Central Garden and Pet
sagged 18% Monday after trimming its third-quarter and 2004 earnings forecasts.
The Lafayette, Calif., company cited weak grass seed sales in June, driven by cool, wet weather. The company said June grass seed sales dropped 40% from a year ago, even at "significantly lower margins."
Central Garden forecast third-quarter earnings of around 85 cents a share on revenue of $370 million. That's well short of the Thomson First Call analyst consensus, which calls for earnings of $1.02 a share on sales of $398 million.
The company also trimmed its fiscal year earnings forecast, saying it expects to earn $1.94 a share on revenue of $1.25 billion. Analysts had expected earnings of $2.22 on revenue of $1.28 billion.
"Central Garden and Pet's garden products segment, especially the grass seed operations, did not meet our expectations for the month of June and the third quarter," said CEO Glenn Novotny. "Consistent with reports from our major retail customers, our garden products segment experienced a soft start to the summer season as June retail sales were especially weak and retailers reduced purchasing to control inventories. These results were due largely to unusually cool and wet weather across most of the country and weaker consumer spending which adversely impacted the demand for grass seed."
On Monday the stock dropped $6.16 to $27.94.