro forma change in net earnings (loss) amounts presented above
because  compensation cost is reflected over the options vesting period of three
years and compensation  cost for options granted prior to January 1, 1995 is not
considered.  The weighted average fair value of the options granted during 1997,
1998 and 1999 were  estimated  as  $11.65,  $9.46 and $4.48 on the date of grant
using the Black-Scholes option pricing model with the following assumptions:  no
dividend yield, volatility of 47.5%, 59.0% and 62.1%, risk-free interest rate of
6.0%, 5.0% and 6.0% for 1997, 1998 and 1999, respectively,  and an expected life
of five years for all grants.

     The following table summarizes  information  about the options  outstanding
under all stock option plans at January 29, 2000:
<TABLE>
<CAPTION>
                          Options Outstanding               Options Exercisable
                  -----------------------------------   --------------------------
                                Weighted
                                 Average     Weighted                    Weighted
   Range of                     Remaining    Average                     Average
   Exercise         Number     Contractual   Exercise       Number       Exercise
    Prices        Outstanding  Life (Years)   Price      Exercisable      Price
  ----------      -----------  ------------  --------    -----------     ---------
<S>                      <C>       <C>        <C>               <C>       <C>
$ 4.78-$10.33            940       7.35       $  8.36           400       $  9.78
$10.63-$17.44            716       7.53       $ 16.37           156       $ 12.87
$17.54-$21.38            126       3.13       $ 18.63           115       $ 18.64
$22.50-$31.67            748       6.80       $ 23.23           312       $ 23.95
                   ---------                               --------
                       2,530       7.03       $ 15.53           983       $ 15.81
                   =========                               ========
</TABLE>

     (d) Stockholder Rights Agreement:

     On September  10, 1998,  the Board of Directors  declared a dividend of one
preferred  share  purchase right (a "Right") for each  outstanding  share of the
Company's  common stock,  which Rights expire on September 22, 2008.  Each Right
entitles a  stockholder  to purchase  one  one-hundredth  of a share of Series A
Junior Participating  Preferred Stock of the Company, at the price of $75.00 per
one one-hundredth of a preferred share, subject to adjustment, or, under certain
circumstances,  shares of common  stock of the  Company or a  successor  company
which at the time of such  transaction  would have a market  value  equal to two
times the exercise price of the Right.  The Rights would become  exercisable for
all other  persons  only if a person  acquires or  announces  a tender  offer to
acquire beneficial  ownership of 15% or more of the Company's common stock. Each
share of Series A Junior  Participating  Preferred  Stock  will be  entitled  to
certain  minimum  dividends and an aggregate  dividend of 100 times the dividend
declared per common share, if any. The Rights have no voting  privileges and the
Board of Directors may terminate the Stockholder Rights Agreement at any time or
redeem  outstanding  Rights at a price of $0.01 per Right at any time prior to a
person  acquiring   beneficial  ownership  of  15%  or  more  of  the  Company's
outstanding common stock.

7.   Income Taxes

     Income taxes (benefit) consists of the following:

                                            Years Ended
                               ----------------------------------------
                               January 31,   January 30,   January 29,
                                  1998          1999          2000
                               -----------   -----------   -----------
   Current:
      Federal                    $    416      $     64      $    991
      State                          (370)         (423)          993
      Foreign                          --           132            --
                                  -------       -------       -------
                                       46          (227)        1,984
                                  -------       -------       -------
   Deferred:
      Federal                      (4,290)         (876)       12,945
      State                        (1,242)          665         1,902
      Foreign                          --            --            --
                                  -------       -------       -------
                                   (5,532)         (211)       14,847
                                  -------       -------       -------
   Income taxes (benefit)        $ (5,486)     $   (438)     $ 16,831
                                  =======       =======       =======

     A reconciliation  of income taxes at the federal  statutory rate of 34% for
the fiscal  years  ended  January  31, 1998 and January 30, 1999 and 35% for the
fiscal year ended January 29, 2000 with the provision for income taxes (benefit)
follows:

