Central Garden & Pet at Barclays Conference: Strategic Shifts and Growth Plans

On Thursday, 04 September 2025, Central Garden & Pet Company (NASDAQ:CENT) presented at the Barclays 18th Annual Global Consumer Staples Conference. CFO Brad Smith outlined the company’s strategic initiatives, emphasizing both strengths and challenges. The company is transitioning to a more agile culture while focusing on innovation, M&A activities, and adapting to market dynamics.

Key Takeaways

• Central Garden & Pet is focusing on top-line growth while maintaining bottom-line strength.
• The company is leveraging AI for content iteration and consumer review synthesis.
• A restructuring plan is underway, with cost-saving measures and location consolidations.
• E-commerce growth is a priority, with investments in direct-to-consumer capabilities.
• The pet market, particularly cat products, is seen as a key growth area.

Financial Results

• Annual revenues exceed $3 billion, with a record year for bottom-line growth.
• Gross margin improvements were noted last quarter, with a focus on maintaining or expanding margins.
• Tariff impacts are expected to range from $5 to $7 million for Q4.
• The company maintains low leverage at 1.2x net basis, with flexibility to increase for strategic deals.

Operational Updates

• The restructuring plan is in early to mid-stages, focusing on cost savings and business rationalization.
• About 20 locations have been closed or consolidated.
• Innovation is being driven by a shift to an agile culture, with specific profitability guidelines.
• AI is utilized for rapid content iteration, with a focus on governance to mitigate misinformation risks.

Future Outlook

• M&A remains a crucial part of the company’s strategy, particularly in pet consumables.
• The company aims to increase pet e-commerce penetration from 27-29% to 40-50%.
• Additional distribution points and an extended garden season are expected to boost Q4 performance.
• The pet market is projected to normalize by fiscal 2027, with cats as a primary growth segment.

Q&A Highlights

• Weather impacts are being mitigated by focusing on less seasonal businesses.
• Millennials and Gen Z are emerging as key demographics in the lawn and garden space.
• Tariff impacts remain within the $5-7 million range, with cost mitigation efforts underway.
• The pet market strategy targets 90% consumables and 10% durables, with a focus on growing cat demand.

For a detailed understanding, readers are encouraged to refer to the full transcript below.

Full transcript - Barclays 18th Annual Global Consumer Staples Conference 2025:

Hale Holden: All right. Well, thank you for joining me. My name is Hale Holden. I’m joined with Brad Smith, Chief Financial Officer of Central Garden and Pet.

This is Central’s first on stage appearance, but not our first at the conference. So first question we have is at a high level, Central is a little different than some of the other staples companies that have presented this week. Company started in distribution and has a mix of branded and private label together and so maybe make walk through what makes Central a little different than some of its peers or special if you want.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Okay. Good morning, everyone. As the name suggests, we are a pet and garden supplies company located in the San Francisco Bay Area with revenues right now of over $3,000,000,000 a year. We’re one of those companies that’s known really more by the brand names of the products we sell, such as Nylabone, if you have a dog, or Pennington, if you’re taking care of your lawn. Attributes that make us unique as a company in my view, first of all, we’re really unique in that we are an entrepreneurial BU led culture.

This company was built by acquiring businesses where the founders were willing to interested in taking some money off table, but wanted to still continue to be involved in running and growing these businesses going forward. And so we’ve got many of these businesses that we’ve taken on over the years. Pennington Seed, for example, Dan Pennington runs that company and his brother is on the board. The Nylabone business, the founder family is still involved in running that business. So we tend to have a very entrepreneurial spirit within the business units, and we are giving them a fair amount of autonomy to grow those businesses.

Secondly, pet and garden spaces tend to be somewhat recession resistant and are supported by favorable long term demographic trends. Another one, in both pet and garden, we compete in a broader number of categories than our peers, and our brands are, for the most part, either number one or number two in the categories in which we compete. Our businesses are concentrated in customers and channels that are winning right now, and we have strong partnerships with those customers. And lastly, I would say that we have very low leverage and very high liquidity right now relative to the competitive space that we are up against. So those would be the attributes.

