US: Central Garden & Pet bets on consumables in pet business as durables slide
by Diana Dominguez
Dog treats, flea and tick, and bird products grow as overall pet sales decline, and the slowdown is set to continue in the coming months.
Central Garden & Pet’s pet business reported $416 million (€354M) in net sales for the first quarter of fiscal year (FY) 2026, ending 27 December 2025, reflecting a 3% year-over-year (YoY) decline.
According to the company, the drop was mainly due to portfolio optimization efforts, including reducing or eliminating lower-margin categories, such as durables, and closing its UK operations.
Central also cited shipment timing, stating that some of the volume was transferred to the second quarter.
In FY2025, durables accounted for 16% of the pet segment’s sales, but they declined by double digits in Q4 due to discontinued, low-margin SKUs. The decrease is expected to continue through the first half of 2026.
“These factors were partially balanced by continued growth in our Rawhide business and our Animal Health business, especially within professional and equine. Consumables overall grew at a low single-digit rate, supported by favorable point-of-sale trends,” Bradley G. Smith, Chief Financial Officer (CFO) of Central Garden & Pet, tells investors.
Other indicators
Across the pet segment, categories including dog treats, flea and tick products, and pet bird products also recorded market-share gains.
Non-GAAP (generally accepted accounting principles) operating income was $50 million (€42.5M), with operating margin improving by 0.1 percentage points YoY to 12.1%.
Meanwhile, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) slipped by 1.4% YoY to $60 million (€51M).
John Edward Hanson, President of Pet Consumer Products, also sees potential in live pets and acknowledges that the live animal business grew in Q4 and again in Q1.
“From household penetration by rate, everything we can see, the category stabilized. 6 or 9 months ago, it was declining still, so I think we definitely have seen the bottom,” he says.
Overall performance
Overall, the US pet supplier reported net sales of $617 million (€524.5M) in the period, down 6% YoY. Net income fell 50% between October and December, to $7 million (€6M).
The drop in revenue included a 12% decline in the garden segment, driven by shipment timing, the continued transition of 2 third-party distribution product lines to a direct-to-retail model, and the rationalization of the live plants categories.
Guidance
For FY2026, Central affirms a non-GAAP diluted earnings per share (EPS) guidance of $2.70 (€2.28) or better, supported by “continued margin discipline, cost efficiency initiatives and portfolio optimization.”
Capital expenditures are projected to be approximately $50 million (€42.5M) to $60 million (€51M), focused on maintenance, productivity initiatives and targeted growth investments across both pet and garden segments.
“Unchanged from the first quarter, we currently estimate [an] incremental YoY gross tariff exposure of roughly $20 million (€17M) for the fiscal year, concentrated in the pet segment. We expect to mitigate the impact through pricing actions, portfolio management and supply chain initiatives,” Smith says.
The CFO notes that the guidance excludes any potential impacts from acquisitions, divestitures or restructuring activities that may occur during the fiscal year.
Fonte: globalpetindustry.com
