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Central Garden & Pet's (CENT) Buyout Strategy Boosts Sales

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Central Garden & Pet Company (CENT - Free Report) looks well poised for growth, driven by its robust endeavors like strategic acquisitions. The company has been making constant efforts to reinforce its position in the pet supplies, and lawn and garden supplies space. It has also been developing new products, advancing digital capabilities, optimizing supply chain and focusing on marketing activities.

Buoyed by such endeavors, the company continued with its stellar performance in first-quarter fiscal 2021, wherein both the top and the bottom lines not only surpassed the Zacks Consensus Estimate but also improved year over year. Notably, the quarter marked the fifth straight sales and earnings beat. Solid execution and strong consumer demand across the Pet and Garden segments drove quarterly performance. Further, the top line improved 22.7% year over year, benefiting from organic growth in both the segments. Also, the company’s Central to Home strategy bodes well. We believe these efforts will keep yielding results ahead.

Acquisition Strategy Bodes Well

Acquisitions form an important part of Central Garden & Pet’s strategy. In fact, the company has been a disciplined buyer in the garden and pet areas, and has concluded more than 50 acquisitions since 1992. Via these buyouts, management has been enhancing the company’s manufacturing capabilities, operating synergies, developing distribution network, economies of scale and market advantages. These buyouts are widening the company’s customer base, helping it capture greater market share. Apart from fortifying the company’s portfolio, these buyouts have been contributing to its sales and overall performance.

In line with the same commitment, the company recently concluded the buyout of Green Garden Products (Green Garden) from private equity firm Freeman Spogli & Co. On the last day of December 2020, management unveiled that it has agreed to buy Green Garden, earlier known as Plantation Products, for $532 million. Headquartered in Norton, MA, Green Garden is a provider of vegetables, seed starters, herb and flower seed packets, as well as plant nutrients across North America. With the addition of Green Garden to Central Garden & Pet’s portfolio, the company looks to expand the business, leverage merchandising, engage in brand building and enhance digital capabilities.

Earlier, it closed the buyout of Hopewell Nursery, which is a key live goods grower that caters to retail nurseries, landscape contractors, wholesalers and garden centers in the Northeast. This deal, which follows the addition of Bell Nursery to the company’s portfolio, looks to strengthen the company’s position in the live goods space with high-quality offerings.

Central Garden & Pet also bought DoMyOwn.com (DoMyOwn)– a fast-growing online retailer of professional-grade control products in the United States. The deal adds best-in-class e-commerce fulfillment platform and digital capabilities to the company’s portfolio, while also fortifying its position in the control product space. With the help of the DoMyOwn acquisition, Central Garden & Pet is able to tap into and cater to the rising e-commerce demand.

The company had purchased  General Pet Supply, a supplier of pet food and supplies, and also the remaining 55% stake in Arden Companies. Central Garden & Pet, which has strong commercial relationships with Walmart (WMT - Free Report) , Home Depot (HD - Free Report) and Lowe’s (LOW - Free Report) had earlier acquired C&S Products. This buyout complements the company’s existing wild bird feed business.

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