As it updated its stores goal to 3,000 across the United States and annual plan of new openings to 90 per year, Tractor Supply announced its second quarter financial results including gains in net and comparable sales as well as earnings.
The company posted a net income of $421.2 million, or $3.83 per diluted share versus $396.5 million, or $3.53 per diluted share, in the year-prior quarter.
Still, earnings per share came up short of a MarketBeat-published analyst consensus estimate of $3.91 per diluted share as well as a revenue target of $4.26 billion.
Net sales increased 7.2% to $4.18 billion in the quarter year over year as comparable sales gained 2.5%, led by 1.8% transactions growth, Tractor Supply maintained. Operating income was $559.3 million versus $525 million in the year-earlier period.
According to Tractor Supply, the advance in net sales was driven by contributions emerging from the acquisition of Orscheln Farm and Home, new store openings and comp growth. The average transaction count increase of 1.8% and comparable average ticket growth of 0.6% comprised the comp gain, and reflects continued strength in core year-round merchandise, including consumable, usable and edible products, Tractor Supply noted, which significantly outpaced the chain average. Softness in demand for seasonal goods and declines in big-ticket items partly offset the core performance.
In announcing the financial results, Hal Lawton, Tractor Supply president and CEO, said, “As has been well documented, U.S. consumer spending on goods is moderating. Additionally, our business was further impacted by seasonal underperformance, particularly in June. Consequently, our second quarter results, while solid, were below our expectations. My thanks and appreciation go out to our 52,000 Tractor Supply Team Members. Through their efforts, we delivered record customer service scores and positive comparable transaction growth in the quarter. Given our first-half performance and our view that our customers will continue to be discerning in their spending for the remainder of the year, we are adjusting our full-year outlook.”
Lawton added, “We believe we have a robust, distinct business model in an attractive market. We have achieved remarkable growth and market share gains over the last three-plus years. We remain excited about the many vectors that exist for us to expand our competitive advantages and deliver attractive growth. Today, based on market insights, we are announcing an increase to our long-term store target to 3,000 organic sites. Additionally, we are announcing our intention to increase our annual new store openings to 90 beginning in 2025 with 2024 being a transition year. With significant share opportunity in a total addressable market of more than $180 billion, we have a long growth runway ahead of us as we continue to execute on our Life Out Here strategy.”
Tractor Supply indicated that capital plans for 2023 include opening a total of about 70 Tractor Supply stores, completing the Orscheln Farm and Home conversions to Tractor Supply, continuing Project Fusion remodels and garden center transformations, building its 10th distribution center and opening a total of 10 to 15 new Petsense by Tractor Supply stores.