                                            Years Ended
                               ----------------------------------------
                               January 31,   January 30,   January 29,
                                  1998          1999          2000
                               -----------   -----------   -----------
   Income taxes at federal
      statutory rate             $ (6,347)     $   (957)     $ 13,506
   Non-deductible expenses          1,489           286           463
   State taxes, net of federal
      tax benefit                  (1,064)          160         1,882
   Foreign taxes, net of federal
      tax benefit                      --            87            --
   Change in valuation allowance       --            --         1,600
   Other                              436           (14)         (620)
                                  -------       -------       -------
                                 $ (5,486)     $   (438)     $ 16,831
                                  =======       =======       =======

     The sources of  significant  temporary  differences  which gave rise to the
deferred tax provision and their effects follow:

                                            Years Ended
                               ----------------------------------------
                               January 31,   January 30,   January 29,
                                  1998          1999          2000
                               -----------   -----------   -----------
   Inventory                     $ (1,216)     $  2,693      $     26
   Deferred rent                     (588)         (779)         (779)
   Depreciation                     1,611         4,220         7,808
   Accrued fringes                   (699)          204          (680)
    Intangibles                     1,771           686          (221)
    Store closing costs            (1,941)        1,840           974
   Fixed assets                     1,128         1,571            24
   Other assets                    (2,358)        1,450          (970)
   Benefit of net operating
      loss carryforwards           (3,929)      (12,482)        9,093
   Change in valuation allowance       --            --         1,600
    Other                             689           386        (2,028)
                                  -------       -------       -------
                                 $ (5,532)     $   (211)     $ 14,847
                                  =======       =======       =======

     Deferred  income  taxes  reflect  the tax effect of  temporary  differences
between the carrying amount of assets and  liabilities  for financial  reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred tax assets follow:

                                               January 30,   January 29,
                                                  1999          2000
                                               -----------   -----------

Deferred tax assets:
  Inventory                                      $ 3,556       $ 3,530
  Deferred rent                                    4,191         4,970
  Accrued fringes                                  1,901         2,581
  Store closing costs                              3,656         2,682
  Fixed assets                                        29             5
  Other assets                                       908         1,878
  Net operating loss carryforwards                27,104        18,011
  Other                                               --         1,323
                                                  ------        ------
    Total deferred tax assets                     41,345        34,980
  Valuation allowance                             (4,900)       (6,500)
                                                  ------        ------
    Net deferred tax assets                       36,445        28,480
                                                  ------        ------

Deferred tax liabilities:
  Depreciation                                    (7,386)      (15,194)
  Intangibles                                     (1,904)       (1,683)
  Other                                             (705)           --
                                                  ------        ------
    Total deferred tax liabilities                (9,995)      (16,877)
                                                  ------        ------

Net deferred tax assets                          $26,450       $11,603
                                                  ======        ======

     The valuation allowance of $4,900 at January 30, 1999 and $6,500 at January
29, 2000 relates primarily to net operating loss carryforwards of PetCare,  with
the  increase in the  valuation  allowance  at January 29, 2000  relating to the
Company's  equity  share  in  the  losses  of  Petopia.com.   In  assessing  the
realizability of deferred tax assets,  management  considers  whether it is more
likely than not that some  portion or all of the deferred tax assets will not be
realized.   Management   considers  the  scheduled   reversal  of  deferred  tax
liabilities,  projected  future  taxable  income and tax planning  strategies in
making this  assessment.  Based upon the level of historical  taxable income and
projections  for future  taxable  income over the periods for which the deferred
tax assets are deductible,  management  believes it is more likely than not that
the Company will realize the benefits of these  deductible  differences,  net of
the valuation allowance.

     At January 29, 2000,  the Company has available net loss  carryforwards  of
$47,869 for federal  income tax  purposes,  which  begin  expiring in 2012,  and
$24,002 for state income tax purposes, which begin expiring in 2005.

