Central Garden & Pet(US:CENT) ZACKSยท2024-11-25 14:55Core Viewpoint - Central Garden & Pet Company (CENT) is expected to report a decline in both revenue and earnings for the fourth quarter of fiscal 2024, with revenues estimated at $723.8 million, reflecting a 3.5% decrease from the previous year [1]. Financial Performance - The consensus estimate for the bottom line remains unchanged at a loss of 20 cents per share, with a trailing four-quarter earnings surprise of 38.9% on average [2][10]. - An operating loss of $25.7 million is anticipated for the fourth quarter, which includes a write-down charge related to grass seed inventory [8]. Segment Performance - The Pet segment is projected to see a sales decline of 5.6% due to macroeconomic challenges affecting consumer discretionary spending and a decrease in new pet adoptions [4]. - The Garden segment is expected to experience a slight sales decline of 0.6%, which is an improvement compared to a 6.1% drop in the previous quarter [5]. Operational Challenges - The company is undergoing significant operational restructuring, including the closure of distribution facilities and winding down its underperforming pottery business, which may lead to short-term revenue disruptions [6]. - Increased competition and lower foot traffic in home centers are likely contributing factors to weaker top-line performance [6]. Inventory and Cost Management - A notable concern is the significant decrease in market prices for grass seed, with an estimated write-down of $15 million to $20 million impacting profitability [7]. - SG&A expenses are expected to increase by 140 basis points as a percentage of net sales in the final quarter, which could pressure margins [7]. Strategic Initiatives - Despite the challenges, the company is advancing its cost and simplicity program, along with investments in capacity expansion and automation, which are expected to mitigate some bottom-line pressure [9].