Growing profits down on the farm

BRENTWOOD, Tenn. — Tractor Supply Company continues to operate in a fertile market segment that enabled the nation’s largest farm and ranch store chain to harvest record profits during the second quarter.

The Brentwood, Tenn.-based operator of 1,043 stores released impressive results for the quarterly period ended June 25 after the market closed Wednesday and raised its full-year profit forecast. Sales increased 10.6% to nearly $1.2 billion and was driven by a 4.6% same-store sales increase and the addition of 16 new stores. Profits rose a solid 18% to $91.2 million, and earnings per share advanced 18.3% to $1.23, four cents better than analysts expected.

“Our ability to achieve record results, despite unfavorable weather patterns, further demonstrates that the structural changes we made to the business over the past few years have been successful,” said Jim Wright, Tractor Supply’s chairman and CEO. “Through excellent seasonal preparedness and execution, we anticipated our customers’ needs, maintained appropriate in-stock positions and our customers responded positively to our efforts. As a result, we experienced strong sales and earnings growth, positive ticket and traffic, margin expansion and SG&A leverage.”

Based on its second-quarter showing, the company raised its full-year sales and earnings expectations. Net sales are now expected to fall within a range of $4.1 billion to $4.14 billion compared to earlier expectations in a range of $4.04 billion to $4.11 billion. Same-store sales for the year are now expected to increase 5% to 6% compared with the prior expectation of an increase of 3.5% to 5%. And full-year earnings per share are now anticipated to range between $2.75 to $2.82 compared with prior guidance of $2.62 to $2.70.

“As we look to the remainder of the year, we are optimistic about the momentum we have generated in our business,” Wright said. “To continue growing, we remain focused on executing the merchandise, marketing and operational plans that will enable Tractor Supply Company to meet our customers’ needs, expand operating margins and improve our processes continuously. Additionally, we will continue to invest in our stores and infrastructure while delivering value to our shareholders.”