Freshpet (FRPT, Financial) experienced a 3% rise in its stock price following its Q1 earnings report. The company, known for its premium refrigerated pet food, reported an unexpected GAAP loss due to certain charges, though revenue increased by 17.6% year-over-year to $263.2 million, surpassing expectations. Despite this, Freshpet adjusted its FY25 sales growth guidance to 15-18%, down from the previous 21-24%, and also lowered its FY25 adjusted EBITDA guidance.

- Freshpet attributed the slowdown in sales growth to recent macroeconomic changes. Although historically resilient, the company is observing consumer hesitancy in purchasing new pets and opting for premium pet food amid economic uncertainty.

- In response, Freshpet plans to boost advertising to attract higher-income consumers through digital and TV channels. It will also introduce a new entry-level product under the Freshpet Complete Nutrition label, aiming to draw customers with a lower price point who may later trade up within the brand.

- The company is focusing on offering multi-packs for better consumer value and has expanded its direct-to-consumer (DTC) business nationally, providing subscription options for cost savings. Freshpet is also targeting value-oriented retail stores, including warehouse clubs, and has recently entered its first Sam's Club store with promising early results.

- Freshpet continues to grow its customer base across income and age groups, but the current economic climate is limiting growth above 20%. The challenge lies in attracting new consumers rather than retaining existing ones, as Freshpet remains a high-end brand.

Despite the belief that pet spending remains steady during economic downturns, Freshpet's premium position makes attracting new customers challenging. While existing customers remain loyal, the company is taking strategic steps like value-packs and subscriptions to navigate the tough economic landscape expected through 2025.