Reports of the uptick in small equipment sales were reinforced with the release of Tractor Supply’s second quarter 2020 earnings report. While TSCO sales aren’t reliant on equipment, its performance is a positive indicator for the rural lifestyle market in general.
Tractor Supply, which touts itself as the largest rural lifestyle retailer in the U.S., reported on July 23 financial results for its second quarter ended June 27, 2020.
Net sales for the second quarter 2020 increased 35% to $3.18 billion from $2.35 billion in the second quarter of 2019. Comparable store sales for the second quarter 2020 increased 30.5% driven by comparable transaction count and comparable average ticket of 14.6% and 15.8%, respectively.
The company said COVID-19 pandemic had a significant impact on consumer demand across all of the company’s major product categories as customers focused on the care of their homes, land and animals. The increase in comparable store sales was driven by unprecedented demand for spring and summer seasonal categories along with exceptional growth in everyday merchandise, including consumable, usable and edible products. All geographic regions of the company had robust comparable store sales growth. In addition, the Tractor’s e-commerce sales experienced triple digit sales growth.
Gross profit increased 41% to $1.16 billion from $820.7 million in the second quarter of 2019. Gross margin increased 155 basis points to 36.4% from 34.9% in the prior year’s second quarter. The increase in gross margin was driven by lower depth and frequency of sales promotions, favorable product mix and lower transportation costs as a percent of net sales.
Operating income for the second quarter of 2020 increased 55.7% to $447.8 million compared to $287.6 million in the second quarter of 2019.
Net income increased 54.5% to $338.7 million from $219.2 million in the second quarter of 2019, and diluted earnings per share increased 61.1% to $2.90 from $1.80 in the prior year’s second quarter.
During the second quarter of 2020, the company opened 18 new Tractor Supply stores and 3 new Petsense stores and closed three Petsense stores.
First 6 Months FY20 Results
Net sales for the first 6 months of 2020 increased 23% to $5.14 billion from $4.18 billion in the first 6 months of 2019. Comparable store sales increased 19% as compared to an increase of 4% in the first 6 months of 2019.
Gross profit increased 26.6% to $1.82 billion from $1.44 billion and gross margin increased to 35.4% from 34.4% in the first 6 months of 2019. Net income increased 42.7% to $422.5 million from $296 million in the first 6 months of 2019.
During the first 6 months of 2020, the company opened 38 new Tractor Supply stores and 3 new Petsense stores and closed 1 Del’s store and 3 Petsense stores.
The company said that the impact of the COVID-19 pandemic will have on the broader economy and the its fiscal 2020 results remains uncertain.
The Company is providing third quarter guidance of:
|Net Sales||$2.30 billion - $2.42. billion|
|Comparable Store Sales||+12.0% - +18.0%|
|Net Income||$136 million - $162 million|
|Earnings per Diluted Share||$1.15 - $1.35|