Comps, New Stores Drive Tractor Supply Q2 Sales Growth
Second quarter net sales at Tractor Supply rose more than 7% as new store openings, growth in comparable store sales, and the acquisition of Orscheln Farm and Home were cited by the company as key drivers.
For the quarter ended July 1, net sales were $4.18 billion, up from net revenue of $3.9 billion in the second quarter of 2022. Comparable store sales increased 2.5%, as compared to an increase of 5.5% in the prior year’s second quarter, driven by comparable average transaction count increase of 1.8% and comparable average ticket growth of 0.6%. Net income increased 6.2% to $421.2 million from $396.5 million, and diluted earnings per share was $3.83 compared to $3.53 in the second quarter of 2022.
Company officials said comparable store sales growth reflects continued strength in core year-round merchandise, including consumable, usable and edible products, which significantly outpaced the chain average. This performance offset softness in demand for seasonal goods and declines in big-ticket items.
“As has been well documented, U.S. consumer spending on goods is moderating,” said Hal Lawton, president and CEO of Tractor Supply. “Additionally, our business was further impacted by seasonal underperformance, particularly in June. Consequently, our second quarter results, while solid, were below our expectations.”
The retailer also updated its store growth plans, which now call for a target store count of 3,000 locations, an increase of 200 from prior guidance. The company anticipates accelerating its annual new store growth to approximately 90 stores per year beginning in 2025, with a step up to 80 new stores in 2024.
Additionally, the Company plans to periodically execute the sale-leaseback of its existing ownership of 117 stores to fund the cash required by the new development program and to capture the value of its existing real estate.
Tractor Supply also updated its 2023 fiscal guidance. It is now projecting annual net sales of $14.8 billion - $14.9 billion, down from prior guidance of $15 billion to $15.2 billion. Comparable store sales are now estimated to be between 1.3% and 2.5%, down from previous guidance of 3.5% to 5.5%.
“We believe we have a robust, distinct business model in an attractive market,” said Lawton. “We have achieved remarkable growth and market share gains over the last three plus years. We remain excited about the many vectors that exist for us to expand our competitive advantages and deliver attractive growth.”