Central Garden Loss Wider than Est. - Analyst Blog
12 December 2012 - 7:10PM
Zacks
Central Garden & Pet
Company (CENT) reported soft fiscal fourth-quarter 2012
(ended September 29, 2012) results. The company’s quarterly loss of
21 cents a share remained flat with the prior-year quarter loss but
was wider than the Zacks Consensus Estimate of a loss of 20
cents.
However, strong sales in the
company’s Pet division and one extra week in the quarter
facilitated it to register a 5% increase in total sales to $397.2
million. The company’s reported total sales surpassed the Zacks
Consensus Estimate of $380 million.
Gross profit increased 7% to $105.1
million, whereas gross margin expanded approximately 40 basis
points to 26.5%. The company reported an operating loss of $8.5
million compared with an operating loss of $4.6 million in the
prior-year quarter. The company stated that increased
promotional and innovation expenses and lower revenues from the
decor business negatively impacted the results.
Segment wise, Pet
Products segment sales increased 12% to $237.6 million,
reflecting improved sales in animal health products coupled with
increases in pet distribution business. The segment’s branded
product sales jumped 12% to $191.7 million, whereas sales of other
manufacturers’ products rose 15% to $45.9 million in the quarter.
Pet segment’s operating income increased 4.5% year over year to
$16.3 million.
Garden Products
sales declined 3% year over year to $159.6 million, reflecting
lower decor sales. The Garden Products segment’s branded product
sales decreased 6% to $140.2 million, whereas sales of other
manufacturers’ products increased 17% to $19.4 million. The segment
reported an operating loss of $7.7 million during the quarter
compared with a loss of $6.9 million in the year-ago quarter,
reflecting lower profitability and increased costs.
Central Garden & Pet, which
faces stiff competition from The Scotts Miracle-Gro
Company (SMG), ended the quarter with cash and cash
equivalents of $48.5 million, long-term debt of $449.5 million and
shareholders’ equity of $464.9 million. The leverage ratio was 4.0x
for the quarter.
Currently, we maintain a long-term
‘Outperform’ recommendation on the stock. However, Central Garden
& Pet has 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
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