Pet companies report higher SG&A expenses as logistics and expansion costs increase

While macroeconomic events have been driving up logistics and product costs since 2025, an analysis by the consulting firm McKinsey reveals the ratio between selling, general and administrative (SG&A) expenses and the revenue of grocery retailers in Europe is increasing.

Everyday expenses

“After a dip to 19% of revenue in 2022, SG&A reached 19.7% in 2025. This increase is widespread across major grocery retailers in European markets, indicating structural cost inflation rather than isolated inefficiencies,” the company noted in the report, The State of Grocery Retail 2026.

These expenses account for costs related to managing daily business operations, such as marketing, advertising, rent, staff and utilities.

After interviewing 36 CEOs in the European sector in the first quarter of 2026, McKinsey found that “cost and margin pressure remained the number one concern” for the fifth consecutive year.

Among the greatest pressure points on grocery retail, business leaders highlighted labor cost inflation, operational expenses, and investments in store expansion and refurbishments, as well as increasing investments in IT, AI and automation.

What about pet companies?

GlobalPETS calculated the SG&A/Net sales ratio for eight companies operating with a pet-related portfolio, comprising both retailers and manufacturers.

The analysis revealed that, on average, the ratio remained constant in 2022 and 2025, at 24.3%, while being slightly higher in 2024 (24.5%). The percentages are significantly higher than for grocery retail, as measured by McKinsey.

However, individual company results indicate that five of the eight analyzed firms had an increase in this ratio in 2025 compared to 2024: Colgate-Palmolive, Central Garden & Pet, Pet Valu, Tractor Supply and General Mills. This means that expenses began to consume a larger share of revenue for the majority of the sample.

The number is higher when compared to 2022, with six companies allocating a larger portion of their revenue to SG&A. In addition to those mentioned previously, Post Holdings and Chewy are included in this group, while Pet Valu is excluded.

Freshpet is the only company for which this ratio has declined over the years, falling from 40% in 2022 to 37% in 2023 and 2024, and finally to 34% in 2025. 

First quarter of 2026

GlobalPETs also analyzed the expenses of companies that reported results in 2026, given that higher energy and logistics costs tend to put further pressure on expenditure.

Retailers: higher spending, smaller proportion

Canadian pet retailer Pet Valu’s SG&A expenses amounted to CA$55.5 million ($40.5M/€34.6M) in the first quarter of 2026, a 1.5% increase YoY. 

The numbers were due to higher outlays on technology (related to cloud services) and marketing and advertising, as well as store network growth. At the same time, lower expenses related to employee benefits helped the company to offset the increase. 

Higher SG&A expenses impacted results of operating income, adjusted EBITDA (earnings before interest, taxes, depreciation, and amortization), and adjusted net income – all decreasing from a year before.

“[The] rate was impacted by higher technology SaaS (Software as a Service) fees and costs associated with a higher corporate store count, a number of which are early in their sales maturation curve,” Pet Valu’s Chief Financial Officer (CFO) Linda Drysdale explains.

Similarly, US-based retailer Central Garden & Pet posted SG&A expenses of $186 million (€159M), up 3% YoY. 

Even higher in absolute terms, the spending represented a smaller portion of revenue in the period for the two companies. For Pet Valu, it accounted for 19.3% of revenue in comparison with 19.6% a year before. At Central, it went from 21.6% in 2025 to 20.5% in 2026. 

Expenses to pay for launches

Tennessee-based rural retailer Tractor Supply also had larger expenses – up 6.1% YoY to $1.07 billion (€0.91B) – but in this case, greater spending accounted for a higher percentage of net sales, too (from 29% to 29.7% in one year).

Although part of this increase financed the company’s plan to accelerate the opening of new stores – 40 new units during the quarter – the larger share of revenue was due to sales being weaker than expected.

CFO Kurt Barton said the company invested in strategic initiatives across the business, which helped “Q1 to carry a heavier SG&A burden”. 

For the second half of 2026, Tractor Supply expects approximately $10 million (€8.5M) of incremental expense to fund the launch of its 11th distribution center and associated shipments.

Logistics increases costs for producers

For the fresh dog food producer Freshpet, adjusted SG&A expenses increased proportionally to net sales in the quarter, from 32.2% in 2025 to 34.2% in 2026. The company attributed this to higher variable compensation, greater proportional spending on media and increased logistics costs.

Media spending increased 0.7 percentage points (p.p.) to 15.8% of net sales in the quarter, while logistics costs were 6.3% of revenue compared with 5.8% a year ago. The company attributed this to storm-related costs, driver shortages and recent fuel cost increases starting in March, following conflicts in the Middle East. 

For the full 2026, Freshpet expects media expenses to remain in line with last year, but anticipates elevated logistics costs given increased fuel costs.

Volatile oil prices

A similar pressure is forecast by Colgate-Palmolive. Having already increased spending by 2% last year, the producer began 2026 with a jump of 9.4% in SG&A expenses to $2.07 billion (€1.76B).

The company expects to rack up an additional $300 million (€256M) in raw material and logistics costs, primarily due to rising oil prices and their impact on oil byproducts, resins, fats and other oils, along with a 10% increase in ocean and land freight costs. “Logistics go into SG&A, so there will be an incremental impact from that,” CFO Stan Sutula says.

In 2025, the company’s costs totaled $7.9 billion (€6.7B) due to both non-recurring expenses (such as litigation and a growth program) and increased employee costs. On the other hand, it spent less on advertising.

However, at Hill’s Pet Nutrition, advertising investments increased by 50 basis points last year, which led to a 60-basis-point rise in total general and administrative expenses for the pet segment. 

A costly 2026

Despite different business models, the results suggest that pressure on operating costs in both the pet and grocery retail sectors is likely to tighten as the year goes on.

In addition to investment in expansion and technology, companies are also contending with external scenarios that look set to increase costs in the short term.