Tractor Supply's Sales Drought

An unseasonably cool April, coupled with drought conditions, created a tough spring selling season for Tractor Supply (Nasdaq: TSCO  ) . Then again, investors have been down this path before. Did a tough second quarter parch the company's prospects for the entire year?

Total second-quarter sales still managed to improve 10.6%, as Tractor Supply posted a modest 1% increase in same-store sales; most of the growth stemmed from the 20 new stores opened during the quarter. Store expansion will remain brisk, with 85-90 new locations planned. Concurrently, management is working to reduce new-store occupancy costs.

Unfortunately, unseasonably extreme April weather throughout most of the U.S. dried up demand for riding mowers and other big-ticket items. Troubles in related apparel also offset strength in pet-food sales. Higher selling and administrative costs dampened earnings growth to less than 3%, which came in below analysts' expectations.

Tractor Supply is still sticking with its full-year bottom-line projection of $2.49-$2.56 in earnings per share, but it's got quite a ways to go. First-quarter earnings amounted to a measly $0.12, in what is usually the slowest quarter of the year.

I'm sticking with the stock, since I see plenty of expansion opportunity for Tractor Supply. Its strong cash generation means it can fund growth with its own capital. Additionally, its rural focus is relatively unique in the crowded retail space, keeping it out of the clutches of big-box behemoths with competing wares, be they PetSmart (Nasdaq: PETM  ) , Wal-Mart (NYSE: WMT  ) , or Home Depot (NYSE: HD  ) . And unlike the home-improvement giants, subprime and related housing woes don't appear to be causing Tractor Supply major sales concerns. Now, if only the weather would cooperate.

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Fool contributor Ryan Fuhrmann is long shares of Tractor Supply, Home Depot, and PetSmart, but has no financial interest in any other company mentioned. Feel free to email him with feedback or to discuss any companies mentioned further. The Fool has an ironclad disclosure policy.