Tractor Supply Company (TSCO 0.33%), a leader in rural lifestyle retail, released its fourth-quarter earnings for 2024 on January 30, 2025. The company presented a mixed performance with actual earnings per share (EPS) of $0.44, missing the consensus estimate of $0.45. Revenue stood at $3.77 billion, slightly below the anticipated $3.782 billion mark, yet representing a 3.1% lift from the same quarter last year. This quarter showcased a balance between advancing strategic initiatives and facing growing macroeconomic pressures.
| Metric | Q4 2024 | Q4 Estimate | Q4 2023 | Y/Y Change |
|---|---|---|---|---|
| EPS | $0.44 | $0.45 | $0.46 | -4.3% |
| Revenue | $3.77B | $3.782B | $3.66B | +3.1% |
| Net Income | $236.4M | N/A | $247.9M | -4.6% |
| Gross Margin | 35.2% | N/A | 35.3% | -0.1 pp |
Source: Analyst estimates for the quarter provided by FactSet.
Business Overview
Tractor Supply Company, a prominent retailer serving small farmers and rural lifestyle enthusiasts, focuses on offering a diverse range of products tailored to rural communities. It operates over 2,400 stores across the United States, presenting goods that include livestock feeds, pet supplies, clothing, and tools.
The company has been strategically enhancing its digital footprint and store network to cater to its rural consumer base. Emphasizing an omnichannel strategy, it aims to seamlessly integrate online and physical shopping experiences while expanding its store count and remodeling existing outlets under the Project Fusion initiative.
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Key Data Points
Quarterly Highlights and Developments
During the fourth quarter, Tractor Supply made significant strides in expanding its retail presence, opening 26 new Tractor Supply stores and four Petsense by Tractor Supply locations. These additions support its strategy to reach more rural customers, catering to a demographic with a growing affinity for rural living and pet care.
Despite the revenue miss, sales rose 3.1% year-over-year, reaching $3.77 billion. The company's digital sales crossed the $1 billion mark, highlighting its strong digital capabilities and successful omni-channel strategies. Digital transformation continues to be a focal area, enhancing customer experience and accessibility.
However, the quarter saw a 4.6% decline in net income to $236.4 million, influenced by rising operating expenses. Selling, general, and administrative expenses rose by 5.5% due to strategic investments and operational cost increases, impacting profitability despite an otherwise solid topline performance.
Tractor Supply maintained its exclusive brand strategy, with 29% of sales stemming from proprietary brands, helping stabilize revenue streams. It also opened its tenth and largest distribution center, showcasing a commitment to operational efficiency and supply chain improvements.
The quarter was not without challenges. A slight decrease in gross margin by 0.1 percentage points from the previous year reflected rising cost pressures. Moreover, declines in discretionary spending categories like apparel and outdoor products indicated shifts in consumer habits amid broader economic influences.
Outlook and Expectations
Looking ahead to fiscal 2025, Tractor Supply is targeting net sales growth in the mid-single digits, with an EPS range projected between $2.10 and $2.22. The company plans to open around 90 new stores, aligning with its growth strategy and continuing investments in Project Fusion to further enhance customer engagement.
Management remains optimistic about future prospects, anticipating benefits from strategic initiatives, including the recent acquisition of Allivet, an online pet pharmacy. This acquisition broadens its market potential, contributing to a more diverse product lineup and an enriched customer offering. However, persistent macroeconomic pressures and rising operational costs merit close monitoring as they could influence the near-term outlook.
