Tractor Supply Company
) released its preliminary results for the second quarter of fiscal
2014 wherein its sales remained below expectations. Further, the
company sounded cautious about its margins and earnings forecast
for the second quarter while it slashed its expectations for fiscal
The lower-than-anticipated sales results together with a trimmed
guidance for the fiscal disappointed the Wall Street causing the
company's shares to roll down 5.59% during yesterday's afterhours
Tractor Supply reported second quarter sales of $1.58 billion,
marking an 8.8% rise from $1.46 billion in the prior-year quarter
but below the Zacks Consensus Estimate of $1.602 billion.
Comparable store sales (Comps) improved 1.9%, against a 7.2%
increase registered in the second quarter of fiscal 2013, on the
back of sustained strength of consumable, usable and edible
products (C.U.E.) and solid traffic counts.
However, the company's sales results were impacted by weaker than
anticipated sales of some seasonal merchandise especially in the
Northern regions, as well as soft sales results in the safe
category and also by deflation effects. Nevertheless, the company
stated that sales picked up in the second half of the quarter,
partly offsetting the impact of unfavorable weather in the first
The company is slated to release its complete second quarter
results on Jul 23. Considering the soft sales trends in the second
quarter coupled with higher transportation costs and increased
promotional activity the company expects gross margin to be flat
compared with the prior year quarter. However, gross margin should
benefit slightly from the company's initiatives and deflation. The
company projects SG&A expenses as a percentage of sales to
increase based on the lower-than-expected comps results in the
Consequently, the company expects earnings per share in the range
of 94-95 cents per share, which is below the current Zacks
Consensus Estimate of $1.02 per share.
As a result of weakness in the second quarter results the company
leaned toward the lower end of its previously stated guidance
ranges for fiscal 2014. Previously, the company projected sales of
about $5.62-$5.70 billion, comps in the 2.5%−4.0% range and
earnings in the range of $2.54-$2.62 per share.
While the company continues to see strength in its core C.U.E.
offerings and several seasonal categories, it believes that overall
sales of spring seasonal merchandise in the second quarter were not
up to the mark. The company blamed the weak results on unfavorable
spring weather in the first quarter that carried into the initial
part of the second quarter. However, the company recognized the
efforts of its staff across the chain, who took charge of the
challenging situation and helped in efficient inventory management.
With sales trends now improving, the company remains confident of
its performance in the second half of the fiscal year. Tractor
Supply currently has a Zacks Rank #3 (Hold).
Other Stocks to Consider
Better-ranked stocks in the related industry include
Barnes & Noble Inc.
Five Below Inc.
), all carrying a Zacks Rank #2 (Buy).
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