BRENTWOOD, Tenn., April 24, 2013 — Tractor Supply Co. (NASDAQ: TSCO), the largest retail farm and ranch store chain in the United States, today announced financial results for its first fiscal quarter ended March 30, 2013.
First Quarter Results: Net sales increased 6.4% to $1.09 billion from $1.02 billion in the prior year's first quarter. Same-store sales increased 0.5% compared to a very strong 11.5% increase in the prior-year period. The same-store sales increase was driven primarily by continued strong results in key consumable, usable and edible (C.U.E.) products, principally animal- and pet-related merchandise. The company experienced strong sales of winter seasonal merchandise due to the extended cold weather during the quarter. These increases were principally offset by lower sales of spring seasonal merchandise as compared to the prior year's first quarter. As stated in the prior year, the company estimated a sales benefit of approximately $38 million in the first quarter of 2012 due to the early spring weather.
Gross margin dollars increased to $352.1 million from $332.8 million in the prior year's first quarter. As a percent of sales, gross margin decreased slightly to 32.4% from 32.6% in the prior year. The decrease in gross margin as a percent of sales resulted primarily from the continued mix shift to lower-margin C.U.E. products, as well as increased transportation costs. These decreases were partially offset by the favorable impact from key margin-driving initiatives.
Selling, general and administrative expenses, including depreciation and amortization, improved to 26.1% of sales compared to 26.3% of sales in the prior year's first quarter. The improvement as a percent of sales was attributable to lower year-over-year incentive compensation expense.
Net income for the quarter was $44.0 million, or $0.62 per diluted share, compared to net income of $40.3 million, or $0.55 per diluted share, in the first quarter of the prior year.
The company opened 22 new stores in the first quarter of 2013 compared to 33 new store openings in the prior year's first quarter.
Greg Sandfort, president and chief executive officer, stated, "We are delighted with our ability to again deliver double-digit EPS growth on top of very strong growth during the prior year's first quarter. While weather was not as favorable as a year ago, we planned accordingly and are pleased to have generated a same-store sales increase compared to last year's very strong 11.5% increase. Our C.U.E. categories again posted solid increases in both sales and units, and contributed to our 20th consecutive quarter of year-over-year transaction count increases."
Company Outlook: The company confirmed its fiscal 2013 expectations for net sales to range between $5.07 billion and $5.17 billion, with same-store sales expected to increase 3% to 5%. The company projects fiscal 2013 full year net income to range from $4.32 to $4.40 per diluted share. This projection includes estimated costs of $0.06 to $0.07 per diluted share associated with the relocation of its southeast distribution center and its corporate data center. For the full year, the company expects capital expenditures to range between $240 million and $250 million including spending to support 100 to 105 new store openings and construction of the company's southeast distribution center expected to open in 2013 and new Store Support Center expected to open in 2014.
Sandfort concluded, "We believe we have the right product and plans in place to capitalize on the spring selling season. The structural changes we have embedded into our daily operations continue to drive sustainable improvements for our business. As we look to the balance of 2013, we remain optimistic regarding the opportunities ahead of us."
About Tractor Supply Company: At March 30, 2013, Tractor Supply Co. operated 1,197 stores in 45 states. The company's stores are focused on supplying the lifestyle needs of recreational farmers and ranchers. The company also serves the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located in towns outlying major metropolitan markets and in rural communities. The company offers the following comprehensive selection of merchandise: (1) equine, 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 lawn and garden items, power equipment, gifts and toys; (4) maintenance products for agricultural and rural use; and (5) work/recreational clothing and footwear.