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NEW YORK CITY-Pet superstore chains such as Petco and PetSmart continue to take market share away from grocery stores, according to a Lehman Bros. report. They now represent about 23% of pet items sold in the sector, up 300% from 1991. During that time supermarkets fell to 59% from 77%.

The market will continue to support both chains, wrote retail analyst Alan Rifkin, as both companies keep growing. This year PetSmart, which operates more than 700 stores, expects to open 90 units. Petco, also with over 700 stores, does not even have presence yet in 20 of the top 100 US markets.

Sales are also strong at both chains. Petco has posted 47 consecutive quarters with year-over-year same-store sales gains, while PetSmart expects a Q4 year-on-year gain of 7%.

Meanwhile, Lehman also released a report on the softlines sector this week. More than half of Gap Inc.’s 140 store closures are expected to take place during this quarter, it said. The company is running clearance sales at its Old Navy chain that, in some cases, reach up to 75% off.

Lehman also looked at Abercrombie & Fitch’s new Ruehl concept, which the apparel giant launched earlier this year. Ruehl, geared toward college graduates, an older segment than Abercrombie targets at its other chains, currently has three of those stores in operation, though industry observers have said that the company is poised for a major rollout of the chain. The stores could improve their interior lighting, but Abercrombie seems to be attracting the upscale demographic it has sought, the report says.

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