So I’ve

Hale Holden: been around the story for a while, and there’s been sort of different iterations of Central. There’s also been different iterations of folks with different backgrounds in the C suite that were predecessors of yours. There are times when the company were was higher levered, probably not as operationally focused when the stock was lower. You’ve been CFO for about a year. What I think is interesting or new is that both yourself and Nico came from inside the company, which I think is the first time I’ve seen that in quite some time.

So maybe talk about how you’re both approaching that and where you want to bring the company. Yes.

Brad Smith, Chief Financial Officer, Central Garden and Pet: So I mean, if you look at our year, we’re having a record year in terms of bottom line growth, but where the challenge has really been really throughout the industry has been on growing the top line. And so Nico and I are really wanting to get our business back to top line growth as well as continuing to grow the bottom line going forward. So foundationally, we’re if you look at how we want to accomplish that, we’re transitioning from a more centrally driven process heavy culture to a more agile culture that gives more decision making latitude to the business units. And we want to enable our business unit leaders to act faster, be bolder, take calculated risks and really have the ability to act more like a start up. We want to build the same level of capability as well in innovation that we’ve built in cost and simplicity.

If you go back a few years, that was a muscle that was needed to be developed, and we really were maniacal in our focus on being able to take cost cost out of the business. And I would say it’s now a core capability and strength across the business, and it’s really part of our DNA and across the business going forward and part of our operating algorithm. And so we want to develop innovation to the same degree to further differentiate our offerings and strengthen our competitive advantage. Lastly, M and A has historically been a very important part of our financial algorithm. We want to get back to doing deals.

As part of that and as I’ve been discussing in this conference with various folks, we are more open to widening the aperture and exploring adjacencies within the M and A market in addition to our primary focus on pet consumables.

Hale Holden: So I mean, guys have talked about M and A for some time, and there’s been smaller deals. We’re always looking for the white whale. But maybe talk about what you’re seeing in the M and A pipeline or

Brad Smith, Chief Financial Officer, Central Garden and Pet: what you’re thinking on that? Well, it’s been relatively muted lately, but we are looking at we are seeing deal flow improve. More inbound is coming in. And we continue to be focused on pet consumables. But we’re also and within that space, we’re looking at obviously larger deals as well as bolt ons where we’ve got an existing business that we want to continue to expand at.

But we’re also looking at areas where there’s white spaces that we could make it that where we could compete and make a difference in. Cat is one that I’ve discussed recently where I think there’s a real opportunity. And then lastly, we’re looking at other adjacencies where we’ve got an existing business that we play in, but there’s a possibility to buy another business that both competes in that space but also in other spaces that we’re not in. And because I’m

Hale Holden: a credit guy, maybe you could give your leverage currently and where you might flex leverage to on a transaction?

Brad Smith, Chief Financial Officer, Central Garden and Pet: Well, we’ve got very low leverage right now. I think with cash, it’s what, down is it, Frederic, like 1.2 or something like that on a net basis. So it’s extremely low. We’d be willing to go up to four or 4.5 for the right deal.

Hale Holden: Okay. Yes. So one of the questions I’ve been asking in all of my actually, investing meetings is how is because last year, AI was a theoretical sort of like a thought bubble. How is AI going to change your day to day or what companies could be advantaged or disadvantaged? Today, it’s now very much in my daily usage.

Think other folks’ daily usage, hopefully not my kids at school, but other than that. So maybe you could talk about how AI is helping or hurting Central either go to market or internally.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Yes. I would say it’s really in a period of transition. It’s a mixed bag right now. I see it offering the potential to help us, but also heard of if it’s not properly managed. Where it is helping and for example, the rapid iteration and testing of content on the digital shelf is a key area for us where there’s huge benefit.

