Tractor Supply reflects on a strong year and a weak quarter

Tractor Supply Company reported back on a fourth quarter that was slowed by winter setbacks. Still, the year looked good for the farm and ranch retailer.

Net sales for the fourth quarter increased 3.9% to $1.65 billion from $1.58 billion last year. Comparable store sales decreased 1.4%, down from last year's fourth quarter increase of 5.3%.

Net income decreased 0.3% to $111.7 million from $112.1 million and diluted earnings per share increased 1.2% to $0.82 from $0.81 in the fourth quarter of the prior year.

The company attributed the weakness to below-expected performance in cold weather seasonal categories such as stoves, fuel, and insulated outerwear. There was some weakness as well in big-ticket items like snow blowers, log splitters and generators.

Year-round staples like livestock feed, pet food and hardware helped offset these decreases.

"While our fourth quarter sales were below our expectations due principally to the record warm temperatures across most of the country, we effectively managed our markdown cadence and inventory flow throughout the period," said president and CEO Greg Sandfort. "As temperatures have normalized, sell-through of cold-weather seasonal items has improved. Further, we believe we have a solid plan in place to meet our customers' seasonal needs as we transition to the important spring selling season."

Also of some impact to fourth quarter performance: the company began shipping merchandise to stores from its new distribution facility in Casa Grande, Arizona.

Additionally, Tractor Supply opened 26 new stores and closed three stores during the quarter, compared to 22 openings and one closing in the year-ago period.

For the full fiscal year of 2015, net sales were up 9.0% to $6.23 billion, and net income rose 10.7% to $410.4 million.

Tractor Supply provided some guidance for fiscal 2016, with a net sales expectation of $6.9 billion to $7.0 billion and net income expectations in the range of $455 million to $467 million.

"We have a very loyal customer who continues to shop our stores for their everyday basic needs," said Sandfort. "We continue to take a long-term, balanced approach to managing and growing the business and believe we have the strategies and tools in place to meet our annual target of mid-teens earnings per share growth in 2016."