An unusually long winter delayed the start of the critical spring selling season, but rural lifestyle retailer Tractor Supply (TSCO 0.18%) still managed solid sales and profit growth in its fiscal first quarter. Revenue rose thanks to the combination of a growing store base and higher traffic at existing locations. Modest expense gains, plus benefits from a lower tax rate, powered a double-digit spike in net income.

Here's a look at how the headline results compared with the prior-year period:


Q1 2018

Q1 2017

Year-Over-Year Change


$1.68 billion

$1.56 billion


Net income

$71.4 million

$60.3 million






Data source: Tractor Supply financial filings.

What happened with Tractor Supply this quarter?

Tractor Supply managed modest, but broad-based gains across its geographic sales regions and healthy pricing trends. And, while operating expenses rose, management affirmed its full-year targets on both the top and bottom lines.

A tractor at work in a field

Image source: Getty Images.

Highlights of the first quarter include: 

  • Comparable-store sales rose 3.7% to roughly match the prior quarter's results. That increase was driven by a 3% customer traffic improvement and a more modest uptick in average spending per shopper. Sales rose in its everyday and winter seasonal categories but fell in its spring and summer seasonal products.
  • Gross profit jumped 9% to $564 million, which translated into a gross profit margin of 33.5% compared to 33.1% a year ago. Strong demand for winter merchandise allowed the retailer to keep prices steady during the quarter.
  • Rising labor costs ate up a greater proportion of earnings, and that drove operating income down to 5.6% of sales from 6.2% last year.
  • Tax expenses plunged, and so net income rose to $71 million, or 4.2% of sales, from $60 million, or 3.9% of sales.
  • Tractor Supply accelerated investments in its e-commerce sales channel while still delivering nearly $200 million in direct cash returns, including $157 million in stock buybacks and $35 million in dividend payments.

What management had to say

CEO Greg Sandfort and his team were pleased with the overall performance. "We generated solid increases in both comparable store sales and gross margin, despite a delay in the spring selling season in many of our markets," Sandfort explained in a press release.

Referring to their multichannel sales initiative, management expressed optimism about progress at building a robust digital business that complements Tractor Supply's base of over 1,700 stores. "Looking to the balance of 2018, we remain excited about the opportunities ahead of us as we continue to execute our ONETractor strategy," Sandfort said, "which we believe will contribute to sustainable long-term growth for our shareholders."

Looking forward

That strategy will push spending higher this year and take up a significant chunk of the savings generated by a lower tax burden. But Tractor Supply is still expecting a big boost in net income as earnings rise to between $3.95 and $4.15 per share from $3.31 per share in 2017.

The company affirmed its growth outlook that predicts steady comps gains ranging from 2% to 3%, or roughly equal to last year's expansion pace. A lot will depend on the upcoming spring selling season, though, which means investors will have a much better reading on the retailer's 2018 trends following Tractor Supply's fiscal second-quarter report.