Tractor Supply Posts In Line Earnings - Analyst Blog
April 25 2013 - 6:10AM
Zacks
Tractor Supply Co. (TSCO) reported strong
first-quarter 2013 results with earnings surging nearly 12.7% to 62
cents per share, in line with the Zacks Consensus Estimate. Results
benefited mainly from strong top-line performance and improved
margins.
Detailed Analysis
Net sales in the quarter improved 6.4% to $1,085.8 million from
$1,020.4 million in the prior-year quarter. However, total revenue
missed the Zacks Consensus Estimate of $1,098 million.
Tractor Supply reported same-store sales increase of 0.5% compared
to a solid 11.5% growth achieved in the prior-year quarter. The
increase was driven by robust performance in core consumable,
usable and edible (C.U.E) products − mainly for pet food and animal
feed. Further, the company benefited from strong sales of winter
assortments due to an unexpected cold weather. However, these were
largely impacted by lower sales of spring assortments compared to
the prior year.
Gross profit during the quarter increased 5.8% to $352.1 million
compared with $332.8 million in the prior-year quarter. Gross
margin contracted 20 basis points to 32.4% from 32.6% in the
year-ago quarter, impacted by the mix shift to low-margin C.U.E
products and higher transportations costs, offset in part by the
company’s key margin-driving initiatives.
Better cost containment related to store personnel and lower
incentive compensation expenses resulted in a 20 basis points (bps)
contraction in selling, general and administrative expenses, as a
percentage of sales, which came in at 24.0% versus 24.2% in the
prior-year quarter.
Consequently, operating margin during the quarter remained flat at
6.3%, with operating income rising 5.5% to $67.9 million in
absolute terms.
Financial Position
Tractor Supply ended the year with cash and cash equivalents
(including restricted cash) of $65.4 million compared with $148.6
million at the end of the year-ago quarter. As of Mar 31, 2013,
stockholders’ equity was $1,030.2 million compared with $1,055.2
million as of Mar 31, 2012.
Store Update
In the first quarter, Tractor Supply opened 22 new stores compared
with 33 stores in the year-ago quarter. As of Mar 30, 2013, the
company operated as many as 1,197 stores in 45 states.
Management Guidance
Tractor Supply reiterated its 2013 net sales guidance, projecting
sales in the range of $5.07 billion – $5.17 billion, with comps
expected to improve 3%−5%. The company anticipates 2013 earnings in
the range of $4.32 − $4.40 per share, including estimated costs of
6 cents to 7 cents per share related to relocation of its
distribution center in the Southeast and its corporate data
center.
Moreover, Tractor Supply expects capital expenditure in the range
of $240 – $250 million in 2013, comprising $100 – $105 million
slated to be spent toward opening of 100 to 105 new stores and the
construction of the Southeast distribution center and new Store
Support Center, which are expected to open in 2013 and 2014,
respectively.
Other Stocks to Consider
Tractor Supply currently has a Zacks Rank #2 (Buy). Other companies
performing well in the retail space are Big 5 Sporting
Goods Corporation (BGFV), Cabela’s Inc.
(CAB) and Hot Topic Inc. (HOTT). Of these, Big 5
and Cabela’s carry a Zacks Rank #1 (Strong Buy) and Hot Topic
carries a Zacks Rank #2 (Buy).
BIG 5 SPORTING (BGFV): Free Stock Analysis Report
CABELAS INC (CAB): Free Stock Analysis Report
HOT TOPIC INC (HOTT): Free Stock Analysis Report
TRACTOR SUPPLY (TSCO): Free Stock Analysis Report
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