Central Garden & Pet ($CENT), which is being stalked by the Harbinger Group hedge fund, saw its third-quarter sales ending June 28 decrease by 11% to $438 million. The marketer and producer of branded products for the lawn and garden and pet supplies markets saw revenues decline in both segments.
Net sales for the pet segment for the quarter were $227.1 million, a decline of 5% from the third quarter of 2013. The company attributed the decline to weaknesses in the industry and competition heating up among flea and tick products. Branded product sales in the pet segment for the company's third quarter plummeted by 9% to $177.1 million--a loss of $17.4 million.
The pet segment's operating income was $28.4 million compared to $33.1 million during the same period last year. The segment's gross margin improved, which the company says was from higher gross margins in the small animal and dog and cat businesses. But despite the growth in those areas, the segment's operating margin declined by 140 basis points to 12.5% due to higher marketing costs compared to the third quarter last year. The company again attributed this spike in marketing costs to its flea and tick business.
"We are continuing our aggressive efforts to improve customer service, address issues that have impacted financial performance and position the company to create value for shareholders," said Central President and CEO John Ranelli in a statement.
In June, Harbinger offered to buy Central for $10 per share or acquire its pet business for $750 million. The fund disclosed in June that it had taken a stake of about 4% in Central and that it has in the past communicated an interest in a transaction to "William Brown, the chairman of the board and its controlling stockholder," The New York Times reported at the time.
- here's the release