Tractor Supply Net Sales Miss Estimates In Q3, Confirms Allivet Acquisition

Tractor Supply Company TSCO shares are trading lower in the premarket session after the company reported third-quarter results.

Quarterly earnings per share of $2.24, in line with the analyst consensus. Third-quarter net sales of $3.47 billion (+1.6%) missed the street view of $3.485 billion. The increase in net sales was driven by new store openings.

Comparable store sales declined 0.2% yearly, driven by a comparable average transaction count increase of 0.3%, offset by a comparable average ticket decrease of 0.5%.

Gross profit increased 3.2% to $1.29 billion, and gross margin increased 56 basis points to 37.2% from 36.7% in the prior year’s third quarter.

The gross margin rate increase was primarily attributable to ongoing lower transportation costs along with disciplined product cost management and the continued execution of an everyday low-price strategy. 

Operating income was $324.6 million in the third quarter of 2024 compared to $340.9 million in the year-ago period.

The company opened 16 new Tractor Supply stores in the third quarter of 2024.

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The firm also announced it has signed a definitive agreement to acquire Allivet, a privately held online pet pharmacy.

Tractor Supply expects Allivet to strengthen its portfolio offering for companion animals. This includes equestrian and livestock customers.

This acquisition will also allow the company to introduce a convenient, low-cost pet and animal pharmacy solution for its 37 million Neighbor’s Club members.

The transaction will close in Tractor Supply’s fiscal first quarter of 2025. The deal is an all-cash transaction that Tractor Supply anticipates financing through its balance sheet.

The company exited the quarter with cash and equivalents worth $186.294 million. Inventories as of quarter-end totaled $3.082 billion.

Outlook: Tractor Supply forecasts 2024 net sales between $14.85 billion and $15 billion. The company slightly adjusted from the previous range of $14.8 billion to $15 billion, while the estimate is $14.897 billion.

The company anticipates 2024 EPS between $10.10 and $10.40, compared to the prior range of $10.00 to $10.40, with an estimate of $10.28.

Price Action: Tractor Supply shares are trading lower by 1.05% to $289.0 premarket at last check Thursday.

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