Central Garden & Pet reported mixed results for the fiscal third quarter ended June 27, with net sales declining 8% to $882 million, yet the company elevated its full-year earnings guidance. The company’s departure from its pet distribution business earlier in the year, a lower-margin operation, contributed to improved profitability metrics across the board. Gross margin expanded 130 basis points to 35.9%, while non-GAAP operating margin increased 90 basis points to 15.4%. When adjusting for the divested pet distribution business, organic net sales actually grew 2% to $862 million.
The Garden segment emerged as the primary driver of performance, with sales increasing 3% to $482 million. Growth was powered by strong demand in wild bird feed, fertilizer and controls, and grass seed, with segment operating margin advancing 100 basis points to 18.7%. Based on this momentum, management lifted its fiscal 2026 non-GAAP diluted EPS guidance from $2.70 or better to $2.85 or better.
The Pet segment painted a more complicated picture. Reported net sales fell 19% to $400 million, though organic Pet sales rose 2% to $380 million, indicating that portfolio adjustments rather than underlying demand weakness accounted for much of the reported decline. On a company-wide basis, GAAP diluted EPS decreased to $1.45 from $1.52, and non-GAAP EPS slipped to $1.54 from $1.56, even as net income fell 5% to $90 million.
Central announced a definitive agreement to acquire an 80% interest in TRIXIE, a European pet supplies and pet snacks company serving more than 30,000 retail stores, for up to €400 million including earn-outs. The acquisition, expected to close in the first half of fiscal 2027, would raise international sales to approximately 10% of total revenue and provide Central access to Europe’s fragmented pet specialty market. The deal introduces integration complexity through new supply chains, retail relationships, and a minority-stake-holding leadership team that will remain in place.
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