Central Garden & Pet reports improved financials for fourth quarter

Central Garden & Pet Company has reported improved financial results for the fourth quarter and full year ended September 27, 2014.

Fourth quarter
The company’s 2014 fourth quarter operating income was US$1.4 million, compared to an operating loss of US$26.4 million in the fourth quarter of 2013, which included two charges—the 2013 garden charge of US$11.2 million and a US$7.7 million non-cash charge related to the impairment of goodwill in the garden segment. The net loss for the quarter was US$4.1 million, compared with a net loss of US$22.6 million in the fourth quarter of 2013.
Fourth quarter net sales of US$374.2 million increased 1% from US$368.8 million in the comparable fiscal 2013 period. Gross margin for the quarter increased 670 basis points compared to the prior year, reflecting higher margins in the company’s garden segment, principally due to the non-recurrence of a charge included in the prior year’s fourth quarter, as well as higher controls and grass seed gross margins. In the fourth quarter of 2013, the company’s gross profit included a US$11.2 million charge (“2013 Garden Charge”) associated with two garden products that were subsequently discontinued.
Fourth quarter: Pet segment
The pet segment’s operating income for the fourth quarter was US$21.1 million versus US$24.7 million in the comparable prior year period, a decline of US$3.6 million. The pet segment’s gross and operating margins declined during the quarter. Pet’s operating margin declined 150 basis points to 9.7%, due in part to lower operating margins in the professional and flea and tick businesses, as well as a less favorable mix of sales, with higher sales of other manufacturers’ products and lower higher-margined flea and tick and professional sales than a year ago. Margins increased in several businesses, most notably dog and cat and small animal.
Fourth quarter net sales for the pet segment were US$217.1 million, a decrease of 2% from the comparable prior year quarter. The decline was in large part due to lower sales in the company’s flea and tick and small animal businesses, partially offset by higher sales of other manufacturers’ products, as well as higher professional and dog and cat sales. Industry weakness, reduced shelf space and increased competition in the flea and tick business and certain other businesses continued to weigh on sales in the segment. As in the garden segment, wild bird feed sales were also impacted by lower selling prices. The pet segment’s branded product sales for the quarter decreased US$9.1 million, or 5%, to US$166.5 million from US$175.6 million. Sales of other manufacturers’ products increased US$5.7 million to US$50.6 million, an increase of 13% versus the comparable prior year period, due primarily to a selling mix difference in the independent channel.
Fiscal 2014
The fiscal 2014 adjusted operating income excludes the 2014 Garden Charge and a US$4.9 million gain on the sale of plant manufacturing assets. The fiscal 2013 adjusted operating loss excluded the US$11.2 million 2013 Garden Charge and the US$7.7 million garden goodwill impairment charge.
Adjusted net sales for the year ended September 27, 2014 were US$1.61 billion, down from US$1.66 billion a year ago. Adjusted operating income for the year was US$68.2 million compared to US$59 million in the prior year. Fiscal year 2014 adjusted garden operating income was US$53.1 million, an increase of US$25.9 million from the prior year. Pet operating income was US$88.1 million in fiscal 2014, a decrease of US$7.3 million from fiscal 2013. Adjusted consolidated operating margin increased to 4.2% from 3.6% in the prior year. Net income for the fiscal year ended September 27, 2014 was US$8.8 million compared to a loss of US$1.9 million in fiscal year 2013. Adjusted net income was US$16.4 million, compared to US$10 million for the year ended September 28, 2013.

Report projects global pet care market revenues of US$97 billion in 2015

Research and Markets published a new "Global Pet Care" report with pet care market analysis and forecasts to 2015. 
A Global Pet Care industry profile provides qualitative and quantitative summary information on market share and market size; profiles of leading pet product companies, including Mars Inc., Nestle and Proctor & Gamble Company; an analysis of pet care market trends and more. 

According to the report, the pet care market, which is comprised of retail sales of cat care, dog care, other pet care and pet healthcare products, generated total revenues of US$80.3 billion in 2010, representing a compound annual growth rate of 4.3 percent from 2006-2010. Dog care sales were the most profitable in the global pet care market in 2010, generating total revenues of US$29.2 billion or 36.3 percent of the market's total value. The report forecasts a slowdown in the 2010-2015 period at an anticipated compound annual growth rate of 3.8 percent and a market value of US$97 billion in 2015. 
The report can be purchased online.

Pet industry spending at record US$50 billion in 2011, report finds

The American Pet Products Association's annual pet industry spending and data report found that pet industry spending grew by 5.3 percent to an all-time high of US$50.96 billion in 2011.
The American Pet Products Association projects a 3.8 percent growth rate through 2012 and US$53 billion in overall pet spending, driven by new, innovative products including petfood, pet supplies and over-the-counter medications, veterinary care, live animal purchases and other pet services. Pet services, like grooming, boarding, pet sitting and others, experienced the largest growth, rising 7.9 percent from 2010 to US$3.79 billion in 2011. The report projects pet services will grow by 8.4 percent in 2012 to US$4.11 billion in spending. Pet food spending had a slower, but steady increase in 2011, rising 5.8 percent to US$19.85 billion, and is projected to rise 3.1 percent to US$20.46 billion in 2012. Spending on pet supplies and over-the-counter medications also grew in 2011, up 7.6 percent from 2010 to US$11.7 billion in 2011. According to the association's president, Bob Vetere, two reasons for the slower growth in petfood sales are that pet sales and adoptions are flattening, and most consumers have already been drawn to high-end petfoods so the segment is reverting back to a more traditional growth pattern. "As the total pet population continues to grow, despite a slower pace, we still see the overall industry expanding year after year," Vetere said. "As pet owners continue to pamper pets and treat them like members of the family, we see positive growth and a response to consumer demand for more products and services which we expect to see through 2012.” 

