Central Garden & Pet Company Reports 8.2% Decline in Net Sales for Q3 Fiscal 2026

Central Garden & Pet Company reported a decline in financial performance for the third quarter of fiscal 2026, with net sales decreasing by 8.2% to $882.4 million compared to $960.9 million in the same quarter of the previous year. The decrease was primarily attributed to the divestiture of the Pet Distribution business, which negatively impacted sales by approximately $92 million. However, organic net sales, which exclude the effects of acquisitions and divestitures, increased by 2.4%. Gross profit for the quarter was $316.9 million, down from $332.0 million, but gross margin improved to 35.9%, up 130 basis points from the prior year.

In terms of profitability, operating income fell to $125.8 million from $135.1 million year-over-year, while net income attributable to Central Garden & Pet Company was $89.9 million, or $1.45 per diluted share, compared to $95.0 million, or $1.52 per diluted share, in the prior year. The company noted that selling, general, and administrative expenses decreased by $5.8 million to $191.1 million, although as a percentage of net sales, these expenses increased to 21.7%. The decline in operating income was partially offset by a reduction in selling, general, and administrative expenses and an increase in gross margin.

Central Garden & Pet has also made significant strategic moves, including the divestiture of its Pet Distribution business to Phillips Pet Food & Supplies, which was completed on April 13, 2026. This transaction involved the transfer of net assets valued at approximately $57 million and resulted in a pre-tax gain of $2.5 million. Additionally, the company announced plans to acquire 80% of TRIXIE Heimtierbedarf GmbH & Co. KG, a German pet supplies company, for up to €400 million, with the acquisition expected to close in the first half of fiscal year 2027, pending regulatory approval.

Operationally, the company reported a decrease in pet segment sales, which fell by 18.7% to $400.5 million, while the garden segment saw a 2.9% increase in sales to $481.9 million. The company’s total debt stood at $1.2 billion as of June 27, 2026, with no borrowings outstanding under its $600 million credit facility. Cash provided by operating activities increased to $207.6 million for the nine months ended June 27, 2026, up from $149.8 million in the prior year, reflecting improved working capital management.

Looking ahead, Central Garden & Pet remains focused on integrating its recent acquisitions and optimizing its operational efficiency. The company anticipates that its cash flows from operations, along with available credit, will be sufficient to meet its working capital and capital expenditure needs for the foreseeable future. However, it acknowledges potential risks related to market conditions, including inflation and consumer spending trends, which could impact future performance.