Looking good down on the farm
Tractor Supply solidified its positioned as the nation’s leading operator of farm and ranch stores during the second quarter with the opening of 26 stores and a better than expected 7.2% same store sales increase which prompted an increase in full year guidance.
The company has opened a total of 48 new stores this year, pushing its total to 1,223 units in 46 states and making it the unrivaled leader in a unique segment of the retail industry. Tractor Supply focuses on serving the lifestyle needs of recreational farmers, ranchers and rural residents with a product assortment that includes a wide range of animal suppliers, hardware and tools and power equipment, seasonal products and apparel and footwear.
It is an effective combination. The company said its sales increased 12.7% to $1.46 billion from $1.29 billion during the second quarter ended June 29, and same store sales increased 7.2% on top of a prior year gain of 3.2%. The sales strength was said to be broad-based and driven by categories such as consumables, seasonal merchandise and a category Tractor Supply defines as “usable and edible” products.
Strength of lower margin consumable products caused the retailer’s gross margin rate to decline slightly to 34.8% from 34.9%, but expenses were considerably lower at 21.2% of sales compared to 21.8% of sales, resulting in a corresponding improvement in overall profitability. Net income increased 15.9% to $123.6 million, or $1.75 a share, compared to $106.6 million, or $1.45 a share.
"We anticipated a late start to spring this year, and entered the second quarter well-positioned to take advantage of the seasonal shift,” said Greg Sandfort, Tractor Supply’s president and CEO. “As a result, we delivered a solid increase in store traffic, strong same-store sales growth across geographic regions and double-digit EPS growth.”
The better than expected results prompted the company to increase its full year outlook, bumping its same store sales forecast to a range of 4% to 5% from an earlier range of 3% to 5%. The profit outlook was increased to a range of $4.36 to $4.44, compared to its previous guidance of $4.32 and $4.40.
"Our performance in the first half of 2013 again demonstrated the continued strength of our core businesses, as well as our ability to manage through seasonal variances,” Sandfort said. “We place great rigor into better understanding and serving our customers' evolving needs, while seeking to introduce new customers to the Tractor Supply brand. We believe our company has a great opportunity ahead of us to grow the business, while continuing to deliver value to our shareholders."