Tractor Supply Co.
) reported strong first-quarter 2013 results with earnings
surging nearly 12.7% to 62 cents per share, in line with the
Zacks Consensus Estimate. Results benefited mainly from strong
top-line performance and improved margins.
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Net sales in the quarter improved 6.4% to $1,085.8 million from
$1,020.4 million in the prior-year quarter. However, total
revenue missed the Zacks Consensus Estimate of $1,098 million.
Tractor Supply reported same-store sales increase of 0.5%
compared to a solid 11.5% growth achieved in the prior-year
quarter. The increase was driven by robust performance in core
consumable, usable and edible (C.U.E) products − mainly for pet
food and animal feed. Further, the company benefited from strong
sales of winter assortments due to an unexpected cold weather.
However, these were largely impacted by lower sales of spring
assortments compared to the prior year.
Gross profit during the quarter increased 5.8% to $352.1 million
compared with $332.8 million in the prior-year quarter. Gross
margin contracted 20 basis points to 32.4% from 32.6% in the
year-ago quarter, impacted by the mix shift to low-margin C.U.E
products and higher transportations costs, offset in part by the
company's key margin-driving initiatives.
Better cost containment related to store personnel and lower
incentive compensation expenses resulted in a 20 basis points
(bps) contraction in selling, general and administrative
expenses, as a percentage of sales, which came in at 24.0% versus
24.2% in the prior-year quarter.
Consequently, operating margin during the quarter remained flat
at 6.3%, with operating income rising 5.5% to $67.9 million in
Tractor Supply ended the year with cash and cash equivalents
(including restricted cash) of $65.4 million compared with $148.6
million at the end of the year-ago quarter. As of Mar 31, 2013,
stockholders' equity was $1,030.2 million compared with $1,055.2
million as of Mar 31, 2012.
In the first quarter, Tractor Supply opened 22 new stores
compared with 33 stores in the year-ago quarter. As of Mar 30,
2013, the company operated as many as 1,197 stores in 45 states.
Tractor Supply reiterated its 2013 net sales guidance, projecting
sales in the range of $5.07 billion - $5.17 billion, with comps
expected to improve 3%−5%. The company anticipates 2013 earnings
in the range of $4.32 − $4.40 per share, including estimated
costs of 6 cents to 7 cents per share related to relocation of
its distribution center in the Southeast and its corporate data
Moreover, Tractor Supply expects capital expenditure in the range
of $240 - $250 million in 2013, comprising $100 - $105 million
slated to be spent toward opening of 100 to 105 new stores and
the construction of the Southeast distribution center and new
Store Support Center, which are expected to open in 2013 and
Other Stocks to Consider
Tractor Supply currently has a Zacks Rank #2 (Buy). Other
companies performing well in the retail space are
Big 5 Sporting Goods Corporation
Hot Topic Inc.
). Of these, Big 5 and Cabela's carry a Zacks Rank #1 (Strong
Buy) and Hot Topic carries a Zacks Rank #2 (Buy).