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Tractor Supply Company (TSCO - Analyst Report) provided a sneak preview of its fourth -quarter results while citing a robust sales performance during the quarter, which raised its fiscal 2011 profit forecast. Tractor Supply raised its earnings expectation for fiscal 2011 between $2.97 and $2.99 per share from $2.85 to $2.89 per share.

The company anticipates a benefit of approximately 9 cents to be included in its annual earnings guidance for an extra sales week included in the fourth quarter. The current Zacks Consensus Estimate stands at $2.91 per share which is below the company’s guidance range.

The farm equipment retailer provided a business update ahead of its participation at ICR XChange Conference, Net sales, during the fourth quarter, surged 20.1% to $1.24 billion from $1.03 billion in the prior-year quarter. Further, Tractor Supply stated that an extra sales week in the quarter contributed approximately 6.6% to the sales growth. Net sales were ahead of the Zacks Consensus Estimate of approximately $1.2 billion.

Robust performance in core consumable, usable and edible products − for instance, pet food and animal feed − acted as a catalyst for same-store sales, marking an increase of 7.6% during the fourth quarter. Tractor Supply has been continuously witnessing increasing trends in same-store sales. re

Fiscal 2011, so far

During the recession, Tractor Supply had suffered setbacks as buyers avoided big-ticket purchases such as mowers, but recent quarters have positively seen an uptick in results. The company's impressive merchandising improvement strategy and solid same-store sales trend resulted in double-digit top-line growth for the company during the first three quarters of fiscal 2011.

Furthermore, improved inventory management and cost control measures facilitated Tractor Supply to post robust growth in its bottom line.

During first-quarter 2011, Tractor Supply registered a growth of 17.7% in its top line, resulting in an increase of 71% in its bottom line. The company’s second-quarter earnings per share rose approximately 18% while its top line grew by 10.6%. During the third quarter, Tractor Supply’s earnings per share climbed 45% primarily driven by an increase of 17.9% in net sales.

Our Take

We believe that the company’s efficiency in managing inventory level, strategic merchandise sourcing, private branding and cost control measures will retain its momentum of increasing trends both in its top and bottom line.

The company operates in a highly fragmented industry and faces competition from larger retailers like The Home Depot Inc. (HD - Analyst Report).

Tractor Supply’s shares maintain a Zacks #2 Rank, which translates into a short-term ‘Buy’ recommendation. Our long-term recommendation on the stock remains ‘Neutral’.

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