Retail media bid execution is another space opportunity that I see that we’re currently leveraging. We leverage synthesize consumer reviews across hundreds of our retailers to help us identify product opportunities, gaps and innovation ideas. Another opportunity that I see that we haven’t started yet but will would be price elasticity, evaluation of new products. And the list goes on and on. So I’m very excited about not only what we’re doing but also opportunities to leverage it more going forward to help us.

Where I see it as more of a challenge is consumers are increasingly relying on AI generated responses to their Google searches rather than reviewing actual search results. And on AI generated summaries of our ratings and reviews on e commerce platforms rather than reviewing the actual reviews themselves. And as you and I both know, AI is not perfect and can often generate a lot of inaccuracy. So this changes our approach to not only having to focus on search engine optimization, but also generative engine optimization and answer engine optimization, which is quite a bit to govern. So it’s also AI’s fueling the algorithms for most, if not all, of our social platforms where it’s not only the creator but also the curator.

So again, creating the risk of potential misinformation. So kind of long winded way of saying we’re having to double down on our efforts to really have proper governance over what’s coming out of AI and making sure that it’s it’s accurate.

Hale Holden: Yeah. So we’ve been thinking about this a lot. I’m gonna

Brad Smith, Chief Financial Officer, Central Garden and Pet: go off script a little bit for you. But I’ve noticed.

Hale Holden: No worries. Let’s let’s say, like, I was going into JatGPT, and you guys sell a lot of Pet Bets. Right? Mhmm. And so I want a pet bed for my dog.

The next question the the L and M might ask me is, like, okay. How big is your dog? Well, I got a black lab. He’s sixty five pounds. You need a big pet bed.

How much do you wanna spend? Small, medium, or a lot? I it’s like, I wanna spend a medium amount. And then it’s gonna say, this is the one you should buy. And there’s no reference point.

Right? It comes maybe it comes through reading Yelp reviews or reading Amazon reviews, or maybe it’s just hallucinating and just telling me to buy something or maybe you’re paying it to tell me that this is the one I should buy. But that type of search for the consumer, think, a whole new world.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Oh, and that’s where the GEO and AEO focus is key.

Hale Holden: On the last earnings call you had, I had a little bit of out of body thought when you guys were talking about innovation. And I was wondering like how you sit at the table in the office and somebody comes up to you and they’re like, okay, nylon bone, got it. We’re gonna make it from reclaimed fishing nets or we’re gonna make turtle sticks made from black soldier fly larvae or the one you told me in the meeting this morning, which we can talk about or not on the industrial cattle product.

Brad Smith, Chief Financial Officer, Central Garden and Pet: But these are all kind of a newer muscle set for the company. So maybe you talk about how you encourage that or what the innovation pipeline works like or how often you’re refreshing the portfolio. Yes. So to be honest, given centric in our business model, each of the businesses really has their own innovation approach. And we give them latitude to determine what new item launches make sense for their categories.

They know their categories better than I do. And some

Hale Holden: of

Brad Smith, Chief Financial Officer, Central Garden and Pet: the categories we play in are very, very niche, particularly if you’re looking at equine, for example, or livestock, which you and I talked about earlier. So as part of those efforts, obviously, the businesses, they get deep into customer and consumer feedback to determine where we have unmet needs. Use of AI is proving key and unlocking opportunities that we may not have seen. And then really, from a corporate perspective, we’re setting guidelines in terms of minimum profitability requirements. And really where I’m getting involved, or Nico, our CEO, is that they’ve got a hot idea and they require a significant amount of funding in order to go after that.

Otherwise, they’re generally empowered to proceed with their launches and they provide quarterly updates to us. So having said that, as I just mentioned, it is not this muscle across the board at our company. It’s not developed to the level that is what we’ve where we’ve developed cost and simplicity. We want to change that. So it’s a strategic priority next multiyear journey.

