Back to top

Analyst Blog

Zacks Equity Research

Sluggish 4Q for Central Garden

CENT SMG

 ZacksTrade Now

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

Central Garden & Pet Company (CENT - Analyst Report) recently reported sluggish fourth-quarter 2011 results, battered by higher input costs, altered product mix along with the company’s sustained investments in brand building and marketing.

The company’s quarterly loss of 21 cents a share widened from a loss of 2 cents per share delivered in the prior-year quarter. The analyst covered by Zacks expected the company to deliver a loss 6 cents per share in the reported quarter.

However, total revenue for the quarter increased 8.6% to $376.9 million, reflecting sales growth in garden products segment. Moreover, the reported net sales surpassed the Zacks Consensus Revenue Estimate of $360 million.

During the reported quarter, gross profit shrinked 5.1% to $98.2 million, whereas gross margin contracted 370 basis points to 26.1%. The decline reflected a 14.4% rise in cost of goods sold. Total operating loss for the quarter was $4.6 million, indicating a significant decline from an operating income of $7.4 million in the year-ago quarter. The decline resulted from increased commodity prices and lower sales of high margin products.

CentralGarden& Pet, one of the leading producers and marketers of premium and value-oriented products, is focused on the lawn & garden and pet supplies markets in the U.S.

Garden Products segment sales jumped 24% to $165.1 million. However, due to increased input costs, the segment reported an operating loss of $6.9 million during the quarter. The reported operating result marks an improvement from the prior-year quarter, reporting a loss of $7.4 million.

According to the company, the Garden Products segment’s branded product sales registered a growth of 27% to $148.5 million, whereas sales of other manufacturers’ products remained flat at $16.6 million during the quarter.

Pet Products segment sales inched down 1% to $211.8 million. Moreover, the segment’s operating income plunged 37.3% to $15.6 million from $24.9 million, reflecting a continued rise in raw material costs.

CentralGarden& Pet, which faces stiff competition from The Scotts Miracle-Gro Company (SMG - Snapshot Report), ended the quarter with cash and cash equivalents of $12 million, long-term debt of $435.3 million and shareholders’ equity of $456.8 million, excluding non-controlling interest of $0.6 million.

The company bought back 3.2 million shares for $24.6 million during the quarter under review within its $100 million share repurchase program approved in June 2011.

Currently, we maintain a long-term ‘Neutral’ recommendation on the stock. Moreover, Central Garden & Pet holds a Zacks #3 Rank, which translates into a short-term ‘Hold’ rating.

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%