8.   Employee Savings Plan

     The Company has employee  savings plans which permit eligible  participants
to make  contributions by salary reduction  pursuant to either section 401(k) of
the  Internal  Revenue  Code  or  under  the  Company's  non-qualified  deferred
compensation  plan. The Company matches 50% of the first 6% of compensation that
is contributed by each  participating  employee to the plans. In connection with
the required match, the Company's  contributions to the plans were $199 in 1997,
$532 in 1998 and $873 in 1999.

9.   Commitments and Contingencies

     The Company and certain of its officers  have been named as  defendants  in
several  virtually  identical  class action  lawsuits filed in the United States
District  Court for the  Southern  District  of  California  between  August and
November,  1998. These cases have been  consolidated and will be administered as
one case.  The  plaintiffs  purport  to  represent  a class of all  persons  who
purchased the Company's common stock between January 30, 1997 and July 10, 1998.
The complaints  allege that the defendants  violated various federal  securities
laws through material  misrepresentations and omissions during the class period,
and seek unspecified  monetary damages.  These matters have been tendered to the
Company's  insurance  carrier.   While  the  Company  believes  the  allegations
contained in these  lawsuits are without  merit,  the claims have not progressed
sufficiently for the Company to estimate a range of possible  exposure,  if any.
The Company and its officers intend to defend themselves vigorously.

     In addition,  the Company is involved in routine  litigation arising in the
ordinary course of its business.  While the results of such litigation cannot be
predicted with  certainty,  the Company  believes that the final outcome of such
matters will not have a material  adverse  effect on the Company's  consolidated
financial position or results of operations.




