- Net Sales Increased 35.0 percent; Comparable Store Sales Increased 30.5 percent with Strong Double-Digit Growth Across All Product Categories and Regions; Triple-Digit E-commerce Growth
- Diluted Earnings Per Share Increased 61.1 percent to $2.90
Company Provides Third Quarter 2020 Outlook and Outlines Select New Growth Initiatives
Tractor Supply Company, the largest rural lifestyle retailer in the United States, today reported financial results for its second quarter ended June 27, 2020.
“In a highly dynamic environment, the Tractor Supply team delivered record results for the second quarter. At all levels, our team’s dedication to supporting each other and our customers is a true reflection of Tractor Supply’s Mission and Values in action,” said Hal Lawton, Tractor Supply’s President and Chief Executive Officer. “Thank you to all of the Tractor Supply Team Members for their resilience and determination during these trying times. We believe our performance in the second quarter demonstrates the strength of our business and long-term growth potential.”
Lawton continued, “As we attract new customers and gain market share, now is the time for us to build on Tractor Supply’s Out Here lifestyle assortment and convenient shopping format. Over the last few months, we have successfully rolled out new technology and services such as curbside pickup, same day/next day delivery and our first-ever mobile app. We are excited today to announce our Field Activity Support Team (FAST) and several new technology and service enhancements that are being implemented across the enterprise. Additionally, we are beginning work to transform our side lots and mature stores to improve space productivity, bring our latest merchandising strategies to life and advance our efforts to remain nationally strong while locally relevant. These strategic growth initiatives are guided by our commitment to disciplined financial returns and sustained profitable growth.”
Second Quarter 2020 Results
Net sales for the second quarter 2020 increased 35.0 percent to $3.18 billion from $2.35 billion in the second quarter of 2019. Comparable store sales for the second quarter 2020 increased 30.5 percent driven by comparable transaction count and comparable average ticket of 14.6 percent and 15.8 percent, respectively. The COVID-19 pandemic had a significant impact on consumer demand across all of the Company’s major product categories as customers focused on the care of their homes, land and animals. The increase in comparable store sales was driven by unprecedented demand for spring and summer seasonal categories along with exceptional growth in everyday merchandise, including consumable, usable and edible products. All geographic regions of the Company had robust comparable store sales growth. In addition, the Company’s e-commerce sales experienced triple-digit sales growth.
Gross profit increased 41.0 percent to $1.16 billion from $820.7 million in the second quarter of 2019 and gross margin increased 155 basis points to 36.4 percent from 34.9 percent in the prior year’s second quarter. The increase in gross margin was driven by lower depth and frequency of sales promotions, favorable product mix and lower transportation costs as a percent of net sales.
Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 33.0 percent to $709.1 million from $533.2 million in the second quarter of 2019. As a percent of net sales, SG&A expenses decreased 33 basis points to 22.3 percent from 22.7 percent in the prior year’s second quarter. The decrease in SG&A as a percent of net sales was primarily attributable to leverage in occupancy and other fixed costs from the increase in comparable store sales. The leverage from these SG&A expenses were partially offset by incremental costs related to the COVID-19 pandemic and increased incentive compensation given the Company’s strong performance in the quarter. The Company incurred incremental costs related to the COVID-19 pandemic of approximately $55 million, including appreciation wages for frontline Team Members as well as additional labor hours and supply costs dedicated to cleaning and sanitation as COVID-19 cases increased across the country.
Operating income for the second quarter of 2020 increased 55.7 percent to $447.8 million compared to $287.6 million in the second quarter of 2019.
The effective income tax rate was 22.9 percent compared to 22.4 percent in the prior year’s second quarter.
Net income increased 54.5 percent to $338.7 million from $219.2 million in the second quarter of 2019 and diluted earnings per share increased 61.1 percent to $2.90 from $1.80 in the prior year’s second quarter.
During the second quarter of 2020, the Company opened 18 new Tractor Supply stores and three new Petsense stores and closed three Petsense stores.
For more information on the fiscal report and the rest of 2020 outlook, visit the company’s official statement.