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.

Pet Valu signs US Humane Society's Puppy Friendly Pet Store pledge

Pet Valu, a mid-Atlantic US petfood and supply chain, signed The Humane Society of the United States' Puppy Friendly Pet Store pledge.
This pledge means that the company commits to not sell puppies from puppy mills, but instead to support local pet adoption programs and provide literature that helps customers learn how to locate a puppy from a reputable source. Store owners who sign The HSUS’ pledge receive a placard proclaiming, “We love puppies; that’s why we don’t sell them,” to display in the store, as well as free materials for their customers about how to adopt a puppy or find a responsible breeder.
“Pet Valu is proud to be a part of the Puppy Friendly Pet Stores Program, which reinforces our commitment to providing our customers with quality pet supplies while looking out for the best interest of animals,” said Connie Lowney of Pet Valu. “We believe that this will be a successful business model in our 63 locations, and are hopeful that our commitment will inspire others to support responsible pet acquisition.”
A list of participating "Puppy Friendly" pet stores is available from www.humanesociety.org/puppystores.

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.

Petco launches mobile site for on-the-go shopping

Petco launched a customized mobile website for shopping and pet care information online and on-the-go.
Powered by Digby's Mobile Software Platform, the new site offers 24-hour mobile access to Petco's products with photographs, customer reviews, a store locator and online purchasing capabilities.
“Whether in one of our more than 1,000 PETCO stores nationwide or online at PETCO.com, we’re committed to providing our customers with everything they need to be great pet parents in a fun and enjoyable shopping environment,” said Katie Grisko, Petco's web strategy manager. “We’re thrilled to provide a whole new level of convenience for our online customers with mobile access to PETCO.com – from anywhere, at anytime.”

Companies join forces for pet store grand opening

My Perfect Pet, a frozen fresh petfood company, will help kick off the grand opening of the newest location of Unleashed by PETCO – a small concept pet store – later this month in Chula Vista, California, USA.
My Perfect Pet will offer pets and their owners samples of all-natural dog food.

HSUS endorses stores that don’t sell puppies

The Humane Society of the United States has endorsed 45 Chicago, Illinois, USA, pet stores that have pledged not to carry puppies in hopes of funneling more customers to those retailers, rewarding them for steering clear of “puppy mills,” according to the Chicago Tribune.
"We want to encourage (the shops) by saying thank you, and to encourage people to support those stores," said Jordan Matyas, Illinois director for the Humane Society.