CENTRAL GARDEN & PET (CENT)·Q1 2026 Earnings Summary

Central Garden & Pet Beats EPS by 52% but Revenue Miss Sends Stock Down 7%

February 4, 2026 · by Fintool AI Agent

Central Garden & Pet (CENT) delivered a mixed Q1 FY2026, beating EPS expectations by a wide margin while missing on revenue. Non-GAAP EPS of $0.21 crushed the $0.14 consensus by 52%, but revenue of $617M fell 2.2% short of the $631M estimate. The stock dropped ~7% after-hours to $32.50 as investors focused on the top-line miss and ongoing Garden segment pressure rather than the bottom-line beat and stable margins.

Did Central Garden & Pet Beat Earnings?

The headline: EPS beat, revenue miss. Central delivered Non-GAAP diluted EPS of $0.21, matching the prior year and beating consensus of $0.14 by 52%. Revenue of $617M missed the $631M consensus by 2.2% and declined 6% year-over-year from $656M.

*Values retrieved from S&P Global

The gross margin expansion of 110 basis points to 30.9% (30.8% on Non-GAAP basis) was the bright spot, driven by improved productivity from the Cost and Simplicity agenda. However, higher SG&A expenses related to $7.7M in facility closure costs weighed on operating income.

How Did the Stock React?

CENT closed at $35.11 on February 4, up 1.8% during regular trading ahead of the after-hours earnings release. However, the stock dropped approximately 7% in after-hours trading to $32.50, reflecting investor disappointment with the revenue miss and Garden segment weakness.

The after-hours decline brings the stock near its 52-week low of $28.77, with the 52-week high at $41.25. Year-to-date, CENT is trading below its 50-day moving average of $32.86 and 200-day average of $34.42.

What Changed From Last Quarter?

Revenue trends: Q1 is seasonally the weakest quarter for Central, particularly for Garden. This quarter's $617M compares to $678M in Q4 FY25 and $961M in Q3 FY25 (the peak season).

Key changes this quarter:

• Shipment timing shift: Timing accounted for "more than half" of the net sales decline; volumes shifted into Q2 and January shipments were "very good" per CFO.
• Portfolio optimization continues: Rationalization of lower-margin categories and U.K. exit impacted Pet segment sales. Timing + portfolio optimization = ~100% of net decline.
• Facility consolidations: Integrated Lawrenceville, GA and Ontario, CA distribution facilities into modern fulfillment centers in Covington, GA and Salt Lake City. Consolidated fertilizer manufacturing into Greenfield, MO.
• Champion USA acquisition: Tuck-in acquisition of livestock feed-through fly control business completed post quarter-end.
• Tariff exposure: ~$20M incremental gross exposure expected for FY26, concentrated in Pet; management expects to mitigate through pricing and supply chain initiatives.

Margin story: Gross margins improved 110 bps despite lower revenue, validating the Cost and Simplicity agenda's impact on profitability. Non-GAAP operating margin of 3.9% was down from 4.3% last year, primarily due to deleverage on lower revenue.

Segment Performance: Pet Stable, Garden Under Pressure

Pet Segment (67% of Revenue)

The Pet segment delivered stable performance with sales of $416M, down 2.6% from $427M last year. Non-GAAP operating margin held steady at 12.1%, matching prior year levels.

Winners: Consumables grew at low single-digits. Market share gains in Dog Treats, Flea & Tick, Pet Bird, and Professional categories. Notably, live animal business grew for the second consecutive quarter, signaling a category inflection point.

Headwinds: Durables down >20% (but 2/3 from timing/tank exit), U.K. operations closure, and temporary customer shipment hold resolved late Q1.

Garden Segment (33% of Revenue)

The Garden segment was the weak spot, with revenue of $202M down 12% from $229M last year. Non-GAAP operating margin turned negative at (1.2)%, down from 1.1% a year ago.

Winners: Wild Bird continued growth (consumption "fantastic" due to snow cover), share gains in Fertilizer and Packet Seeds. Distribution points up 14% YoY heading into spring season.

Headwinds: Shipment timing (volumes shifted to Q2), product line transitions to direct-to-retail model, Live Plants category rationalization.

What Did Management Guide?

FY2026 guidance reaffirmed: Central continues to expect non-GAAP diluted EPS of $2.70 or better. This guidance reflects:

• Continued margin discipline
• Cost efficiency initiatives
• Portfolio optimization benefits

Capital allocation:

• CapEx: $50-60M for maintenance, productivity, and targeted growth investments
• Share repurchases: 660,000 shares for $18.5M during Q1
• Remaining buyback authorization: $28M
• M&A: $57M spent on acquisitions during Q1

Key assumptions in outlook:

• Competitive and promotional retail environment
• Value-oriented consumer behavior
• Current tariffs and commodity inflation
• Dynamic macroeconomic and geopolitical conditions

The FY2026 EPS guidance of $2.70+ implies significant improvement from Q1's $0.21 run-rate, which is typical given the seasonal pattern where Q2 and Q3 drive the majority of earnings.

What Are the Risks?

