News

Tractor Supply Co. Announces Plans for Expansion Despite Weaker-than-Expected Earnings

James L. Flint

• July 30, 2023

Tractor Supply Co.'s stock (TSCO) experienced a 1.4% rise in premarket trading on Thursday following the release of their second-quarter earnings report. Despite posting weaker-than-expected earnings and revising their guidance, the rural lifestyle retailer revealed plans to open more stores in the U.S.

During the second quarter, Tractor Supply Co., headquartered in Brentwood, Tenn., achieved a net income of $421.2 million, equating to $3.83 per share. This marked an increase from the previous year's figures of $396.5 million and $3.53 per share respectively. Sales also saw growth of 7.2%, reaching $4.18 billion.

However, Chief Executive Hal Lawton acknowledged the impact of moderating U.S. consumer spending on goods and seasonal underperformance, particularly in June, leading to below-expectation results.

As a result, the company adjusted its full-year guidance, now anticipating sales to range from $14.8 billion to $14.9 billion, down from the previously projected range of $15.0 billion to $15.3 billion. Similarly, their earnings per share (EPS) forecast was revised to a range of $10.20 to $10.40, compared to the initial guidance of $10.30 to $10.60.

Despite these setbacks, Tractor Supply Co. remains optimistic about future growth. They unveiled plans to increase their store count in the U.S., targeting a total of 3,000 stores—200 more than previously anticipated. Starting in 2025, the company aims to accelerate their new store growth to approximately 90 stores per year and plans to open about 80 new stores in 2024. To fund these developments, Tractor Supply Co. intends to engage in sale-leaseback agreements for some of its 117 existing stores.

Although Tractor Supply Co.'s stock has experienced a year-to-date decline of 4.7%, the broader market, as represented by the S&P 500 (SPX), has seen a 19% gain.

In conclusion, despite the underwhelming second-quarter earnings, Tractor Supply Co. remains committed to expanding its presence in the U.S. market, with ambitious plans for future store growth.