Sales rise but profits fall at CG&P
Central Garden & Pet, a leading supplier of seeds, pottery, insecticides and other outdoor living products, reported net sales for its fourth fiscal quarter of $376.9 million, a 9% increase over the comparable period in fiscal 2010. The company's operating loss was $4.6 million for both the fourth quarter of 2011 and 2010.
Sales gains were driven by the garden products segment, which reported net sales for the quarter of $165.1 million, a gain of 24% over the fourth quarter of 2010.
The garden products segment's branded product sales increased $31.6 million, or 27%, to $148.5 million, while sales of other manufacturers' products were $16.6 million, in line with the fourth quarter of 2010. The company's gross and operating margins were adversely impacted by higher raw material input costs during the quarter. The garden products segment's operating loss during the quarter was $6.9 million, compared with an operating loss of $7.6 million in the fourth quarter of 2010.
In fiscal-year reporting, Central Garden & Pet posted net sales of $1.6 billion for 2011, an increase of 7%, compared with $1.5 billion in the comparable 2010 period. Branded products sales were $1.4 billion, up 9% over the comparable 2010 period. Sales of other manufacturers' products decreased 4% to $253.0 million.
Net income for the fiscal year ended Sept. 24 was $28.3 million, compared with $45.8 million in the comparable 2010 period. Operating income totaled $85.2 million compared with $109.1 million. The company's gross and operating margins were adversely impacted by higher raw material input costs throughout the fiscal year.
"We are pleased with our top-line growth in a tough quarter, but are dissatisfied with the bottom line," said Bill Brown, the company’s chairman and CEO. "As highlighted on our last quarterly call, we have committed to a broad set of transformation initiatives that are expected to take significant cost out of the company, improve margins meaningfully and enable more aggressive reinvestment in our brands to drive top-line growth. Gus Halas, president and CEO of Central Operating Companies, who joined us in April, is already well underway in reshaping Central from what was essentially a portfolio of siloed companies, into a single, more integrated company that can better meet the needs of customers and deliver substantially better results for shareholders."
Halas also commented in a prepared statement: "We have a roadmap for improved financial performance beginning in the second half of calendar 2012 and into 2013. We expect to update shareholders on our progress in the coming quarters. Central is already on a dramatically different path than it has ever been before, and we expect it to lead to sustained growth and improved profitability well into the future."
Based in Walnut Creek, Calif., Central Garden & Pet is a supplier of lawn, garden and pet products under a variety of brands, including Pennington, Kaytee, Amdro, Sevin, Ironite, Norcal and New England Pottery.