Tractor Supply solidified its positioned as the nation’s leading operator of farm and ranch stores during the second quarter with the opening of 26 stores and a better than expected 7.2% same store sales increase which prompted an increase in full year guidance.
The company has opened a total of 48 new stores this year, pushing its total to 1,223 units in 46 states and making it the unrivaled leader in a unique segment of the retail industry. Tractor Supply focuses on serving the lifestyle needs of recreational farmers, ranchers and rural residents with a product assortment that includes a wide range of animal suppliers, hardware and tools and power equipment, seasonal products and apparel and footwear.
It is an effective combination. The company said its sales increased 12.7% to $1.46 billion from $1.29 billion during the second quarter ended June 29, and same store sales increased 7.2% on top of a prior year gain of 3.2%. The sales strength was said to be broad-based and driven by categories such as consumables, seasonal merchandise and a category Tractor Supply defines as “usable and edible” products.
Strength of lower margin consumable products caused the retailer’s gross margin rate to decline slightly to 34.8% from 34.9%, but expenses were considerably lower at 21.2% of sales compared to 21.8% of sales, resulting in a corresponding improvement in overall profitability. Net income increased 15.9% to $123.6 million, or $1.75 a share, compared to $106.6 million, or $1.45 a share.
"We anticipated a late start to spring this year, and entered the second quarter well-positioned to take advantage of the seasonal shift,” said Greg Sandfort, Tractor Supply’s president and CEO. “As a result, we delivered a solid increase in store traffic, strong same-store sales growth across geographic regions and double-digit EPS growth.”
The better than expected results prompted the company to increase its full year outlook, bumping its same store sales forecast to a range of 4% to 5% from an earlier range of 3% to 5%. The profit outlook was increased to a range of $4.36 to $4.44, compared to its previous guidance of $4.32 and $4.40.
"Our performance in the first half of 2013 again demonstrated the continued strength of our core businesses, as well as our ability to manage through seasonal variances,” Sandf