Central Garden & Pet raises guidance despite 19% pet sales decline

Central Garden & Pet’s pet portfolio posted a 19% year-over-year (YoY) decline in net sales to $400 million (€352M) for the third quarter (Q3) of fiscal year (FY) 2026, which ended on 27 June 2026.

The company attributes the double-digit decline to its exit from the pet distribution business at the beginning of the quarter. CEO Niko Lahanas says the exit will continue to reduce reported revenue over the next several quarters.

“The earnings impact will be minimal given the lower margin profile of that business,” he adds.

Organic net sales increased 2% YoY to $380 million (€334M) in the period. Brad Smith, the company’s CFO, says that this growth was driven by broad gains across most of the portfolio, offsetting lower dog and cat revenues primarily due to the timing of promotional events and related investment spending.

Online sales rose 10% YoY, supported by a record Amazon Prime Day performance. The company also gained market share in the professional products, dog treats, rawhide, and flea-and-tick categories.

Acquisition of TRIXIE

Central Garden & Pet agreed to acquire an 80% stake in German pet supplies and snacks company TRIXIE for €340M ($389M) in cash at closing, plus up to €60M ($68.7M) in earn-out payments.

The acquisition is expected to strengthen Central’s presence in Europe while giving TRIXIE an opportunity to expand further into the US. The acquired company supplies more than 30,000 pet retailers worldwide, with approximately 90% of its sales generated from proprietary brands.

The transaction is expected to close in the first half of FY2027, subject to customary regulatory approvals and closing conditions.

“Once the TRIXIE transaction closes, it will contribute incremental sales and earnings, helping offset a portion of the reported revenue impact while further strengthening our overall business mix,” Lahanas says.

He also notes that M&A remains an “important” component of its long-term strategy. “Even after funding this transaction in the coming months, our balance sheet remains strong and provides us meaningful flexibility to pursue additional high-quality opportunities that enhance our portfolio and create shareholder value.”

Company-wide results

Overall, Central’s net sales reached $882 million (€776M), down 8% YoY, while organic net sales increased 2% YoY to $862 million (€759M).

Gross profit declined 5% YoY to $317 million (€279M), while gross margin expanded 130 basis points to 35.9% from 34.6%.

Net income declined 5% YoY to $90 million (€79M), translating to diluted earnings per share (EPS) of $1.45 (€1.28). 

Guidance

Central Garden & Pet raised its full-year guidance and now expects non-GAAP diluted EPS of $2.85 (€2.51), up from $2.70 (€2.38), driven by continued margin discipline, ongoing investment in growth initiatives and portfolio optimization.

Capital expenditures are forecast at approximately $50 million (€44M), focused on maintenance, productivity initiatives and targeted growth investments across both segments.

According to the company, the outlook assumes a competitive retail environment, continued consumer focus on value, existing tariffs, inflation in select commodities and stable commodity costs despite ongoing macroeconomic and geopolitical uncertainty.