Central Garden & Pet Reports 7.4% Decline in Net Sales for Q2 Fiscal 2025

Central Garden & Pet Company reported a decline in financial performance for the second quarter of fiscal 2025, with net sales decreasing by $66.6 million, or 7.4%, to $833.5 million compared to $900.1 million in the same period last year. The Pet segment saw a 5.5% drop in sales to $453.7 million, while the Garden segment experienced a 9.5% decline to $379.8 million. The decrease in sales was attributed to the timing of customer orders, unfavorable weather conditions, and a decline in demand for certain pet products.

Despite the drop in sales, the company's gross profit for the quarter decreased only slightly by $5.8 million to $273.1 million, resulting in an improved gross margin of 32.8%, up from 31.0% in the prior year. This improvement was driven by productivity gains from the company's Cost and Simplicity program and moderating inflation. Operating income remained relatively flat at $93.3 million, while net income increased to $63.6 million, or $0.98 per diluted share, compared to $62.0 million, or $0.93 per diluted share, in the previous year.

In terms of strategic developments, Central Garden & Pet completed the acquisition of TDBBS, LLC, a provider of premium natural dog chews and treats, for approximately $60 million. This acquisition is expected to enhance the company's product offerings and eCommerce capabilities. Additionally, the company announced plans to wind down its operations in the United Kingdom, transitioning to a direct-export model, which incurred one-time costs of approximately $5.3 million.

Operationally, the company reported a decrease in selling, general, and administrative expenses, which fell by $5.7 million to $179.8 million. However, as a percentage of net sales, these expenses increased to 21.6% from 20.6% in the prior year due to lower sales. The company also repurchased approximately 2.1 million shares of its non-voting common stock at an aggregate cost of $63.2 million during the six months ended March 29, 2025.

Looking ahead, Central Garden & Pet anticipates continued challenges in the market, including potential impacts from economic uncertainty and changing consumer spending patterns. The company remains focused on its strategic initiatives, including cost management and product innovation, to navigate these challenges and drive future growth.