It’s not an easy nut to crack. It takes a while to build up the capabilities and pipeline and get the flywheel going. Right now, of our business units are stronger than others, but all can improve. And we’ll be making investments from the center as needed to strengthen innovation. An example of that would be we started using a consultant in our Life Sciences business, which is really intended to help the team with further ideation and coming up with additional ideas around innovation.

We’ve continued to invest in and we’ll invest more in digital marketing capabilities and AI capabilities. I see plenty of drill sites from a in terms of areas that we could get further into like cats, which I’ve discussed, treats and supplements, organics across a multitude of our categories, garden. Cleaning supplies isn’t actually an area where we’re seeing some interesting innovation opportunities. So there’s plenty of fertile ground, plenty of work to be done to build the pipeline, and I think we’ll have more to discuss in November.

Hale Holden: Great. So now I’m going to go back to your core since you are the CFO. We’ll go to financial You’ve done a decent amount of operational streamlining over the last twelve months. You’ve wound down The UK, you’ve consolidated two DCs in Utah. Maybe walk through where you are in your restructuring plan, ultimate goals, how much runway remains and the cost and simplicity plan?

Brad Smith, Chief Financial Officer, Central Garden and Pet: Yes. So, as I mentioned, it’s a muscle we developed the past few years. So, I would say we’re in early to mid innings. And we have a nice pipeline of more opportunities. You’re never done in this world on taking cost out of the business.

Good companies continue to find ways each year to take more cost out. But obviously, as you get further along in your journey, the opportunities are become more modest. We’ve taken, I want to say, around we’ve closed and consolidated maybe about 20 locations, Frederic, over the last few years as part of our broader rationalization efforts, including our U. K. Business.

We’ve drastically rationalized our durables business in Pet and our live goods business in Garden. That latter project was one of the biggest drivers of our margin expansion in Q3. We’ve got a number of media projects teed up, which should help drive meaningful additional savings in 2026 and beyond, and we’ll share more details on that as in the near future. So I feel good about our pipeline for the next eighteen to twenty four months.

Hale Holden: And so your gross margin was up nicely last quarter. These cost saves that you’ve taken out, should we view them as structural on the gross margin? Or are you looking to reinvest them back into growth? Or is there more room, I guess,

Brad Smith, Chief Financial Officer, Central Garden and Pet: on gross margins? Well, I would say they were primarily structural, both Q3 and year to date. And what we see coming for the next eighteen to twenty four months will also be structural in nature. And yes, I think the goal is continue to maintain, if not expand preferably expand margins going into next year. And but clearly, we look at cost savings as fuel to reinvest in growing the top line as needed whatnot going forward.

A little recovery in

Hale Holden: pet probably would help too.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Yes. Yes, that would.

Hale Holden: So you’re at a competitor conference in mid August, and I just assume that you won’t go to that anymore since we had you up here. You did mention that your fiscal fourth quarter, which is the current quarter, was off to a nice start. So any comments? Is that still the case, mostly in a pet recovery? Or is it extending the garden sales into

Brad Smith, Chief Financial Officer, Central Garden and Pet: the fall season? Yes. Would say it is still the case. And we’re into September now, so it’s shaping up to be a good quarter on both sides of the defense, pet and garden. On the pet side, actually on both sides, we’ve gained quite a bit of additional distribution points of distribution in the fourth quarter, which is helping E comm our e comm business is performing well on the Pet side.

And then on the Garden side, we benefited from an extension of the Garden season into the fourth quarter. As I mentioned on the earnings call, it was a rough Q3. It was a washout. I don’t know if anybody here lives in the Boston area, but most of the weekends during our Q3 were washouts, which didn’t help for selling gardening supplies. But it’s been a relatively nice and mild Q4 thus far, so

Hale Holden: we did get some benefit,

Brad Smith, Chief Financial Officer, Central Garden and Pet: which is helping the Q4 in garden. So shaping up to be a good quarter.

