Tractor Supply (TSCO) Q3 2024 earnings summary

Executive summary

• Q3 2024 net sales rose 1.6% year-over-year to $3.47 billion, driven by new store openings, while comparable store sales declined 0.2% and net income fell 5.3% to $241.5 million; diluted EPS was $2.24, down from $2.33 in Q3 2023, impacted by the absence of a prior-year one-time depreciation benefit.

• The company announced the acquisition of Allivet, an online pet pharmacy, to expand pet Rx offerings and enhance Neighbor's Club benefits, with the deal expected to close in Q1 2025.

• Customer engagement remains strong, with Neighbor's Club membership exceeding 37 million and retention rates at record highs.

• Strategic investments in store remodels (Fusion format), new store openings, and supply chain enhancements continue to drive growth and operational efficiency, with 54 new Tractor Supply stores and 7 new Petsense stores opened in the first nine months of 2024.

• The company provided disaster relief for communities affected by hurricanes and continues to invest in customer engagement programs.

Financial highlights

• Gross margin improved by 56 basis points year-over-year to 37.2%, driven by lower transportation costs and disciplined product cost management.

• SG&A expenses rose 119 basis points to 27.8% of net sales, mainly due to planned growth investments and higher depreciation.

• Operating margin for Q3 2024 was 9.36%, down from 9.99% in Q3 2023.

• Net income margin for Q3 2024 was 6.96%, down from 7.47% in Q3 2023.

• Over $760 million returned to shareholders year-to-date via share repurchases and dividends.

Outlook and guidance

• Fiscal 2024 net sales expected between $14.85–$15.0 billion; comparable store sales forecasted flat to up 1%.

• Operating margin rate projected at 9.8%–10.1%; net income between $1.09–$1.12 billion; diluted EPS of $10.10–$10.40.

• Capital expenditures for fiscal 2024 projected at $625–700 million, net of sale-leaseback proceeds.

• Plans to open approximately 80 new Tractor Supply stores and 10–15 new Petsense stores in 2024.

• Management expects sufficient liquidity from cash, operations, and credit facilities for the next 12 months and foreseeable future.