Exhibit 99.1
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TRACTOR SUPPLY COMPANY PROVIDES
THIRD QUARTER BUSINESS UPDATE
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BRENTWOOD, TENNESSEE, SEPTEMBER 29, 2004 - Tractor Supply Company (NASDAQ:
TSCO), the largest retail farm and ranch store chain in the United States, today
provided a business update for the third quarter ended September 25, 2004.
Net sales for the quarter increased 18.1% to $426 million from $361 million last
year, exceeding the Company's previously announced guidance for net sales in the
$390 to $400 million range. Same-store sales increased 10.1%, versus last year's
13.7% gain.
During the third quarter, the Company's sales result was better than anticipated
primarily due to strong sales of emergency response items, particularly in the
Southeast region, as well as a higher level of promotional activity compared to
the year ago period. However, the Company's gross margin was negatively impacted
by several factors including:
- Sales of lower margin hurricane related products.
- Higher year-over-year levels of promotional activity.
- A later than expected start to the Fall/Winter selling season, which
negatively impacted the sale of higher margin seasonal products.
- Greater than anticipated freight costs coupled with difficulty passing
through steel and other commodity costs to consumers.
- A higher LIFO reserve due to increased product costs.
In addition, selling, general and administrative expenses were higher primarily
due to reset activity, uninsured losses and increased legal and accounting
expenses.
While the process of evaluating inventories and operating costs is not yet
complete, the Company currently anticipates net income, excluding an estimated
$1.9 million after-tax charge related to the consolidation and relocation of the
Company's store support center, to be between $8.5 and $9.5 million, or $0.20 to
$0.23 per diluted share. This compares to the Company's previous expectation for
net income, excluding the above referenced charge, of $11.0 to $12.4 million, or
$0.26 to $0.29 per diluted share.
Including the aforementioned charge, net income is anticipated to be in the
range of $6.6 to $7.6 million, or $0.16 to $0.18 per diluted share, for the
third quarter. This compares to the Company's previous guidance, including the
charge, of $9.0 to $10.4 million, or $0.21 to $0.24 per diluted share, for the
third quarter.
Joe Scarlett, Chairman and Chief Executive Officer stated, "We have not fully
assessed the potential impact of the above conditions on our fourth quarter
sales, margin and profits. However, we have now completed the significant third
quarter reset activity and we are taking steps to improve our margins. For
example, next week, as part of our annual vendor conference, we will be holding
a series of meetings titled "Working Collaboratively to Reduce Supply Chain
Costs." We continue to believe we are well positioned to continue to drive
long-term growth and deliver shareholder value."
The Company plans to release its full third quarter results as well as provide
an update of expectations for fiscal 2004 after the market closes on Monday,
October 11, 2004.
Tractor Supply Company operates 500 stores in 32 states, focused on supplying
the lifestyle needs of recreational farmers and ranchers. The Company also
serves the maintenance needs of those who enjoy the rural lifestyle, as well as
tradesmen and small businesses. Stores are located in towns outlying major
metropolitan markets and in rural communities. The Company offers the following
comprehensive selection of merchandise: (1) equine, animal and pet products,
including everything necessary for their health, care, growth and containment;
(2) maintenance products for agricultural and rural use; (3) hardware and tool
products; (4) seasonal products, including lawn and garden power equipment; (5)
truck, trailer and towing products; and (6) work clothing for the entire family.
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AS WITH ANY BUSINESS, ALL PHASES OF THE COMPANY'S OPERATIONS ARE SUBJECT TO
INFLUENCES OUTSIDE ITS CONTROL. THIS INFORMATION CONTAINS CERTAIN
FORWARD-LOOKING STATEMENTS, INCLUDING STATEMENTS REGARDING ESTIMATED RESULTS OF
OPERATIONS. 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 QUARTER-END FINANCIAL AND ACCOUNTING
PROCEDURES, GENERAL ECONOMIC CYCLES AFFECTING CONSUMER SPENDING, WEATHER
FACTORS, OPERATING FACTORS AFFECTING CUSTOMER SATISFACTION, CONSUMER DEBT
LEVELS, PRICING AND OTHER COMPETITIVE FACTORS, THE ABILITY TO ATTRACT, TRAIN AND
RETAIN QUALIFIED EMPLOYEES, THE ABILITY TO IDENTIFY SUITABLE LOCATIONS AND
NEGOTIATE FAVORABLE LEASE AGREEMENTS ON NEW AND RELOCATED STORES, THE TIMING AND
ACCEPTANCE OF NEW PRODUCTS IN THE STORES, THE MIX OF GOODS SOLD, THE CONTINUED
AVAILABILITY OF FAVORABLE CREDIT SOURCES, 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 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.
READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING
STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. THE COMPANY DOES NOT
UNDERTAKE ANY OBLIGATION TO RELEASE PUBLICLY ANY REVISIONS TO THESE
FORWARD-LOOKING STATEMENTS TO REFLECT EVENTS OR CIRCUMSTANCES AFTER THE DATE
HEREOF OR TO REFLECT THE OCCURRENCE OF UNANTICIPATED EVENTS.