Former Pets.com CEO explains reasons behind company's shutdown

Former Pets.com Chief Executive Julie Wainwright discussed why Pets.com shut down, after a recent sfgate.com article made the comparison between Wainwright's pets.com and startup company, PetFlow.com.
In her comments , Wainwright said that her company did not go out of business because it was selling petfood for below cost, as the article claimed, and pointed out that the company's average order was around US$37, only half of which included petfood. She also noted that in 2000, the company had to employ more than 40 engineers because there were no "plug and play" solutions for ecommerce management and customer service, in addition to needing several IT staffers to ensure the site did not crash since cloud computing did not exist. 
Wainwright also attributed the closure of Pets.com to the fact that of the US$260 million in funding needed to break even, the company had only raised US$180 million and felt it would be impossible to raise the rest. Pets.com believed that the company should be shut down to return money to shareholders instead of being forced to declare bankruptcy, according to Wainwright.

Stella & Chewy's, shortbread treats among top 10 dog products of 2010

Dog News Daily has released its "Top 10 Dog Products" for 2010, and the list includes Stella & Chewy's Chicken Freeze Dried Dinner and Shortbread Cookies, a dog treat from Exclusively Pet.
Other products to make the list for 2010 include:

• The Supercollar, a collar/leash hybrid
• Dog Fashion: The Bathrobe Collection by Romy & Jacob
• Skin Care Product: Skin Rescue Lotion by DerMagic
• Shampoo: Papaya Plus 2-in-1 Shampoo by Tropiclean
• Dog Carrier: The Amelia Tote on Wheels by Sherpa Pet
• Car Safety Product: The Auto Zip Line by Kurgo
• Leash: The Kujo by Ezy Dog
• Dog Bed: The Co-sleeper Pet Bunk Bed by Arms Reach

Pet humanization trend leads to increase in UK petfood sales

Petfood sales rose by 6.7% to a £1.5 billion (US$2.1 billion) in the past year thanks to the trend of pet humanization, according to a U.K. Telegraph article.
A report by retail analysts Kantar Worldpanel attributes this trend to a 26.3% increase in the value of cat treat sales. The article says that sociological reasons are behind the growing pet humanization trend in the U.K., including an increase in single person households and loneliness from longer working hours, combined with a desire to be more attached to pets.
"We are seeing an increased desire not only to treat pets to the very best, but also to ensure what they feed them will meet their optimal nutritional requirements," said Ben Thompson of Mars Petcare.

Texas private label petfood producer lays off 43 workers

Pied Piper Pet and Wildlife Inc. laid off about one-fourth of its employees, according to Workforce Solutions of west central Texas USA.
Following the layoffs of 43 people, 113 employees remain with the Hamlin, Texas, USA-based company, according to Mary Ross, executive director of Workforce Solutions in Abilene, Texas USA. Ross said the layoffs may be temporary and the result of declining demand for the higher priced petfoods produced by the company for various clients.
“They are hoping to get some new contracts in a few months and bring those people back,” Ross said.
Ross said representatives from Workforce Solutions have met with officials and employees at Pied Piper Pet and Wildlife to offer their services

Del Monte CEO predicts growth in its petfood business

Richard Wolford, chief executive of Del Monte Foods, predicted growth in the company's petfood business, according to a report by The Washington Post.
Del Monte recently lowered its sales outlook to 2% - 4%, from 3% - 4%. But despite the economy, the company expects to see the most growth in its pet business, according to Wolford.
"People always feel very special about their pets," said Wolford. "They treat them better than their children; our survey will actually show they are more willing to cut back on their children then they are their pets in a tough time."

Spending increasing in Latin America petfood, pet care market

Latin Americans are spending more money on products and services for their pets despite the poor economy, according to an online article from The Independent.
A July 15 report from Euromonitor International indicated that Latin American and Caribbean pet owners are spending more money than previously on pet care goods and services, such as petfood, toys, fashion accessories, health care and grooming. This trend spreading in Latin America is driven by Americans, who treat their pets like children, and the "pet parents" who believe that animals have equal or almost equal rights to people, according to the report.
Euromonitor statistics reported spending on petfood and pet care products increased dramatically across Argentina and Chile from 2004 through 2009. In Argentina, spending increased from US$0.2 billion in 2004 to US$0.6 billion in 2009, and in Chile spending increased from US$0.3 billion to US$0.5 billion in the same period.

German petfood sales down, total money spent up

Germans spent more money on their pets with a turnover on petfood increasing by 2.7% to €2.97 billion (US$4 billion), according to a recent article.
Since petfood sales in Germany dropped 1.4%, the increase is contributed to higher pricing and shifts in assortment