Tractor Supply (TSCO) (XLY) saw its sales increase by 3.9% in 4Q15. That seems low when you compare it to 4Q14 growth of 12%. A major reason for its slowing growth in 4Q15 was a 1.4% decrease in comparable store sales growth from 4Q14.
As you can see in the above graph, Tractor Supply (TSCO) saw a considerable decrease in its organic sales growth. The main reason for the decrease was the warmer-than-normal winter conditions across the country. Cold weather items such as insulated outerwear, snow blowers, and heating products saw a decrease in demand compared to the year before. Non-seasonal items saw an increase of low- to mid-single-digit growth in its comparable sales.
Tractor Supply’s performance in fiscal 2015 gives a better picture of the company. Its sales increased by 9.0%, and organic sales contributed 3.1% in total sales growth. Lowe’s (LOW), Restoration Hardware (RH), and Williams-Sonoma (WSM) had sales growths of 5.5%,16.4%, and 6.7%, respectively.
The store count as of fiscal 2014 was 1,382. In one year, the company opened 114 more stores, which added 5.6% to the total sales growth for the year. In 4Q15 alone, the company had 5.4% sales growth from the new stores. That indicates a high margin of market penetration available for the company in the future.
Gregory A. Sandfort, CEO (chief executive officer) of Tractor Supply, clearly indicated in the conference call that the aim of the company in 2016 will be to increase the assortment of products across stores. It will also focus on brand and market penetration by opening new stores and improving omni-channel platforms for sales.
In the next article, we’ll have a look at the company’s valuation.