Freshpet has reported its first quarter 2025 financials for the period ended March 31.
The company reduced its full-year 2025 sales and profit outlook, citing continued economic headwinds, despite reporting a 17.6% increase in first-quarter sales. The company now expects net sales between $1.12 billion and $1.15 billion, down from its previous projection of up to $1.21 billion. This still reflects annual growth of 15% to 18%, but falls short of the earlier forecast of 21% to 24%.
The New Jersey, U.S.-based pet food maker also adjusted its projected 2025 adjusted EBITDA to between $190 million and $210 million, down from a minimum of $210 million.
In the first quarter, Freshpet posted a net loss of $12.7 million, a reversal from a $18.6 million profit in the same period last year. Net sales reached $263.2 million, up from $223.8 million. Gross profit rose to $103.8 million from $88.2 million, with gross margin holding steady at 39.4%. Adjusted gross profit came in at $120.2 million, or 45.7% of net sales, slightly up from 45.3% a year ago.
Selling, general and administrative expenses jumped to $115.3 million from $79.7 million, largely due to increased media spending, higher share-based compensation, and one-time charges, the company said.
The company blamed its weaker performance on consumer uncertainty and hesitance to switch to higher-priced pet food formats like fresh products.
“Our analysis suggests that the slowdown in our sales growth came on very quickly as the macroeconomic climate changed a few months ago and is due, in part, to the fact that Freshpet’s consumer franchise spans all income and age groups, including consumers who are most economically insecure or uncertain today,” Freshpet CEO Billy Cyr said. “Freshpet’s consumer base is less defined by the income of our users and better defined by how much someone loves their dog."
Company plans product launch with new price point
Cyr sees the shift as temporary and not a threat to long-term demand for premium pet food. To stay on track, Freshpet will lean on advertising, retail expansion and product innovation.
The company plans to introduce a lower-priced bagged product in its Complete Nutrition line, similar to a roll launched during past inflation pressures. It will also grow its multi-pack options to offer more value and convenience.
Freshpet added about 1.6 million households year-over-year, reaching 14.1 million, while the average spend per buyer rose 6% to $110.
“Our analysis shows that higher income consumers — particularly those who tend to buy online and via subscription — are continuing to drive sales for more premium offerings," said Cyr. "Freshpet is amongst those winning brands as our total e-commerce business was up 43% in the quarter. Those consumers are the least economically sensitive consumers, and they continue to get dogs and trade up their dog food.”
"Results have not met expectations"
Cyr said Freshpet remains a strong business with long-term growth potential, but acknowledged that results so far this year have not met expectations.
“Despite the recent macroeconomic headwinds, we believe Freshpet remains a structurally advantaged business with a long runway for growth in a category with long-term tailwinds,” Cyr said. “However, our growth year-to-date has not been as robust as we had anticipated so we are adapting our growth plans to the current economic challenges that our consumers are facing while continuing to drive the operational improvements that are essential to our long-term success.”
He added that the company is planning for the rest of the year as though current conditions will continue: “In doing so, we believe we are positioning Freshpet to weather the near-term economic headwinds and deliver long-term shareholder value while serving pets, people and the planet.”
In February, Freshpet reported its first full-year net profit in company history. For fiscal 2024, the company earned $46.9 million, a turnaround from a $33.6 million loss in 2023. Annual sales grew 27.2% to $975.2 million, exceeding its previous growth targets. Cyr had called 2024 a “breakout year” for the company.
"As we have done over-and-over-again throughout our company’s history, we will be nimble and adjust to this new macro environment — and we still expect to deliver outsized performance against a challenging backdrop,” Cyr added. “It just might not be the same magnitude of performance we have delivered over the past few years until there is greater economic certainty amongst the prospective consumers we are targeting to join the Freshpet franchise.”
According to Petfood Industry's Top Pet Food Companies, Freshpet is a U.S.-based manufacturer of fresh, refrigerated dog treats and food for dogs and cats. The company says all of its meat is 100%farm-raised. In 2022, the company's sales grew by 39.9% as the company invested in increased manufacturing capacity for further growth.