Management highlighted several risks in their outlook:

1. Tariffs and geopolitical tensions - escalating trade barriers could pressure sourcing costs
2. Macroeconomic uncertainty - inflationary headwinds expected to intensify
3. Consumer pressure - focus on value and spending discretion
4. Promotional retail environment - margin pressure from discounting
5. Pet specialty brick-and-mortar - ongoing pressure in this channel

The balance sheet remains strong with $721M in cash (up from $618M YoY) and gross leverage of 2.9x, below the 3.0-3.5x target range. No borrowings on the ABL credit facility.

Key Management Quotes

"The discipline around managing costs and operational simplicity is now firmly embedded in our culture. With that foundation in place, we're applying the same clarity, focus, and consistency to fostering a growth mindset and embedding innovation more deeply across the organization." — Niko Lahanas, CEO

"We view innovation, much like cost and simplicity, as a multi-year journey rather than a near-term event. Our focus is on building repeatable ways to identify opportunities, develop products, and bring them to market." — Niko Lahanas, CEO

"Sometimes you got to get a little smaller to get better, and I think that's what you're seeing sort of real-time." — Niko Lahanas, CEO (on portfolio optimization)

Q&A Highlights: What Management Said

The Q&A session provided critical color on the quarter's dynamics and forward outlook:

Garden Season Positioning:

"The total distribution points of products that we manufacture is up 14% year-over-year. We feel great about that. For a mature business like ours, that's significant improvement." — J.D. Walker, President of Garden Consumer Products

J.D. noted retailers are "optimistic about the upcoming season" and supporting Central with promotions and off-shelf activity. The company expects to continue gaining share in fertilizers, packet seeds, wild bird feed, and add grass seed to that list.

Q2 Shipment Recovery Validated:

"Early indications here in January are we had very good shipments, and we saw a lot of that come back to us already in January, and we still have two more months left in Q2." — Brad Smith, CFO

Pet Category Inflection:

"We definitely have seen the bottom. We have a live animal business now that has grown in Q4 and again in Q1. From household penetration, buy rate, everything we can see, the category stabilized." — John Hanson, President of Pet Consumer Products

The Pet team is "more bullish" than six months ago when the category was still declining. The question now is timing of return to growth, with hopes for the back half.

Durables Deep Dive: Durables were 16% of Pet sales in Q1, down "north of 20%" YoY. However, about two-thirds of that decline came from (1) cushions timing shift from Q1 to Q2 and (2) the tank business exit (part of portfolio optimization). By the back half, durables differences should be in single digits.

M&A Environment:

"We're seeing more activity. I would say we're involved in several discussions right now... We're actually seeing more pet activity, which is quite nice." — Niko Lahanas, CEO

Champion USA Acquisition: Post quarter-end, Central completed the acquisition of Champion USA, a tuck-in business serving the livestock industry with EPA-approved feed-through fly control solutions. This adds complementary capability to the professional portfolio and aligns with the focus on consumables and environmentally responsible solutions.

Consumer Trends: The Garden team sees a shift from "do-it-for-me" to "do-it-yourself" which bodes well for Central's categories. As CEO Lahanas noted: "Consumers may pass on large capital outlays... but they're going to take on small maintenance projects. That's a $200 capital outlay as opposed to several thousand."

Wild Bird Strength: Cold weather across the country is actually benefiting Central's wild bird business. J.D. Walker noted: "Our consumption right now for our wild bird business is fantastic thanks to all the snow cover... that's one of the benefits of having a more diverse portfolio."

Inventory Readiness: In-store inventories are up low single digits in dollars and flat in units YoY. Central completed a fall pre-build and is "ready to be pressure-tested" if spring weather drives strong demand. The network design work enables "a lot more agility" in chasing the season.

What to Watch Going Forward

1. Q2 shipment recovery - January shipments were "very good" per CFO; continued momentum critical
2. Garden season performance - Distribution points up 14% YoY sets up well; weather is the wildcard
3. Pet category growth - Live animal business positive for 2 consecutive quarters; watch for broader category return to growth
4. Tariff exposure - ~$20M incremental gross exposure expected, concentrated in Pet
5. M&A activity - Management "involved in several discussions"; expect pickup, especially in Pet
6. Durables normalization - Should lap timing impacts by back half; differences in single digits expected

Historical Earnings Performance

The Bottom Line

Central Garden & Pet delivered a solid EPS beat driven by gross margin expansion and cost discipline, but the 6% revenue decline and particularly weak Garden segment performance disappointed investors. The 7% after-hours drop reflects concerns about top-line momentum despite management's confidence in full-year guidance.

However, the Q&A revealed several bullish signals: (1) January shipments were "very good," validating the timing shift thesis; (2) distribution points for garden products are up 14% YoY heading into spring; (3) live animal business has grown for two consecutive quarters, signaling the pet category has bottomed; and (4) M&A discussions are active with increasing pet deal flow. Key watch items remain Q2 execution and the upcoming garden season, where weather will determine whether Central can achieve its $2.70+ EPS target.

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Related: View CENT Research | View Q1 2026 Transcript | View Prior Earnings