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Tractor Supply Company (TSCO - Free Report) has reported second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics increased year over year.
Tractor Supply’s earnings of $3.93 per share missed the Zacks Consensus Estimate by a penny. However, the bottom line rose 2.6% from the $3.83 per share registered in the year-earlier quarter.
Net sales grew 1.5% year over year to $4,246.6 million but missed the Zacks Consensus Estimate of $4,280 million. The year-over-year increase can be attributed to store openings, somewhat offset by weak comparable store sales (comps).
Tractor Supply Company Price, Consensus and EPS Surprise
Comps dipped 0.5% year over year driven by a comparable average transaction count fall of 0.6%, partly offset by a comparable average ticket rise of 0.1%. This reflected strength in seasonal merchandise like big ticket, partly offset by lower year-round discretionary categories. Consumable, usable and edible products performed in line with the overall comps rise.
The Zacks Rank #3 (Hold) company’s shares have risen 16.3% in the past six months against the industry’s 6.2% decline.
Costs & Margins
Gross profit rose 2.7% to $1.56 billion and the gross margin grew 43 basis points (bps) year over year to 36.6%. The gross margin increase was mainly attributable to lower transportation costs, better product cost management and the execution of an everyday low-price strategy. These were somewhat negated by growth in big ticket categories. Our model predicted a rise of 2.5% in gross profit and 20 bps increase in the gross margin to 36.4% for the second quarter.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 58 bps year over year to 23.4%. In dollar terms, SG&A expenses, including depreciation and amortization, rose 4.1% year over year to $994.2 million. The higher SG&A expense rate resulted from expected growth investments, including increased depreciation and amortization, onboarding of a new distribution center and modest deleveraged fixed costs, somewhat offset by productivity improvements and disciplined cost control. The company’s ongoing sale-leaseback strategy aided SG&A by 12 bps, net of transaction and repair costs, from the sale of two Tractor Supply locations. Our model predicted SG&A costs to increase 2.9% and the SG&A expense rate to expand 20 bps to 20.6%.
The operating income was up 0.4% year over year to $561.5 million. Meanwhile, the operating margin contracted 15 bps to 13.2%. We estimated a 0.6% drop in operating income for the second quarter.
Financial Position
The company ended the second quarter with cash and cash equivalents of $394.7 million, long-term debt of $1.7 billion and total stockholders’ equity of $2.3 billion. It also provided cash flow from operating activities of $817.3 million in the six months ended Jun 29, 2024.
In the first six months of 2024, the company incurred a capital expenditure of $349.8 million.
It opened 21 Tractor Supply stores and three Petsense by Tractor Supply stores in the reported quarter. As of Jun 29, 2024, the company operated 2,254 Tractor Supply stores in 49 states and 205 Petsense by Tractor Supply stores across 23 states.
2024 Outlook
Based on the year-to-date performance, management revised the guidance for 2024.
The company now expects net sales in the range of $14.8-$15 billion, with comps anticipated between a decline of 0.5% and growth of 1%. Earlier, management expected net sales of $14.7-$15.1 billion and comps between a decline of 1% and growth of 1.5%. The operating margin is likely to be 9.8-10.1% compared with 9.7-10.1% expected earlier. The company predicts net income in the range of $1.08-$1.12 billion compared with $1.06-$1.13 billion expected earlier. Earnings per share are expected to be $10.00-$10.40 compared with the prior forecasted range of $9.85-$10.50.
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.
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Tractor Supply (TSCO) Q2 Earnings Miss, Lower Comps Hurt Sales
Tractor Supply Company (TSCO - Free Report) has reported second-quarter 2024 results, wherein the bottom and top lines missed the Zacks Consensus Estimate. Both metrics increased year over year.
Tractor Supply’s earnings of $3.93 per share missed the Zacks Consensus Estimate by a penny. However, the bottom line rose 2.6% from the $3.83 per share registered in the year-earlier quarter.
Net sales grew 1.5% year over year to $4,246.6 million but missed the Zacks Consensus Estimate of $4,280 million. The year-over-year increase can be attributed to store openings, somewhat offset by weak comparable store sales (comps).
