Central Garden & Pet sees stronger quarter with 4% growth in pet portfolio

Central Garden & Pet posted net sales of $656 million (€636M) in the first quarter of its 2025 fiscal year (FY), which was from October to December 2024. This is a 3% year-on-year (YoY) increase.

Net sales in the pet segment increased 4% YoY to $427 million (€414M) from $409 million (€396M). The company says this was driven primarily by customers shifting the timing of their orders to Q1. The quarter ended on December 28, 2024, and included the holiday shopping season.

The adjusted earnings before interest, tax, depreciation and amortization (EBITDA) of the pet portfolio increased to $61 million (€59M) from $54 million (€52M) a year ago.

Pet products made up most of the company’s YoY growth, with pet segment sales increasing by $18.3 million (€17.7M) and garden segment sales rising by $3.6 million (€3.5M).

Bottoming out?

Despite the growth in Q1 of FY2025, the company has not yet recovered from a slump in 2024. In the fourth quarter, the company reported a 10% YoY net sales decline from $483 million (€468.2M) to $435 million (€421.7M), which was driven by limited intake of new dogs and competition from Chinese e-commerce.

Pet sector net sales of $427 million (€414M) in Q1 reflect a decline between quarters, though the company has returned to YoY growth. Central Garden & Pet CEO Niko Lahanas said last December that he expected the company to “bottom out” in 2025 or 2026, returning to growth.

Headwinds and tailwinds

Whether yearly growth continues depends on multiple factors, including macroeconomic challenges.

In an earnings call, Lahanas told investors that easing inflationary pressures helped the business. He also credits new facilities with expanding e-commerce capacity and improving efficiency – Central opened a new distribution center in Covington, Georgia, and a new e-commerce fulfillment facility in Easton, Pennsylvania.

The company is focused on mergers and acquisitions, which Lahanas had previously said are expected to get easier under the new administration in D.C. However, in the recent earnings call, he cited the broader economic uncertainty around tariffs as a possible headwind.

Revenue guidance

Central included tariffs in its revenue guidance, something many companies have avoided as U.S. trade policy remains unclear as possible 25% tariffs against Mexico and Canada loom.

The company says it has limited exposure to tariffs – 4% of Central’s products come from China and will face a 10% tariff. Only 2% of Central’s products come from Canada and Mexico.

This relative insulation means the main impact of a trade war on the company could be the resulting inflationary pressures spreading throughout the economy.

“Obviously, this week has been quite a wild ride, to say the least,” said CFO Bradley Smith. “We were able to get comfortable that, given our exposure and the timing of when that would hit, some of the mitigation strategies we’ve got in place, that we’d be able to tackle those, absorb those and still, based on everything we see in front of us, stay within our guide.”

Central did not change its guidance from November.