BRENTWOOD, Tenn.— Tractor Supply Co. (NASDAQ: TSCO), the largest rural lifestyle retail store chain in the U.S., today announced financial results for its first quarter ended March 28, 2015.
First Quarter Results
Net sales increased 12.5% to $1.33 billion from $1.18 billion in the prior year's first quarter. Comparable store sales increased 5.7% vs. a 2.2% increase in the prior year period. The increase in comparable store sales was broad based and driven by increases in both traffic and ticket. Comparable store transaction count increased 4.8% and average ticket increased 0.8%. The comparable store sales increase benefited from a solid performance in consumable, usable and edible (C.U.E.) products, including pet and heating consumables, while hardline products such as fencing, truck accessories and tools also performed well. These increases were partially offset by deflation.
Gross profit increased 12.2% to $444.6 million from $396.2 million in the prior year's first quarter. As a percent of sales, gross margin decreased 10 basis points to 33.4%. The slight decline in gross margin rate resulted primarily from increased clearance merchandise activity due to our higher in-stock position at the beginning of the quarter, the timing of new store vendor support and slightly higher shrink. Transportation costs had a favorable impact on gross margin as lower fuel costs more than offset the increased stem miles caused by our western store expansion.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 10.8% to $351.8 million. As a percent of sales, SG&A expenses improved 40 basis points to 26.4% from 26.8% in the first quarter last year. This improvement as a percent of sales was primarily attributable to the leverage of store operating and advertising costs provided by the strong comparable store sales growth, partially offset by higher year-over-year incentive compensation expense.
Net income increased 18.9% to $58.0 million from $48.8 million and diluted earnings per share increased 20.0% to $0.42 from $0.35 in the first quarter of the prior year.
The company opened 41 new stores and closed one store in the first quarter of 2015 compared to 32 new store openings and no store closures in the prior year's first quarter.
Greg Sandfort, president and chief executive officer, stated, "We are pleased with our performance in the first quarter and the overall trends in our business. Sales growth was well balanced across all major merchandise categories and geographic regions, driven by increases in both traffic and ticket. Our merchandising and inventory management teams did an excellent job of managing assortments and inventory levels to deliver strong sales. We had the right products at the right time to meet customer demand in seasonal and everyday C.U.E. products. The momentum of the business has continued into April with more normalized spring weather, and we believe we are well positioned to continue to meet our customers' ongoing needs."
Fiscal 2015 Outlook
The company is reiterating all components of its fiscal 2015 outlook. For fiscal 2015, net sales are anticipated to range between $6.2 billion and $6.3 billion, with comparable store sales expected to increase 2.5% to 4.0%. The Company projects fiscal 2015 full year net income to range from $2.95 to $3.05 per diluted share. For the full year, the Company expects capital expenditures to range between $240 million and $250 million, including spending to support 110 to 115 new store openings and construction of a new Southwest distribution center in Casa Grande, Ariz,, to open in fiscal 2015.
About Tractor Supply
As of March 28, 2015, Tractor Supply Co. operated 1,422 stores in 49 states. The company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers and others who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located primarily in towns outlying major metropolitan markets and in rural communities. The company offers the following comprehensive selection of merchandise: (1) equine, livestock, pet and small animal products, including items necessary for their health, care, growth and containment; (2) hardware, truck, towing and tool products; (3) seasonal products, including heating, lawn and garden items, power equipment, gifts and toys; (4) work/recreational clothing and footwear; and (5) maintenance products for agricultural and rural use.