Hale Holden: I spent a lot of June weekends at youth lacrosse games. It’s very wet. But on the Garden side, I think one of the things that dings your story and your main garden competitor is that we haven’t really seen a normal garden season in a couple of years or I don’t even know what a normal garden season looks like anymore. It’s July. It’s like 20 been three years.

So talk about how you maybe mitigate the weather impact, and manage for sort of that tail volatility that seems like it’s on us all the time. Well, there’s

Brad Smith, Chief Financial Officer, Central Garden and Pet: on the Garden side, I mean, the things we can do is not buy further businesses that are subject obviously to weather risk, growing our less seasonal or counter seasonal businesses. So you look at our wild bird business, which has been hugely successful. We are a leader in the wild bird space, online and offline. And that’s a business that’s actually it took off during COVID, which I understood because everybody was at home, but it continued to grow after COVID to this day. And it’s evolved to be people find mental health benefits from the care and feeding of live birds.

We’re finding that cat is actually, on the pet space, one of the most resilient areas cat demand and adoption has continued to grow post pandemic. And what we’ve learned recently is a big form of cat entertainment or catertainment is actually watching the wild birds feed outside. So the wild bird business, growing that business has been and continuing to grow that is helpful because it’s countercyclical or counter seasonal, sorry, to the rest of the garden business. Growing our cleaning supplies business, which we’ve expanding significantly recently is also counter seasonal. And then lastly, I would say, continuing to work on further optimizing and reducing downside risk on our live plants business.

We did a lot of work to rationalize it last year. We’re going to do some more this year. And that’s going to include, I think, expanding some of our customer base as well. So I bought my kids

Hale Holden: one of the camera bird feeders, the Bird Buddy. Yep. Two years ago, was shocked at how much bird food it uses. Oh, yeah. Or I mean, felt like I was just opening a buffet.

But I was buying your bird food and it would feed, and it was actually it got to be a little more money than I thought I was going to spend.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Surprisingly enough, there are people out there that spend more each year on wild bird feeding than they would spend on their on a pet.

Hale Holden: Yeah. And you can go down the I mean, really down the rabbit hole, what kind of bird feed do you want? What kind of birds do you want to attract? Yes. Anyway.

Yeah. I’m also going to pull the room here. How many of you in the audience have gardens at your house or grass at your house, I guess, or don’t live in an apartment? How many of you have leaned in harder in the last two years gardening into or have kind of backed away from it post COVID?

Brad Smith, Chief Financial Officer, Central Garden and Pet: One? Couple? Oh, come on.

Hale Holden: So one of the things we’re going to start with a little bit on the Garden side is like it is driven somewhat by household formation, which seems pretty low. And then there’s demographic pull for folks that move out of cities and buy their first house and they want to garden around it or retire and they want to lean into the garden or if you’re my wife, you want to buy a lot of people to garden for you. But how do you think about the demographics of where we are in garden growth rates and the market opportunity longer term? So I would say, I mean,

Brad Smith, Chief Financial Officer, Central Garden and Pet: right now, the biggest cohort is millennials in the lawn and garden space. And so that they seem to be fairly resilient in the demand. What we are encouraged by is increasing interest in gardening in the Gen Z group, obviously, the youngest group. And that supports our thesis that historical garden growth rates continue longer term. Now Gen Z is different in their approach.

They’re less about traditional lawn and gardening. They tend their focus tends to be more on small space gardening, balconies, window seals in urban locations. They also tend to make choices based on they care a lot about sustainability. So it could be organic packet seeds. It could be water conservation.

They focus on wellness, so it could be growing native plants or growing their own vegetables. And they focus a lot on convenience, so smaller to easy to use pack sizes, these sorts of things. So that’s a growing cohort, and that gives us optimism for the future. With both cohorts, I would say that small project related demand has continued to be resilient lately, whereas the bigger ticket projects have really dropped off. And that seems to be a function of the HELOC rate, particularly with the millennials, which are more apt to own a more likely to own a home.

