Warm winter impacts Tractor Supply Q4
Comp store sales are flat in Q4 following soft sales of cold weather equipment and gear.
Tractor Supply Company reported fourth quarter 2019 net sales of increased 2.7% to $2.19 billion in from $2.13 billion in the fourth quarter of 2018.
The Brentwood, Tenn.-based retailer also posted a fourth quarter net income of $144.2 million, up 5.3% from a fourth quarter 2018 net income of $136.9 million.
Comparable store sales were flat with just an increase of 0.1% compared to an increase of 5.7% in the prior year’s fourth quarter. The comparable store sales results included an increase in the comparable average ticket of 1.8% and a decrease in comparable transaction count of 1.7%. The comparable store sales performance in the fourth quarter was primarily driven by strength in the consumable, usable and edible categories, the company said.
Tractor Supply blamed the performance on weakness in cold weather seasonal and holiday discretionary categories. Softness in the cold weather seasonal categories such as heating equipment and insulated outerwear were impacted by the unseasonably warm weather in December which was the sixth warmest in 125 years.
The farm and ranch retailer also noted that holiday sales were impacted by six fewer selling days between Thanksgiving and Christmas compared to last year, which had a greater impact on sales than Tractor Supply had anticipated.
For the full year, Tractor Supply reported net sales increased 5.6% to $8.35 billion from $7.91 billion in fiscal 2018. Comparable store sales increased 2.7% versus a 5.1% increase in fiscal 2018.
Profits for the year rose nearly 6% to a net income of $562.4 million from a net income of $532.4 in 2018.
Tractor Supply opened 30 new stores and five new Petsense stores in the fourth quarter and closed one Petsense location during the period. For the full year, Tractor Supply opened 80 new locations and 8 new Petsense stores while closing one Tractor Supply location and one Petsense store.
The bottom line: Warm winter weather results in flat fourth quarter sales for Tractor Supply as profits rise 5.3%.
What the CEO said: “Overall, 2019 was a solid year for the Tractor Supply team as we achieved record revenue and net income. While our comparable store sales performance for the fourth quarter was below our expectations, the weakness was driven principally by the effect of a period of warmer than expected weather impacting the sales of seasonal products and softness in several holiday discretionary categories. Despite the sales trends in the quarter, the Tractor Supply team executed well, controlling what we could control. This performance resulted in earnings per share in line with our guidance range as the team delivered gross margin expansion accompanied with disciplined cost management. I am optimistic about the future of Tractor Supply and where Hal and the team will lead the company in the future,” said Greg Sandfort.
Sandfort is serving as a strategic advisor for Tractor Supply and retired as CEO, effective Jan. 13, 2020.
Hal Lawton, who was named Tractor Supply’s president and CEO, effective Jan. 13 said, “As we move into 2020 and beyond, Tractor Supply is well-positioned to build on our strengths, and I am excited about our opportunities for growth. At Tractor Supply, we have a differentiated customer experience, a robust set of competencies, and are well-positioned to become an even more integral part of our customers’ lives. In the coming weeks and months, I will be focused on listening and learning from Tractor Supply team members and working with the leadership team to position Tractor Supply for continued long-term success.”
Company info: Tractor Supply Company’s full fourth quarter 2019 report is available here.
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