Soft discretionary demand and weaker cold weather business lead to declines in fourth-quarter earnings and comparable store sales at Tractor Supply Co., although profits exceeded a Wall Street estimate.
Net income slipped to $247.9 million, or $2.28 per diluted share, from $270.9 million, or $2.43 per diluted share, in the year-prior quarter. The benefit of a 53rd week in the 2022 fourth quarter contributed 16 cents to diluted EPS, according to Tractor Supply.
A Yahoo Finance-published analyst consensus estimate called for earnings per diluted share of $2.22 and revenues of $3.67 billion.
Comparable store sales decreased 4.2% in the quarter year over year, driven by a comp ticket decline of 1.5% and average transaction count decline of 2.7%, the company reported. Comp performance reflected continued strength in consumables, usable and edible categories offset by softness in cold weather products, discretionary categories and, to a lesser extent, big-ticket items, Tractor Supply maintained, adding comps in the 2022 fourth quarter benefited from a December winter storm by approximately 200 basis points.
Net sales declined 8.6% to $3.66 billion from the year-before quarter. The extra week in fiscal 2022 negatively impacted the year over year performance by 5.6 percentage points, Tractor Supply noted. The decrease in net sales resulted from the comp decline partially offset by positive contributions from new stores.
Operating income decreased 7% to $334.2 million from the year-previous period.
For the full year, net income advanced to $1.11 billion, or $10.09 per diluted share, from $1.09 billion, or $9.71 per diluted share, in the year prior. The benefit of the 53rd week contributed 16 cents to diluted EPS in fiscal 2022.
Comparable store sales were flat year over year. Net sales for fiscal 2023 increased 2.5% to $14.56 billion from the year before. Operating income gained 3.1% to $1.48 billion versus the previous year.
“While our financial performance in 2023 did not meet our initial expectations, our team successfully navigated a highly dynamic environment with agility, operational resiliency and a focus on our strategic investments,” said Hal Lawton, Tractor Supply president and CEO. “As we exit 2023, our business has never been stronger. Our healthy customer engagement, all time high customer satisfaction scores, peak productivity of our supply chain, technology enhancements and the scaled transformation of our store base all serve as proof points of the strength of our business. In 2024, we will continue to invest to strengthen our competitive advantages and to capture the significant growth opportunities in our market. We believe that our business can continue to perform well in the coming years given the investments we have made in our Life Out Here strategy.”