But as the HELOC rate as it goes down, consumers are more willing to tap into funds in order to do bigger projects. And obviously, we’re looking at eight ish plus percent. Typically, what we find spot is really getting below 6% in order for those the pipeline to open up on the bigger projects.

Hale Holden: Let me know when we get back to using HELOCs for garden expansion.

Brad Smith, Chief Financial Officer, Central Garden and Pet: I know. It could be a while. Okay.

Hale Holden: But you did lead me into my next question, which is on the MAHA or Make America Healthy movement. Any risk to garden chemicals you’re seeing or in terms of your product mix or an opportunity?

Brad Smith, Chief Financial Officer, Central Garden and Pet: Not really aware of any risk at present. Usually, are advanced regulatory notifications like on things like bans on active ingredients and whatnot. So if something did come out of left field, which with this administration is always possible, we would have time to pivot, I believe adequate time to pivot, but not aware of anything at present.

Hale Holden: I hid my fruit loops back there, so we’re safe. Can you give us an update on latest tariff thinking and potential exposure for the company?

Brad Smith, Chief Financial Officer, Central Garden and Pet: So for this year, I mean, I’m really sticking with the range that I gave earnings call for Q4 of $5.6000000 or $7,000,000 Obviously, now we our fiscal twenty twenty six kicks in starting October. So we’re working through the math, and it’ll come back in November weather thinking for next year. It’s important to stress that the bulk of our actions to mitigate cost increases, vendor concessions, country of origin changes, SKU redesign, SKU rationalization and pricing, which we’re currently in knee deep in discussions with our customers on, none of that will fully start to bear fruit until next year. So you can’t really take Q4 and multiply it by four as a proxy for next year because it has all the badness without any of the offsets in, but we’ll come back in November with clarity. And fortunately, our tariff exposure relatively low versus other CPGs.

So we’ve got that going for us.

Hale Holden: Where do you think we are on the consumer right now in terms of I guess you could address it in terms of how the tariffs come through in your categories to the consumer? Are they still coming? Or just generically, how you feel

Brad Smith, Chief Financial Officer, Central Garden and Pet: about The U. S. Consumer? So I would say, I mentioned we’re in the midst of pricing discussions, and those are painful to say the least, because our customers are being bombarded by other suppliers as well. Consumer demand in our space has held up up to now.

That being said, we’re really just now seeing the full brunt of the tariffs hitting pricing on the shelf. So my expectations is that we’ll have demand should hold up. But what I do expect to see is if these if the current tariff rates stay in effect is that we’ll see more trading down, for example, with if you look at kind of look at our categories as good, better, best, training from best down to better or from good down to private label, you could see some reduced purchase frequency in the more discretionary items that we sell, such as dog toys. So instead of buying a toy every new toy every month for your dog, it might be every two months that you do. And although I hope it doesn’t happen, it could result in a little bit more of a delay to the extent somebody lost their pet and they’re holding off on getting a new pet, they may hold off a bit longer because they’re feeling the squeeze from a cost standpoint.

But net net, we see pressure on next year, but we think it’s manageable.

Hale Holden: Those are the people that should get pets. Yes. They need help at home. Yes. So let’s talk about pets for a little bit.

You’re at 82% of consumables in the pet portfolio, and you started at a much lower number. So maybe you want to give that number where you were a couple of years ago?

Brad Smith, Chief Financial Officer, Central Garden and Pet: Yes, we were, I mean, somewhere around 35% durable, 65% consumables on the pet side.

Hale Holden: Yes. And you told me earlier today that in the durable number is actually reptiles, which not sure that those are how durable those are, really the same definition. But ultimately, where would you like to get consumables as a percentage of the portfolio? Or if that’s the area that you’re thinking about when you think about M and A,

Brad Smith, Chief Financial Officer, Central Garden and Pet: we can talk about that. So I mean the expectation is that we’re going to be focusing on we’re getting kind of toward the end of rationalizing the durable business at some point, I think, the back half of knock on wood, in the back half of next year, we’ll be relatively close. And then we continue to focus on growing our higher margin consumable businesses. I think when the dust settles, it will be probably around 90% consumables, 10% durables in the pet space. That could be twelve, eighteen, twenty four months from now, but that’s where I would expect.

