Sluggish 4Q for Central Garden - Analyst Blog

By
A A A
Share |

Central Garden & Pet Company ( CENT ) 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 ), 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.


 
CENTRAL GARDEN ( CENT ): Free Stock Analysis Report
 
SCOTTS MIRCL-GR ( SMG ): Free Stock Analysis Report
 
Zacks Investment Research



The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: CENT , SMG

Zacks.com

Zacks.com

More from Zacks.com:

Related Videos

Stocks

Referenced

Most Active by Volume

55,518,322
  • $16.19 ▲ 0.37%
43,062,500
  • $59.532 ▼ 0.31%
41,131,903
  • $26.72 ▲ 2.30%
26,506,839
  • $86.30 ▲ 0.14%
23,080,659
  • $23.113 ▲ 0.36%
22,532,741
  • $23.60 ▲ 4.98%
19,370,130
  • $27.06 ▲ 0.48%
19,304,065
  • $9.125 ▼ 1.99%
As of 4/17/2014, 12:51 PM