Tractor Supply Company
) reported third-quarter 2013 earnings per share of 46 cents,
which was 31.4% higher than the prior-year quarter. Moreover, it
beat the Zacks Consensus Estimate of 41 cents by 12.2%. Results
benefited mainly from improvement in both the top line and
margins. As a result, this farm and ranch store retailer provided
an upbeat outlook.
Quarter in Detail
Net sales in the quarter improved 13.4% year over year to
$1,208.1 million and beat the Zacks Consensus Estimate of
$1,191.0 million. The year-over-year rise in top line was
primarily driven by strong comparable-store sales performance and
favorable weather conditions.
Tractor Supply reported same-store sales increase of 7.5%
compared with 2.9% in the prior-year quarter. The rise was driven
by robust performances in core consumable, usable and edible
(C.U.E) products and seasonal merchandise.
Gross profit rose 16.4% to $415.7 million, compared with
$357.2 million in the prior-year quarter. Gross margin expanded
90 basis points (bps) to 34.4% in the quarter driven by the
company's key margin-driving initiatives and lower markdowns,
partly negatively impacted by the mix shift to low-margin C.U.E
Robust growth of same-store sales and better cost containment
related to store operating expenditure resulted in a 20 bps
reduction in selling, general and administrative expenses
(SG&A), including depreciation and amortization, as a
percentage of sales, to 26.0%. The SG&A expenses, as a
percentage of sales, included a one-time cost of 40 bps related
to relocation of the company's Southeast distribution center and
corporate data center. Excluding this, SG&A expenses as a
percentage of sales would have been leveraged by 60 bps.
Consequently, operating margin during the quarter rose 110 bps
to 8.4%, against 7.3% in the prior-year period. Operating income
rose 30.7% to $101.7 million from $77.8 million in the prior-year
Tractor Supply ended the year with cash and cash equivalents
of $46.0 million, compared with $70.2 million at the end of the
year-ago quarter. As of Sep 28, 2013, stockholders' equity was
$1,184.5 million, compared with $1,054.2 million as of Sep 29,
In the quarter, Tractor Supply opened 23 new stores and shut
down 1 store, compared with 17 store openings and the closure of
1 store in the prior-year quarter. As of Sep 28, 2013, the
company operated a total of 1,245 stores in 47 states.
Tractor Supply raised its 2013 net sales guidance, projecting
sales in the range of $5.12-$5.17 billion, with comps expected to
improve 4.2%−5.0%. Earlier, the company was expecting sales in
the range of $5.10-$5.17 billion and comps growth of 4%-5%.
Moreover, Tractor Supply now anticipates 2013 earnings per share
in the range of $2.24 to $2.27, up from the previous guidance of
$2.18 to$2.22. Currently, the Zacks Consensus Estimate stands at
$2.24 per share, which may see upward revision following the
company's higher guidance.
Other Stocks to Consider
Tractor Supply currently has a Zacks Rank #3 (Hold). Other
companies performing well in the retail space include
Five Below, Inc.
). All these stocks carry a Zacks Rank #2 (Buy).
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