Central Garden & Pet Sales Dip, Profit Outlook Soars

Central Garden & Pet announced its fiscal 2026 third-quarter results on August 5, revealing a complex financial picture. Net sales decreased by 8% to $882 million compared to the previous year.

However, the company's profitability metrics showed improvement. Gross margin expanded by 130 basis points to 35.9%, and operating margin climbed by 90 basis points to 15.4%. This uplift was partly due to the divestiture of its lower-margin pet distribution business earlier in the year.

The Garden segment was a key driver, with sales increasing by 3% to $482 million. This strong performance, particularly in wild bird feed and fertilizer, allowed management to raise its fiscal 2026 non-GAAP diluted EPS outlook to $2.85 or better.

Adding to its strategic moves, Central Garden & Pet agreed to acquire an 80% stake in TRIXIE, a European pet supplies firm. This acquisition, expected to close in the first half of fiscal 2027, aims to boost international sales and establish a presence in the European market.

Despite these positive developments, reported net sales in the Pet segment fell 19% to $400 million. GAAP diluted EPS also saw a slight decline. The TRIXIE acquisition introduces integration complexities and potential risks, given its substantial size and European focus.