Tractor Supply misses quarterly sales estimates on sluggish discretionary demand
Oct 24 (Reuters) -Farming supplies retailer Tractor Supply TSCO.O missed third-quarter sales estimates on Thursday, as cost-conscious consumers cut back spending on higher-margin products like generators and hardware.
The company's discretionary items ranging from truck tools to lawn mowers saw sluggish demand, as lower-income customers relentlessly looked for cheaper alternatives for their essential purchases.
Tractor Supply posted third-quarter net sales of $3.47 billion, compared with analysts' average estimates of $3.49 billion, as per data compiled by LSEG.
Analysts from Truist Securities, earlier this month, had raised concerns over the impact of warmer than average weather conditions in July and August pressuring Tractor Supply's quarterly sales.
The company's net income for the quarter ended Sept. 28, decreased 5.3% to $241.5 million from a year ago owing to higher expense from planned growth investments like onboarding of a new distribution center.
Shares of the company were down about 1% in premarket trading.
However, it benefited from lower transportation costs, effective cost management and continued execution of its everyday low price strategy, which involves offering its products at consistently affordable rates throughout the year.
The company's quarterly gross margin expanded 56 basis points to 37.2%.
Tractor Supply expects annual sales to be between $14.85 billion and $15.0 billion, compared with prior forecast of $14.8 billion to $15.0 billion.
It expects annual earnings per share to be in the range of $10.10 to $10.40, compared with previous forecast of $10.00 to $10.40 per share.
Tractor Supply also separately said it would acquire Allivet, a privately held online pet and animal pharmacy, in an all-cash deal.
Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Shailesh Kuber
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