Freshpet optimistic despite $13 million loss in last quarter

Challenging market dynamics are forcing a rethink of Freshpet’s growth strategy, as performance in the first quarter of 2025 fell short of expectations.

The US pet food firm posted net sales of $263.2 million (€231.6M) between January and March 2025, up 17.6% year-over-year (YoY). However, the quarter’s net loss was $12.7 million (€11.2M), compared to net income of $18.6 million (€16.4M) during the same period in 2024.

Gross profit was higher than a year earlier, at $103.8 million (€91.4M) versus $88.2 million (€77.7M) in Q1 2024, with a consistent margin of around 39.4%. However, selling, general and administrative expenses increased.

Facing headwinds

Freshpet’s CEO, Billy Cyr, states that despite the recent macroeconomic headwinds, Freshpet “remains a structurally advantaged business with a long runway for growth in a category with long-term tailwinds.”

“However, our growth year-to-date has not been as robust as we had anticipated, so we are adapting our growth plans to the current economic challenges that our consumers are facing while continuing to drive the operational improvements that are essential to our long-term success,” he says.

Among the positives for the business were 15% volume growth and 13% household penetration growth, with the heaviest users growing even faster and spending 6% more than they were ($110/€97).

Media spending strategy

The company says its media spending is continuing to drive household penetration. It will invest more in advertising, which has shown a good return on investment. It will use specific strategies to attract higher-income consumers through digital/social channels and linear TV.

It also plans to expand its direct-to-consumer (DTC) channels, specifically Freshpet Custom Meals.

Growth is attributed to the strength of the Freshpet model and improved operational effectiveness, and the company is focused on balancing capacity and demand while improving margins.

Updated guidance

The company updated its FY 2025 net sales guidance ($1.12B-$1.15B/€0.98B-€1.01B), representing a 15-18% YoY growth. This is compared to previous guidance of a 21-24% increase ($1.18B-$1.21B/€1.04B-€1.06B).

The company aims to achieve $1.8 billion (€1.6B) in net sales by 2027, with targets for adjusted gross and EBITDA margins.

“Looking ahead, we believe it is prudent to adjust our 2025 outlook and plan as if the conditions we saw in the first quarter were to continue for the balance of the year,” adds Cyr. “In doing so, we believe we are positioning Freshpet to weather the near-term economic headwinds and deliver long-term shareholder value while serving pets, people and the planet.”