Tractor Supply Company Price, Consensus and EPS Surprise
Tractor Supply Company price-consensus-eps-surprise-chart | Tractor Supply Company Quote
Comps dipped 0.5% year over year driven by a comparable average transaction count fall of 0.6%, partly offset by a comparable average ticket rise of 0.1%. This reflected strength in seasonal merchandise like big ticket, partly offset by lower year-round discretionary categories. Consumable, usable and edible products performed in line with the overall comps rise.
The Zacks Rank #3 (Hold) company’s shares have risen 16.3% in the past six months against the industry’s 6.2% decline.
Costs & Margins
Gross profit rose 2.7% to $1.56 billion and the gross margin grew 43 basis points (bps) year over year to 36.6%. The gross margin increase was mainly attributable to lower transportation costs, better product cost management and the execution of an everyday low-price strategy. These were somewhat negated by growth in big ticket categories. Our model predicted a rise of 2.5% in gross profit and 20 bps increase in the gross margin to 36.4% for the second quarter.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, as a percentage of sales, expanded 58 bps year over year to 23.4%. In dollar terms, SG&A expenses, including depreciation and amortization, rose 4.1% year over year to $994.2 million. The higher SG&A expense rate resulted from expected growth investments, including increased depreciation and amortization, onboarding of a new distribution center and modest deleveraged fixed costs, somewhat offset by productivity improvements and disciplined cost control. The company’s ongoing sale-leaseback strategy aided SG&A by 12 bps, net of transaction and repair costs, from the sale of two Tractor Supply locations. Our model predicted SG&A costs to increase 2.9% and the SG&A expense rate to expand 20 bps to 20.6%.
The operating income was up 0.4% year over year to $561.5 million. Meanwhile, the operating margin contracted 15 bps to 13.2%. We estimated a 0.6% drop in operating income for the second quarter.
Financial Position
The company ended the second quarter with cash and cash equivalents of $394.7 million, long-term debt of $1.7 billion and total stockholders’ equity of $2.3 billion. It also provided cash flow from operating activities of $817.3 million in the six months ended Jun 29, 2024.
In the first six months of 2024, the company incurred a capital expenditure of $349.8 million.
It opened 21 Tractor Supply stores and three Petsense by Tractor Supply stores in the reported quarter. As of Jun 29, 2024, the company operated 2,254 Tractor Supply stores in 49 states and 205 Petsense by Tractor Supply stores across 23 states.
2024 Outlook
Based on the year-to-date performance, management revised the guidance for 2024.
The company now expects net sales in the range of $14.8-$15 billion, with comps anticipated between a decline of 0.5% and growth of 1%. Earlier, management expected net sales of $14.7-$15.1 billion and comps between a decline of 1% and growth of 1.5%. The operating margin is likely to be 9.8-10.1% compared with 9.7-10.1% expected earlier. The company predicts net income in the range of $1.08-$1.12 billion compared with $1.06-$1.13 billion expected earlier. Earnings per share are expected to be $10.00-$10.40 compared with the prior forecasted range of $9.85-$10.50.
Key Picks
Some better-ranked stocks in the retail space are The Gap (GPS - Free Report) , Abercrombie & Fitch (ANF - Free Report) and Urban Outfitters (URBN - Free Report) .
Gap is a premier international specialty retailer, which offers a diverse range of clothing, accessories and personal care products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Gap’s fiscal 2024 earnings and sales indicates growth of 22.4% and 0.2%, respectively, from fiscal 2023 reported figures. GPS has a trailing four-quarter average earnings surprise of 202.7%.
Abercrombie is a specialty retailer of premium, high-quality casual apparel. It flaunts a Zacks Rank of 1 at present. ANF delivered a 28.9% earnings surprise in the last reported quarter.
The consensus estimate for Abercrombie’s fiscal 2024 earnings and sales indicates growth of 47.3% and 10.4%, respectively, from the fiscal 2023 reported levels. ANF has a trailing four-quarter average earnings surprise of 210.3%.
Urban Outfitters is a lifestyle specialty retailer that offers fashion apparel and accessories, footwear, home décor and gift products. It currently has a Zacks Rank #2 (Buy).
The Zacks Consensus Estimate for Urban Outfitters’ fiscal 2024 earnings and sales indicates growth of 9.9% and 5.8%, respectively, from the year-ago actuals. URBN has a trailing four-quarter average earnings surprise of 16.9%.