Posted on Nasdaq.com | July 25, 2019
BRENTWOOD, Tenn., July 25, 2019 (GLOBE NEWSWIRE) — Tractor Supply Company (NASDAQ:TSCO), the largest rural lifestyle retailer in the United States, today reported financial results for its second quarter ended June 29, 2019.
“For both the second quarter and first half of 2019, the Tractor Supply team delivered a very solid performance. For the quarter, comparable store sales growth of 3.2% was driven by improvements in our average ticket and positive comparable transaction counts, along with growth across all geographies. The team managed the business effectively to capture demand, and given our solid performance year to date and our expectations for the remainder of this year, we are raising the low end of our EPS guidance range by $0.05. We now expect EPS to be in the range of $4.65 to $4.75. We continue to demonstrate progress on our ONETractor strategy and remain committed to creating sustainable long-term shareholder value,” said Greg Sandfort, Tractor Supply’s Chief Executive Officer.
Second Quarter 2019 Results
Net sales for the second quarter 2019 increased 6.3% to $2.35 billion from $2.21 billion in the second quarter of 2018. Comparable store sales for the second quarter 2019 increased 3.2% driven by comparable average ticket and transaction count of 2.2% and 1.0%, respectively. All geographic regions of the Company had positive comparable store sales growth. The increase in comparable store sales was primarily driven by strength in everyday merchandise, including consumable, usable and edible products, along with solid demand for spring and summer seasonal categories.
Gross profit increased 6.7% to $820.7 million from $769.4 million in the second quarter of 2018, and gross margin increased 11 basis points to 34.9% from 34.8% in the prior year’s second quarter. The increase in gross margin was driven by product mix, along with the strength of the Company’s price management program. Freight expense did not have a significant impact on the quarter.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 7.5% to $533.2 million from $496.0 million in the second quarter of 2018. As a percent of net sales, SG&A expenses increased 24 basis points to 22.7% from 22.4% in the prior year’s second quarter. The increase in SG&A as a percent of net sales was primarily attributable to incremental costs associated with a new distribution facility in Frankfort, N.Y., and, to a lesser extent, investment in store team member wages. These SG&A increases were partially offset by leverage in occupancy and other costs from the increase in comparable store sales.
The effective income tax rate was 22.4% compared to 22.8% in the prior year’s second quarter.
Net income increased 5.8% to $219.2 million from $207.3 million in the second quarter of 2018, and diluted earnings per share increased 6.5% to $1.80 from $1.69 in the prior year’s second quarter.
During the second quarter of 2019, the Company opened 15 new Tractor Supply stores and one new Petsense store.
First Six Months of Fiscal 2019 Results
Net sales for the first six months of 2019 increased 7.2% to $4.18 billion from $3.90 billion in the first six months of 2018. Comparable store sales increased 4.0% as compared to an increase of 4.7% in the first six months of 2018.
Gross profit increased 7.7% to $1.44 billion from $1.33 billion in the first six months of 2018, and gross margin increased to 34.4% from 34.2% in the first six months of 2018.
SG&A expenses, including depreciation and amortization, increased 8.3% to $1.04 billion from $964.9 million in the first six months of 2018. As a percent of sales, SG&A expenses increased to 25.0% from 24.8% in the first six months of 2018.
The effective income tax rate was 22.3% in the first six months of both 2019 and 2018.
Net income increased 6.2% to $296.0 million from $278.7 million in the first six months of 2018, and diluted earnings per share increased 8.0% to $2.43 from $2.25 in the first six months of 2018.
Year to date through the second quarter, the Company repurchased approximately 3.5 million shares of its common stock for $334.2 million and paid quarterly cash dividends totaling $79.7 million.
During the first six months of 2019, the Company opened 25 new Tractor Supply stores and two new Petsense stores.
Fiscal 2019 Outlook
Based on year-to-date performance, the Company is providing the following updated guidance for the expected results of operations in fiscal 2019:
The Company continues to forecast capital expenditures in the range of $225 million to $250 million for fiscal 2019. For fiscal 2019, the Company reiterates its plans to open 80 new Tractor Supply stores and 10 to 15 new Petsense locations.