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This small cap retailer of farming and gardening equipment is at a one year low, with increasing profits. Reports 25% increase in earnings. Wednesday October 20, 4:43 pm Eastern Time Company Press Release Tractor Supply Company Reports 25% Increase in Earnings Per Share NASHVILLE, Tenn.--(BUSINESS WIRE)--Oct. 20, 1999--Tractor Supply Company is one of the largest retail farm and ranch store chains in the United States with 266 stores in 26 states. Net income for the third quarter increased 23.9% to $2.6 million and net income per share increased 25.0% to $.30 per share. Sales for the third quarter ended September 25, 1999 increased 13.9% to $160.2 million and comparable store sales increased 5.4%. For the nine months ended September 25, 1999, sales rose 13.0% to $500.0 million and comparable store sales increased 6.0%. Net income for the first nine months of fiscal 1999 increased 18.7% to $11.6 million and net income per share increased 18.0% to $1.31 per share. Joe Scarlett, Chairman and CEO, noted that ``comparable store sales on a year-to-date basis continue to be in line with ourgoal to achieve annual comparable store sales of 6%. While sales were slightly below expectations for the third quarter, we were encouraged by the following factors: -- comparable store sales rose 5.4% despite cycling last year's 12% comparable store sales increase and a softening of sales in late September (primarily attributable to drought conditions in Texas and the Ohio valley) and reflect an improvement over that of second quarter (3.1%), -- the group of departments we remerchandised in the first quarter of 1999 continued to perform well during the quarter with a comparable store sales increase over 9%, -- our key sales categories remained strong -- the top core basic sales categories that represent more than a third of our business were up over 10% in the quarter in comparable stores, and -- we, once again, proved our ability to react to short-term pressures: our marketing initiatives and expense control efforts,coupled with the strong performance of our new stores, enabled us to stay on track with our planned profit performance.`` ``During the third quarter, we achieved an approximate 25% reduction in our overstock position and we expect further significant reductions through the fourth quarter. However, we expect that certain overstocks will not be fully resolved until well into the second quarter of next year. We believe these reductions can be achieved without taking significant incremental markdowns. We view our overall in-stock position as significantly improved over the previous quarter and we feel confident the effective use of our new systems will continue to improve.' ``We remain very confident in the business and we have a clear focus on meeting our customers' needs. For the remainder of fiscal 1999, we expect: -- continued comparable store sales increases in the group of departments we remerchandised in the first quarter of 1999 in excess of our composite comparable store sales increases, -- our present product assortment for Fall and Winter (particularly heating and winter work clothing) is well positioned to meet customer demand, and -- continued benefits from the sale of Y2K-related merchandise. ``Looking toward 2000, our merchandising and marketing initiatives are absolutely aligned with our objective of driving comparable store sales. To that end, our strategies include: -- continuing merchandising initiatives including (i) the remerchandising of our tool corral (consisting primarily of compressors, welders, pressure washers, generators, hand tools, and all related accessories), (ii) greater product assortment in fencing and core agricultural maintenance products and (iii) further enhancement of product offerings in equine, pet and bird feeding departments, and -- bold marketing initiatives and research efforts including, (i) expanded use of television media, featuring Company spokesmen, George Strait and John Lyons, (ii) increased coverage of key markets using targeted newspaper circulars and radio, (iii) expanded event marketing and (iv) our entrance into data-based marketing.`` Scarlett added that ``we continue to manage the business long-term and build our growth supportive infrastructure. We are making significant strides forward in the development of the leadership team. We are also making solid progress building systems and distribution capacity to support future growth. We look optimistically and enthusiastically to the future.' The gross margin rate for the third quarter of fiscal 1999 increased .1 percentage point to 26.0% of sales mainly due to the improved product costs and new higher margin products and product lines associated with the major remerchandising effort completed in the first quarter of fiscal 1999. Selling, general and administrative (SG&A) expenses for the third quarter increased 11.4% to $34.1 million primarily due to costs associated with new stores and the incremental costs of certain planned infrastructure investments. As a percent of sales, SG&A expenses decreased .4 percentage points to 21.3% primarily as a result of the Company's on-going efforts to control increases in its operating expenses. Tractor Supply Company opened nine new stores during the third quarter (bringing the total store openings, on a year-to-date basis, to 24 new stores). The Company is on schedule to open the remaining planned six additional new stores this year. The Company is also well positioned to achieve its goal of opening 33 new stores in fiscal 2000 (current plans call for the opening of approximately nine new stores in the first quarter of fiscal 2000). Finally, the planned opening of the Company's newly-constructed distribution center in Pendleton, Indiana (relocating from Indianapolis, Indiana) during the first quarter of 2000 is on schedule. Tractor Supply Company's business is highly seasonal with sales and profits historically highest in the second and fourth fiscal quarters. The Company offers a comprehensive selection of merchandise including farm maintenance products, animal products, general maintenance products, lawn and garden products, light truck equipment, and work clothing. Footnotes: -- All comparisons to prior periods are to the respective period of the prior year unless the context specifically indicates otherwise. -- As with any business, all phases of the Company's operations are subject to influences outside its control. This report contains certain forward-looking statements. These statements include reference to certain factors, any one, or a combination, of which could materially affect the results of the Company's operations. These factors include general economic cycles affecting consumer spending, weather factors, pricing and other competitive factors, the timing and acceptance of new products in the stores, the mix of goods sold, capital market conditions in general and the seasonality of the Company's business. Forward-looking statements made by or on behalf of the Company are based on a 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 there can be no assurance that the actual 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. ---------------------------------------------------------------------- biz.yahoo.com | ||||||||||||||
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