Tractor Supply Company Reports First Quarter 2010 Results

BRENTWOOD, Tenn., April 21 /PRNewswire-FirstCall/ -- Tractor Supply Company (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 27, 2010.  

First Quarter Results

Net sales increased 9.3% to $710.9 million from $650.2 million in the prior year's first quarter.  Same-store sales increased 2.8%, compared with a 4.2% increase in the prior-year period.  This same-store sales increase was primarily driven by the Company's core consumable categories, including animal and pet-related products, as well as heating products and insulated outerwear.

Gross margin increased 13.9% to $228.9 million, or 32.2% of sales, compared to $201.0 million, or 30.9% of sales, in the prior year's first quarter.  The increase in gross margin primarily reflects improved direct product margin, resulting from strategic sourcing, effective pricing and markdown management and vendor-supported special buys.

Selling, general and administrative expenses, including depreciation and amortization, improved to 30.2% of sales for the first quarter compared to 30.7% of sales for the first quarter of last year.  The improvement is primarily due to sales growth and expense control, which enabled the Company to leverage store payroll, occupancy and marketing expenses.

The Company's effective income tax rate decreased to 34.0% compared to 39.0% in the prior year's first quarter.  This reduction in the tax rate resulted from the tax benefit received on the disqualified disposition of incentive stock options during the quarter.  This tax benefit is discrete to the quarter and the Company expects the full year effective tax rate will be approximately 37.0%.

Net income for the quarter was $9.3 million, or $0.25 per diluted share, compared to net income of $0.5 million, or $0.01 per diluted share, in the first quarter of the prior year.  

The Company opened 19 new stores and closed one store in the first quarter compared to 28 new stores, one closed store, and one relocated store in the prior year's first quarter.  

Jim Wright, Chairman and Chief Executive Officer, stated, "As we recently announced, our exceptional performance resulted in sales growth, gross margin expansion and expense leverage; all of which contributed to record first quarter earnings.  Throughout the quarter, we executed well on our strategies to address customers' needs and enhance the business.  The team worked together closely to ensure that our seasonal presentation, product assortment and in-stock levels were appropriate.  Additionally, we lowered per-store inventory for the tenth consecutive quarter through disciplined operational management."  

Company Outlook

As reported in its recent business update release, for fiscal 2010, the Company anticipates net sales to range from $3.44 billion to $3.50 billion, same-store sales are expected to increase 1% to 3%, and net income to range from $3.48 to $3.60 per diluted share.

Mr. Wright concluded, "We are encouraged by our results in the beginning of the year, including initial trends in the important spring selling season.  As we focus on driving the top- and bottom-line, our team will continue engaging customers with efficient direct marketing, compelling merchandise, and crisply executed in-store programs.  We remain optimistic about the balance of 2010 and we are confident that we will continue achieving profitable growth over the long-term."

Conference Call Information

Tractor Supply Company will be hosting a conference call at 5:00 p.m. Eastern Time today to discuss the quarterly results.  The call will be simultaneously broadcast over the Internet on the Company's homepage at TractorSupply.com and can be accessed under the link "Investor Relations."  The webcast will be archived shortly after the conference call concludes through May 5, 2010.

About Tractor Supply Company

At March 27, 2010, Tractor Supply Company operated 948 stores in 44 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 and seasonal products, including lawn and garden power equipment; (3) truck, towing and tool products; (4) work/recreational clothing and footwear for the entire family; (5) maintenance products for agricultural and rural use; and (6) home decor, candy, snack food and toys.

Forward Looking Statements:

As with any business, all phases of the Company's operations are subject to influences outside its control.  This information contains certain forward-looking statements, including statements regarding estimated results of operations in future periods.  These forward-looking statements are subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and are subject to the finalization of the Company's quarterly financial and accounting procedures, and may be affected by certain risks and uncertainties, any one, or a combination, of which could materially affect the results of the Company's operations.  These factors include general economic conditions affecting consumer spending, the timing and acceptance of new products in the stores, the mix of goods sold,  purchase price volatility (including inflationary and deflationary pressures), the ability to increase sales at existing stores, the ability to manage growth and identify suitable locations and negotiate favorable lease agreements on new and relocated stores, the ability to manage expenses, the availability of favorable credit sources, capital market conditions in general, failure to open new stores in the manner currently contemplated, the impact of new stores on our business, competition, weather conditions, the seasonal nature of our business, effective merchandising initiatives and marketing emphasis, the ability to retain vendors, reliance on foreign suppliers, the ability to attract, train and retain qualified employees, product liability and other claims, potential legal proceedings, management of our information systems, effective tax rate changes and results of examination by taxing authorities and the ability to maintain an effective system of internal control over financial reporting.  Forward-looking statements made by or on behalf of the Company are based on knowledge of its business and the environment in which it operates, but because of the factors listed above, actual results could differ materially from those reflected by any forward-looking statements.  Consequently, all of the forward-looking statements made are qualified by these cautionary statements and those contained in the Company's Annual Report on Form 10-K and other filings with the Securities and Exchange Commission.  There can be no assurance that the results or developments anticipated by the Company will be realized or, even if substantially realized, that they will have the expected consequences to or effects on the Company or its business and operations.  Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof.  The Company does not undertake any obligation to release publicly any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.

(Financial tables to follow)

SOURCE Tractor Supply Company