BRENTWOOD, Tenn. — Tractor Supply Co. (NASDAQ: TSCO), the largest rural lifestyle retail store chain in the U.S., announces its business update for the fourth quarter and full year ended December 26, 2015.
Net sales for the fourth quarter increased 3.9% to $1.65 billion from $1.58 billion in the prior year's fourth quarter. Comparable store sales decreased 1.4% for the quarter compared to the prior year's fourth quarter increase of 5.3%. Comparable store transaction counts increased by 0.6%, which represents the 31st consecutive quarter of transaction count growth. For the full fiscal year 2015, net sales increased 9.0% to $6.23 billion from $5.71 billion in fiscal 2014. Comparable sales for fiscal 2015 increased 3.1% compared to a 3.8% increase in fiscal 2014.
The same store sales decrease in the fourth quarter was primarily driven by weakness in the key cold weather seasonal categories of heating (stoves and fuel) and insulated outerwear, particularly in the Northeast and Midwest regions. Sales were also impacted by softness in seasonal big ticket items such as snow blowers, log splitters and generators. The weakness in seasonal categories was partially offset by continued sales strength in year-round basic products such as livestock feed, pet food and hardware.
Greg Sandfort, President and Chief Executive Officer, stated, "While our sales results for the quarter were below our expectations, the weakness was principally in cold weather categories such as heating, insulated outerwear and power equipment. Despite the unseasonably warm weather across most of the country, our customers continued to shop our stores for their everyday needs. Sales of non-seasonal, basic products were strong in the quarter and grew mid-single digits on a comparable store basis, but the warmest winter on record and its impact on cold weather categories was simply too much to overcome in the period."
The Company now anticipates net income for the fourth quarter to range from $0.81 to $0.82 per diluted share and for fiscal 2015 to range from $2.99 to $3.00 per diluted share compared to previous guidance of $3.02 to $3.08 per diluted share.
Additional Fourth Quarter Information
The Company provided the following information to offer further insight into the fourth quarter results:
Sales were heavily impacted by key cold weather seasonal categories such as heating, insulated outerwear and power equipment. While several other categories were affected by the warm winter season, the decline in these three seasonal categories alone negatively impacted comparable store sales by an estimated 400 basis points in the fourth quarter.
Sales of big ticket items were down approximately 6% as sales were negatively impacted by weakness in cold weather items such as snow blowers, generators and log splitters. This was slightly offset by strong sales in trailers and non-seasonal related outdoor power equipment.
The livestock and pet category experienced a mid-single digit same store sales increase.
Sales in the Northeast and Midwest were the most impacted by the unseasonably warm weather. Excluding these regions, the remaining regions of the country aggregated a low single digit same store sales increase.
The Company continued to see strong sales growth in the Western region, where the seasonal trends were more normalized. Same store sales increased high single digits in this region.
Inventory per store including in transit increased by approximately 7%. An increase in key cold weather seasonal categories accounted for approximately 250 basis points of the increase while the inventory build at our new Casa Grande, AZ distribution center was approximately 100 basis points of the increase.
Anthony Crudele, Executive Vice President and Chief Financial Officer, stated, "Based on the expected margin pressure to clear winter merchandise and incremental costs from the new distribution center, we anticipate that the first quarter may be the toughest comparison in 2016. As a reminder, first quarter sales are heavily influenced by spring performance, and we will continue to invest in the key spring seasonal and year-round basic inventory necessary to drive traffic and sales."
Tractor Supply operateds 1,488 stores in 49 states. View the entire news release.