Tractor Supply Sales, Net Income Soften In Q4

Tractor Supply closed out its fiscal year 2023 with a challenging fourth quarter as the retailer reported a decrease in net sales and net income.

For the three months ended December 30, net sales were $3.66 billion, a decrease of 8.6% from the fourth quarter of 2022. The prior year’s fourth quarter included an extra sales week as part of the company’s 53-week calendar in 2022, which negatively impacted the period-over-period sales performance by approximately 5.6 percentage points, company officials said.

Net income in the fourth quarter decreased 8.5% to $247.9 million. Diluted earnings per share decreased 6.2% to $2.28 compared to $2.43 in the fourth quarter of 2022. The benefit of the 53rd week contributed approximately $0.16 to diluted EPS in the fourth quarter of 2022.

Company officials said the decrease in net sales was also attributable to a decline in comparable store sales, partially offset by positive sales contributions from new stores. Comparable store sales decreased 4.2%, as compared to an increase of 8.6% in the prior year’s fourth quarter, driven by a comparable average ticket decline of 1.5% and a comparable average transaction count decline of 2.7%. 

Comparable store sales performance reflects continued strength in year-round consumable, usable and edible categories, offset by softness in cold weather products, discretionary categories and, to a lesser extent, big ticket items. In the fourth quarter of 2022, comparable store sales benefited by approximately 200 basis points from a late December winter storm, company officials said.

In the fourth quarter, the company opened 19 new Tractor Supply stores and three new Petsense by Tractor Supply stores, and closed one Tractor Supply store in the fourth quarter of 2023.

"While our financial performance in 2023 did not meet our initial expectations, our team successfully navigated a highly dynamic environment with agility, operational resiliency and a focus on our strategic investments,” said Hal Lawton, chief executive officer of Tractor Supply. As we exit 2023, our business has never been stronger. Our healthy customer engagement, all time high customer satisfaction scores, peak productivity of our supply chain, technology enhancements and the scaled transformation of our store base all serve as proof points of the strength of our business.”

For the full fiscal year, net sales increased 2.5% to $14.56 billion. Comparable store sales were even with the prior year versus a 6.3% increase in fiscal 2022. Net income increased 1.7% to $1.11 billion from $1.09 billion, and diluted earnings per share increased 3.9% to $10.09 from $9.71 in fiscal 2022. The benefit of the 53rd week contributed approximately $0.16 to diluted EPS in fiscal 2022.

During fiscal 2023, the company opened 70 new Tractor Supply stores and 13 new Petsense by Tractor Supply stores, and closed one Tractor Supply store and one Petsense by Tractor Supply store. In 2023, the company rebranded 81 Orscheln Farm and Home stores to Tractor Supply.

Looking ahead, the company is forecasting net sales for fiscal 2024 of between $14.7 billion and $15.1 billion. Comparable store sales are expected to be between -1.0% to +1.5% with net income of between $1.06 billion and $1.13 billion.