                                  EXHIBIT INDEX

Number                            Document
------                            --------
3.1      Amended and Restated Certificate of Incorporation, as
         amended. (1)
3.2      Amended and Restated By-Laws. (2)
4.1      Form of Common Stock Certificate. (2)
4.2      Stockholder Rights Agreement. (3)
10.1     Amended and Restated Credit Agreement, dated July 15, 1999 between the
         Company and Union Bank, as Syndicating Agent. (4)
10.2     Distribution Center Lease, dated July 1, 1997 between the Company and
         Knickerbocker Industrial Properties East LP for 152 Dayton Jamesburg
         Road, South Brunswick, New Jersey. (5)
10.3     Distribution Center Lease, dated February 20, 1998 between the Company
         and Industrial Developments International, Inc. for 3801 Rock Creek
         Boulevard, Joliet, Illinois. (5)
10.4     Distribution Center Lease, dated November 24, 1997 between the Company
         and Opus West Corporation for 4345 Parkhurst Street, Mira Loma,
         California. (5)
10.5     Master Equipment Lease Agreement, dated March 10, 1995, between the
         Company and KeyCorp Leasing Ltd. (6)
10.6     Master Equipment Lease Agreement, dated November 15, 1995, between the
         Company and Fleet Credit Corporation. (6)
10.7     Master Equipment Lease Agreement, dated September 15, 1998, between the
         Company and IBM Leasing. (7)
10.8     Master Equipment Lease Agreement, dated January 25, 1999, between the
         Company and Matrix funding. (7)
10.9     Master Lease Agreement, dated December 27, 1995, between the Company
         and Newcourt Financial USA, Inc. (6)
10.10    Master Lease Agreement, dated September 28, 1995, between the Company
         and USL Capital Corporation. (6)
10.11    Employment Agreement, dated March 17, 1996, between the Company and
         Brian K. Devine. (6)
10.12    Form of Indemnification Agreement between the Company and certain
         officers and directors. (2)
10.13    Form of Retention Agreement for executive officers. (5)
10.14    Form of Retention Agreement for non-executive officers. (5)
10.15    Petco Animal Supplies 401(k) Plan. (2)
10.16    The 1994 Stock Option and Restricted Stock Plan for Executive and Key
         Employees of Petco Animal Supplies, Inc., as amended and restated on
         March 18, 1998. (7)
10.17    Petco Animal Supplies, Inc. Group Benefit Plan, dated July 29, 1991,
         as amended. (6)
10.18    Petco Animal Supplies, Inc. Directors' 1994 Stock Option Plan, as
         amended. (6)
10.19    Form of Petco Animal Supplies, Inc. Nonstatutory Stock Option
         Agreement. (2)
10.20    Form of Petco Animal Supplies, Inc. Incentive Stock Option
         Agreement.  (2)
10.21    Form of Petco Animal Supplies, Inc. Restricted Stock Agreement. (2)
10.22    Form of Petco Animal Supplies, Inc. Nonstatutory Stock Option Agreement
         (Directors' 1994 Stock Option Plan).  (2)
10.23    The Pet Food Warehouse, Inc. 1993 Stock Option Plan (8)
10.24    Pet Food Warehouse, Inc. Amendment to 1993 Stock Option Plan. (9)
10.25    The PetCare Plus, Inc. 1989 Stock Option Plan (the "1989 Stock Option
         Plan"). (10)
10.26    Form of Incentive Stock Option Agreement under the 1989 Stock Option
         Plan. (10)
10.27    Form of Nonqualified Stock Option Agreement under the 1989 Stock Option
         Plan. (10)
21.1     Subsidiaries of the registrant. (4)
23.1     Consent of KPMG LLP. (4)
27.1     Financial Data Schedule. (4)
-------------
(1) Filed as an exhibit to the Company's Registration Statement on Form S-4
    dated October 23, 1996, File No. 333-14699, including Amendment No. 1
    thereto dated November 20, 1996.
(2) Filed as an exhibit to the Company's Registration Statement on Form S-1
    dated January 13, 1994, File No. 33-77094, including Amendment No. 1
    thereto dated February 24, 1994 and Amendment No. 2 thereto dated March
    11, 1994.
(3) Filed as an exhibit to the Company's Report on 8-K dated September 22, 1998,
    File No. 000-23574.
(4) Filed herewith.
(5) Filed as an exhibit to the Company's Annual Report on Form 10-K dated
    April 30, 1998.
(6) Filed as an exhibit to the Company's Registration Statement on Form S-3
    dated April 4, 1996, File No. 333-3156, including Amendment No. 1 thereto
    dated April 24, 1996.
(7) Filed as an exhibit to the Company's Annual Report on Form 10-K dated
    April 29, 1999.
(8) Filed as an exhibit to Pet Food Warehouse, Inc.'s Registration Statement on
    Form SB-2 dated July 6, 1993, File No.33-65734C, including Amendment No. 1
    thereto, dated effective August 13, 1993, Post-Effective Amendment No. 1
    thereto, dated January 7, 1994, Post-Effective Amendment No. 2 thereto,
    dated February 1, 1994, and Post-Effective Amendment No. 3 thereto, dated
    February 10, 1994.
(9) Filed as an exhibit to the Company's Registration Statement on Form S-8
    dated February 26, 1997, File No. 333-14699.
(10)Filed as an exhibit to the Company's Registration Statement on Form S-8
    dated March 20, 1998, File No. 333-48311.



                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the  undersigned,  thereunto duly  authorized,  on the 12th day of
April, 2000.

                                  PETCO ANIMAL SUPPLIES, INC.


                                  By:        /s/BRIAN K. DEVINE
                                     --------------------------
                                     Brian K. Devine
                                     Chairman of the Board, President
                                     and Chief Executive Officer

     Pursuant to the  requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
Registrant and in the capacities and on the dates indicated.

        Signature                     Title                      Date

/s/BRIAN K. DEVINE        Chairman of the Board, President   April 12, 2000
-----------------------
Brian K. Devine           and Chief Executive Officer
                          (Principal Executive Officer)

/s/JAMES M. MYERS         Senior Vice President and          April 12, 2000
-----------------------
James M. Myers            Chief Financial Officer
                          (Principal Financial and
                          Accounting Officer)

/s/ANDREW G. GALEF        Director                           April 12, 2000
-----------------------
Andrew G. Galef

/s/RICHARD J. LYNCH       Director                           April 12, 2000
-----------------------
Richard J. Lynch

/s/JAMES F. McCANN        Director                           April 12, 2000
-----------------------
James F. McCann

/s/PETER M. STARRETT      Director                           April 12, 2000
-----------------------
Peter M. Starrett