NEW YORK - Tractor Supply Company (NASDAQ:TSCO), the leading rural lifestyle retailer in the U.S., reported a slight earnings beat for the second quarter, but shares fell as the company issued a softer guidance for the full year.
The company's second-quarter earnings per share (EPS) came in at $3.93, marginally above the analyst estimate of $3.92. However, revenue for the quarter was $4.25 billion, falling short of the consensus estimate of $4.28 billion and marking a modest increase of 1.5% from $4.18 billion in the same quarter last year.
Comparable store sales saw a slight decrease of 0.5%, contrasting with an increase of 2.5% in the second quarter of the previous year. This decline was primarily due to a drop in the average transaction count, which was only partially offset by a marginal increase in the average ticket size. Despite the decrease in comparable store sales, the company's net income rose by 0.9% to $425.2 million, and diluted EPS increased by 2.6% compared to the second quarter of 2023.
Tractor Supply's gross profit improved, with a 2.7% increase to $1.56 billion, and gross margin expanded by 43 basis points to 36.6%. This improvement was attributed to lower transportation costs, disciplined product cost management, and the execution of an everyday low price strategy, although it was partially offset by growth in big-ticket categories with lower-than-average margins.
President and CEO Hal Lawton expressed confidence in the company's plans to win over customers and highlighted the significant market share growth opportunities ahead. "We continue to create more separation between us and our competition, thanks to our Team Members and the meaningful relationships they have with our customers," Lawton said.
For the full year 2024, Tractor Supply provided guidance for EPS between $10.00 and $10.40, with the midpoint below the analyst consensus of $10.38. Revenue is expected to be in the range of $14.8 billion to $15 billion, with the midpoint slightly above the consensus estimate of $14.976 billion.
Following the earnings release, Tractor Supply's stock experienced a 2.6% decline, a reaction to the company's soft guidance for the year. This market response indicates investor concerns over the company's ability to meet expectations in the near term.
Tractor Supply opened 21 new stores and continued its capital return to shareholders, repurchasing approximately 0.5 million shares for $139.2 million and paying out $118.5 million in dividends during the quarter. Despite the current market reaction, Tractor Supply remains focused on its long-term strategy and shareholder value creation.
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