Central Garden & Pet Company (CENT - Free Report) posted a disappointing quarter yet again. The company’s third-quarter fiscal 2013 earnings of 28 cents a share missed the Zacks Consensus Estimate of 42 cents by miles and plunged 40.4% year over year.
Top line decreased approximately 7% year over year to $494.1 million and also missed the Zacks Consensus Estimate of $525 million. Decline in both Pet and Garden segments and tough year-over-year comparisons were to blame.
Lower sales led to a 15.6% decline in consolidated gross profit to $152.5 million, while gross margin decreased approximately 290 basis points to 30.9%. Operating income decreased 32.8% to $32.9 million, while operating margin contracted 250 basis points to 6.7% during the quarter.
Pet segment net sales decreased 12% year over year to $237.8 million. The segment’s branded product sales decreased 15% to $194.5 million, whereas sales of other manufacturers’ products increased 2% to $43.3 million in the quarter. Pet segment’s operating income declined 18.1% year over year to $33.1 million, whereas operating margin contracted 100 basis points, reflecting a decline in flea & tick sales, partially offset by lower selling, general and administrative expenses.
Revenue at the Garden segment decreased 2% year over year to $256.3 million, reflecting a decline in control products sales. Moreover, the prior-year quarter benefited from backlog sales, which were not there this quarter. The Garden segment’s branded product sales decreased 3% to $215.5 million, whereas sale of other manufacturers’ products declined 1% to $40.8 million during the quarter. The segment reported an operating income of $13.7 million, down 39.4% year over year, whereas operating margin declined 330 basis points.
Other Financial Details
This Zacks Rank #3 (Hold) company ended the quarter with cash and cash equivalents of $20.5 million, total debt of $509.6 million and shareholders’ equity of $489.9 million, excluding non-controlling interest of $1.7 million. The leverage ratio was 4.9x for the quarter. The company incurred $3 million in capital expenditures and plans to spend at most $30 million in fiscal 2013.
Other Stocks to Consider
Until any further upward revision in Central Garden’s Zacks Rank, other stocks in the consumer goods sector worth considering are Prestige Brands Holdings, Inc. (PBH - Free Report) , Rocky Brands, Inc. (RCKY - Free Report) and Libbey Inc. (LBY - Free Report) , all of which hold a Zacks Rank #1 (Strong Buy).