Hale Holden: And then you mentioned the bump in the pet market during COVID. I definitely saw folks on our desk who should not have gotten pets because they thought they were going live from home forever and then had to go back to work and had some issues like finding pet care. But COVID was five, almost six years ago, rolling into next spring. So where do you think we are in sort of the pet cycle in terms of replacement or normalized household growth or if we’re just going

Brad Smith, Chief Financial Officer, Central Garden and Pet: to have smaller pets going forward? So as I mentioned earlier, cat is one that’s continued to grow through the pandemic and beyond, and we expect that to continue. They are, versus dogs, they tend to be less costly to maintain. They require less attention. They also seem to be relatively in vogue from a social media perspective with the Taylor Swifts and the Katy Perry’s of the world that all adore their cats and talk about them all the time on social media.

So that that certainly is helpful. Hopefully, Travis likes cats. For other animals, I think we are starting to see some signs maybe of stabilization, but it’s going to take more time. I’m most bullish about small dog as being potentially next on the list. Other than that, we’ve got the rest of the animals, large dogs, fish, small animals, birds, hamsters and whatnot.

I think it’s going to take a bit longer. So kind of net net, we see the possibility of stabilization for a small dog and perhaps for the other animals sometime this year. It could be delayed depending on how much pressure consumers are feeling from a cost perspective. But I don’t expect it to go beyond next year. I would be shocked if we haven’t seen stabilization and return to growth by early twenty twenty fiscal twenty twenty seven.

Hale Holden: Like a normalized pet growth would be low single digits for Yes. Yes. I bought a bigger dog 18 ago, so I’m doing my part. Yes. So Central’s petecom sales penetration is about 27% to 29%, that’s the last number you gave.

That would actually put you lower than what Chewy says is that ecom penetration of the category is 40. Obviously, there are different parts of the category.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Well, includes food too. Yes. You’re not in the food section. So

Hale Holden: maybe talk about where you think that can go? I’d be interested in if you’re doing 1P or 3P sales? And then when you think of where we are in the pet channel mix, online mass specialty, kind of where you see it all leveling out? So I think there’s a

Brad Smith, Chief Financial Officer, Central Garden and Pet: lot more room to grow. We’re not in food, we’re not in litter. So if you look at the space that we play in, we believe that we are somewhere close to fair share online, but we think that is going to continue to grow the category and our share is going to continue to grow. I mean at some point, I wouldn’t be surprised if we’re up to 40% or 50%. The trajectory on that, I can’t give you.

It’s tough to project, but I think plenty more room. The we are playing increasingly in the 3P channel as well as 1P, and I think that’s going to continue to evolve. We’ve built a lot of muscle the last year around determining the based on what we’re selling, the optimumecom channel to sell into in order to maximize profitability. And also, we’ve and we’ve talked about this publicly, we’re investing in direct to consumer fulfillment capabilities on the East Coast and in Salt Lake City, and that’s going to be help to further accelerate e comm growth in pet and garden because increasingly, our customers are going to want us to just rather than them deal with inventory, they’re going to want to make the sale and then have us shift directly to the end consumer. Hopefully, you’ll

Hale Holden: pay a little bit of margin on that.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Yes. No, that work that business can work out well for both of us.

Hale Holden: Because then you would optimize your own inventory instead of having inventory on the channel.

Brad Smith, Chief Financial Officer, Central Garden and Pet: Exactly. And we can leverage their shipping rates and whatnot. Yes. All right. Well, that was all I had.

Hale Holden: Brad’s going be in the breakout room around the corner, I think, for any follow-up questions. Thank you very much. All right.

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