Farm supplies retailer
Tractor Supply Company
) came up with a preview of its first quarter 2012 results. Citing
robust sales performance in the first quarter, the company raised
its earnings forecast for the quarter as well as for fiscal
Net sales during the first quarter surged 22.0% to $1.02 billion
from $836.6 million in the prior-year quarter. Net sales were ahead
of the Zacks Consensus Estimate of $935 million. An early spring in
2012 helped boost same store sales, which rose 11.5% in the first
Further, the company indicated that each quarter of 2012 will
have a delayed start by one week, compared to fiscal 2011, due to
the inclusion of 53
week in fiscal 2011. Mitigating the effect of the week shift, first
quarter 2012 same store sales registered an increase of 7.6%.
First quarter results at Tractor Supply benefited mainly from
the structural improvements made over the years. This enabled the
company to adjust its offerings to suit customer demand and to
promptly respond to events, such as the early onset of spring in
Looking into 2012, the company expects its profits to grow
continually, given the right mix of products and marketing plans to
maintain customer footfall.
Encouraged by such robust sales, the company expects its first
quarter earnings to come in the range of 53 cents to 55 cents and
emphasized the same in its business plan. This includes an
estimated 9 cents to 11 cents gain from shift of spring sales into
the first quarter instead of the second quarter. The company's
revised first quarter guidance is way above the current Zacks
Consensus Estimate of 31 cents per share.
Further, the company expects gross margin in the first quarter
to be a little shy of the year-ago level, mainly on account of a
warmer January and February that called for markdowns to sell
through winter seasonal merchandise.
Further citing strong first quarter results, the company raised
its fiscal 2012 earnings guidance range to $3.52 to $3.60 per
share, compared with the earlier forecast of $3.38 to $3.46 per
share. The Zacks Consensus Estimate for fiscal 2012 stands at
$3.50, slightly below the lower-end of the company's revised fiscal
Net income for the year is estimated to reach $260 - $265
million, above the prior estimate of $246 - $253 million. Net sales
forecast for fiscal 2012 has also been raised to $4.61 - $4.68
billion versus the previous guidance of $4.56 - $4.66 billion. In
fiscal 2012, same store sales are expected to register an increase
of 4.0% to 5.5%, up from the prior forecast of 3% to 5%.
Tractor Supply is scheduled to release its first quarter 2012
financial results after market close on Wednesday, April 25,
We believe that the company's efficiency in managing inventory
level, strategic merchandise sourcing, private branding and cost
control measures will help to retain its momentum of increasing
trends both in its top and bottom line.
The company operates in a highly fragmented industry and faces
competition from larger retailers like
The Home Depot Inc.
Tractor Supply's shares maintain a Zacks #2 Rank, which
translates into a short-term 'Buy' rating. Our long-term
recommendation on the stock remains 'Neutral'.
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