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Shares of Tractor Supply Company (NASDAQ: TSCO) were down 16.7% as of 1 p.m. Thursday, after the specialty retail chain provided a disappointing business update ahead of its participation todayin the Goldman Sachs Annual Global Retailing Conference.
As it stands, third-quarter revenue is now expected to increase 4.2% to 5% year over year, or to a range of $1.54 billion to $1.55 billion, with comparable-store sales ranging from flat to a decline of 1% from the same year-ago period. Net income per share for the quarter is expected to be in the range of $0.65 to $0.67. By contrast, analysts' consensus estimates called for higher revenue and earnings of $1.59 billion and $0.71 per share, respectively.
"While there are a number of economic headwinds impacting consumer spending throughout many of the Company's markets," Tractor Supply's press release states, "the energy producing and agricultural markets are the most impacted."
As such, Tractor Supply now expects full fiscal-year 2016 revenue of $6.7 billion to $6.75 billion (down from previous guidance for $6.8 billion to $6.9 billion), including comparable-store sales growth of 1% to 1.7% (down from 2.5% to 3.5% previously). Net income for the year is now expected to be $432 million to $438 million (down from prior guidance for $451 million to $456 million), which should translate to per-share earnings of $3.22 to $3.26 (down from $3.35 to $3.40 previously).
That's not to say Tractor Supply is a broken company. Management has pledged their teams will continue focusing on sales and traffic-driving initiatives, and the company will also prudently allocate inventory and carefully manage expenses as these headwinds persist. Tractor Supply should emerge a stronger company once its industry rebounds. But for now, given its guidance reduction today, it's no surprise to see investors taking a step back.
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