Central Garden & Pet Co (CENT) Q2 2025 Earnings Call Highlights: Record Pet Segment Income ...

Yahoo

08-05-2025

Release Date: May 07, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Central Garden & Pet Co (NASDAQ:CENT) achieved record non-GAAP operating income within its pet segment, driven by strong execution.
The company's wild bird business experienced record sales, benefiting from extended cold weather.
E-commerce sales performance remained robust, with Central Garden & Pet Co (NASDAQ:CENT) holding the #1 online sales position in both the wild bird and grass seed categories.
The cost and simplicity program continues to deliver significant results, including the successful upgrade of a distribution center in Pennsylvania, enhancing direct-to-consumer capabilities.
Central Garden & Pet Co (NASDAQ:CENT) reaffirmed its fiscal 2025 guidance for non-GAAP EPS of $2.20 or higher, demonstrating confidence in its long-term value delivery to shareholders.
Negative Points
Net sales decreased by 7% to $834 million, impacted by the earlier timing of preseason orders and promotional events.
Unseasonably cold and wet weather in March delayed the start of the garden selling season, negatively affecting sales.
The loss of two product lines in the third-party garden distribution business added pressure on the top line.
Tariff actions and geopolitical tensions have increased macroeconomic uncertainty, potentially impacting consumer confidence and inflationary pressures.
The pet segment faced challenges with durable sales down double digits, partly due to SKU rationalization efforts.
Q & A Highlights
Q: Can you discuss the trends in the pet segment, particularly the differences between durables and consumables, and the outlook for the summer? A: John Hanson, President Pet Consumer Products, explained that net sales were down 6% due to customer pull forwards and SKU rationalization. Consumables were up low to mid-single digits, while durables were down double digits. The durable category faces challenges, especially with tariffs, but there are positive trends in the live animal business. Brad Smith, CFO, added that the decline in durables was partly due to SKU rationalization efforts.
Q: How are tariffs impacting your business, particularly in the pet segment? A: Brad Smith, CFO, noted that about 13% of their cost of goods is subject to tariffs, with China being a significant contributor. They are working on vendor concessions, country of origin changes, SKU redesign, and pricing adjustments. Some pre-tariff inventory is helping mitigate exposure, but the situation remains fluid.