Tractor Supply overcomes early Q2 headwinds

Despite soft sales early in its second quarter, Tractor Supply Co. reported a sales gain of 8.8% and comparable-store sales of positive 1.9%.

The Brentwood, Tennessee-based farm-and-ranch-store giant reported $1.58 billion in sales for the period ended June 29, compared with $1.46 billion in the same quarter last year. 

Net income for the quarter increased 8.0% to $133.4 million, up from $123.6 million. 

"Sales in our everyday core C.U.E. offerings were strong throughout the second quarter," said Greg Sandfort, president and CEO. "However, unseasonably cool weather in the early part of the quarter negatively impacted sales of spring seasonal merchandise." 

Comparable-store sales were driven by continued strength of consumable, usable and edible products (C.U.E.) and solid traffic counts, the company reported. But growth in these areas was partially offset by deflation, continued softness in its safe category and weaker-than-expected sales of certain seasonal products primarily in the northern regions. 

Gross profit increased 8.8% to $550.5 million from $506.1 million in the prior-year's second quarter. As a percent of sales, gross margin was flat to prior-year quarter at 34.8%, as increased transportation costs, mix of products and the impact of slightly more sales-driving promotions offset the favorable impact of the company's key gross margin-enhancing initiatives and the impact of deflation. 

Based upon the second-quarter results, the company anticipates its fiscal year 2014 results will be at the low end of the previously provided ranges of $5.62 billion to $5.70 billion in net sales, and 2.5% to 4.0% in comparable-store sales. 

The company opened 23 new stores in the second quarter, compared to with new store openings in the prior year's second quarter.

"Despite some of the early headwinds, we successfully delivered positive comparable-store sales in each month of the quarter while minimizing the impact to merchandise margins," Sandfort said.

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