Tractor Supply Co. has announced that its net sales for the second quarter 2014 increased 8.8% to $1.58 billion as comparable store sales gained 1.9% versus the year-prior period. It added that continued strength of consumable, usable and edible products, and solid traffic counts drove comps.
Weaker than expected sales of certain seasonal product, primarily in the Northern regions, as well as continued softness in the safe category and deflation partially offset the stronger comp elements. The company noted that, as the quarter progressed, sales trends improved as weather became a lesser factor in sales and business began to live up to management expectations.
The company said it expects increased transportation costs and the impact of slightly more promotional activity to effect gross margins, partially offset by the favorable impact of company initiatives and deflation. The company said it expects the lower than anticipated comps to boost SG&A expenses so that it set guidance for second quarter net income at between 94 cents to 95 cents per diluted share.
A Thomson Reuters average financial analyst estimate called for earnings per diluted share of $1.02.
Greg Sandfort, Tractor Supply president and CEO, said, in announcing the first quarter sales and earnings outlook, “We remain pleased with many areas of the business, including our core C.U.E. offerings and several seasonal categories. However, we were not satisfied with the overall sales of spring seasonal merchandise in the second quarter. The challenging spring weather conditions we experienced in the first quarter persisted even later into the second quarter than the prior year. The team responded by effectively managing inventory and increasing marketing initiatives to drive sales, and sales improved as the quarter progressed into June. Traffic trends in the second quarter remained healthy, and I am pleased with how our team members in the field, distribution centers and store support center responded to our customers’ needs. Despite a solid sales trend in July to date, we cannot be assured at this point that spring seasonal sales will be fully realized. As a result, we believe that we will perform at the low end of our full-year guidance. By effectively managing inventory levels and working with our vendors to develop additional sales driving initiatives, we believe we are positioned to drive sales and provide great values to our customers in the back half of the year.”