Tractor Supply Sets Expansion Plans with 80 New Stores, Beats Earnings Expectations Despite Sales Slump in Q4

Tractor Supply Company TSCO reported a fourth-quarter FY23 sales decline of 8.6% year-on-year to $3.66 billion, marginally missing the consensus of $3.67 billion. Adjusted EPS of $2.28 beat the Wall Street view of $2.22.

Comparable store sales decreased by 4.2%, driven by a comparable average ticket decline of 1.5% and a comparable average transaction count decrease of 2.7%. 

Gross profit decreased 5.2% to $1.29 billion from $1.36 billion in the prior year. Gross margin expanded 129 basis points to 35.3% from 34.0% for the previous year.

The gross margin rate increase was primarily attributable to lower transportation costs driven by improved global supply chain and disciplined product cost management, modestly offset by an unfavorable product mix.

Operating income decreased 7.0% to $334.2 million from $359.2 million last year.

Tractor Supply exited the quarter with $397.07 million in cash and equivalents. The company’s long-term debt stands at $1.73 billion.

TSCO repurchased approximately 0.5 million shares of its common stock for $110.4 million and paid quarterly cash dividends totaling $111.4 million, returning $221.8 million of capital to shareholders in the quarter.

FY24 Outlook: The company expects EPS of $9.85 – $10.50 versus the $10.32 estimate. It sees net sales of $14.7 billion – $15.1 billion versus the consensus of $15.03 billion.

The company sees comparable store sale growth of (1.0%) – +1.5%.

The company expects a capex of $625 million – $700 million. Capital plans for 2024 include opening 80 Tractor Supply stores, continuing Project Fusion remodels and garden center transformations, completing its 10th distribution center, and opening 10 – 15 new Petsense by Tractor Supply stores. 

Price Action: TSCO shares are trading higher by 3.03% at $231.40 on the last check Thursday.

Photo via Wikimedia Commons