In its recent quarterly report, Tractor Supply Company (TSCO) surpassed analyst estimates by $0.06 per share, posting earnings of $2.28 per share for the fourth quarter (Q4). Despite a year-over-year decrease in revenues by 8.6% to $3.66 billion, in line with estimates, the company's robust performance in year-round consumable, usable, and edible (C.U.E.) categories drove the earnings beat.
Challenges in Q4 included a significant -4.2% decline in comparable store sales, influenced by a 1.5% decrease in the comparable average ticket and a 2.7% decrease in the comparable average transaction count. Softness in cold weather products, discretionary categories, and big ticket items contributed to this decline.
Tractor Supply issued guidance for FY24 consistent with analyst expectations, anticipating EPS between $9.85 and $10.50, compared to the $10.32 estimate. Revenue guidance for FY24 is set between $14.70 and $15.10 billion, slightly below the $15.03 billion estimate. The company projects same-store comps to fall in the range of -1.0% to +1.5% for FY24.
During the conference call, Tractor Supply acknowledged the challenging first quarter in the previous year but anticipates positive comp sales for the upcoming first quarter. Despite the solid Q4 result and guidance, TSCO shares experienced only a modest 1.8% increase, reflecting lingering headwinds, including a widening decline in comparable store sales and a cautious outlook for 2024 amid economic uncertainty.
The decline in Q4 comparable store sales by -4.2%, compared to -0.4% in Q3, indicates a worsening trend. Total revenue fell more significantly in Q4 than in Q3, signaling a gradual economic slowdown. TSCO approaches its FY24 guidance cautiously, forecasting comp growth below its long-term model, acknowledging the uncertainty for a soft landing or a harder recession. The company's ability to navigate these challenges in 2024 will be crucial for its future position.