Tractor Supply Company, the largest rural lifestyle retailer in the United States, today reported record financial results for its first quarter ended March 27, 2021.

“The Tractor Supply team delivered an exceptionally strong start to the year, and our comparable store sales growth exceeded our expectations. This record performance was achieved by the more than 42,000 Tractor Supply Team Members who are committed to taking care of each other and our customers as the dependable supplier of the Out Here lifestyle. I continue to be incredibly proud of how the organization is responding in the current environment,” said Hal Lawton, Tractor Supply’s president and CEO.

Lawton continued, “Based on our strong performance in the first quarter, the positive macro factors and robust customer retention trends, we are raising our financial outlook for the year and now expect to deliver diluted EPS in the range of $7.05 to $7.40. We believe our resilient business model with a differentiated and loyal customer base, our strategic investments to capture growth opportunities and the strength of our balance sheet position us to capitalize on the momentum in our business in 2021 and beyond.”

First Quarter Results

Net sales for the first quarter 2021 increased 42.5% to $2.79 billion from $1.96 billion in the first quarter of 2020. Comparable store sales increased 38.6% compared to an increase of 4.3% in the prior year’s first quarter. The comparable store sales results included an increase in comparable average transaction count and ticket of 21% and 17.6%, respectively. All geographic regions of the Company had positive comparable store sales growth of at least 30%. The comparable store sales results reflect strong demand for consumable, usable and edible products and robust growth for seasonal categories. In addition, the Company’s e-commerce sales experienced triple-digit percentage growth for the fourth consecutive quarter.

Gross profit increased 48.8% to $983.8 million from $661.2 million in the prior year’s first quarter, and gross margin increased 148 basis points to 35.2% from 33.8% in the prior year’s first quarter. The increase in gross margin was primarily attributable to a lower depth and frequency of sales promotions, less clearance activity and favorable product mix. These factors were partially offset by higher transportation costs as a percent of net sales.

Selling, general and administrative (SG&A) expenses, including depreciation and amortization, increased 37.3% to $753.2 million from $548.7 million in the prior year’s first quarter. As a percent of net sales, SG&A expenses improved 103 basis points to 27% from 28% in the prior year’s first quarter. The improvement in SG&A as a percent of net sales was primarily attributable to leverage in occupancy and other costs from the increase in comparable store sales. Certain first quarter costs as a percent of net sales were higher than the prior year, driven by incremental costs from incentive compensation and COVID-19 such as investments in pay and benefits and other health and safety related expenses.

The effective income tax rate was 18.8% compared to 22.1% in the prior year’s first quarter. The improvement in the effective income tax rate was primarily related to a discrete incremental tax benefit associated with share-based compensation compared to the first quarter of 2020.

Net income increased 116.5% to $181.4 million in the first quarter of 2021 from $83.8 million in the prior year’s first quarter, and diluted EPS increased 118.3% to $1.55 from $0.71 in the first quarter of 2020.

The Company repurchased approximately 1.6 million shares of its common stock for $253.4 million and paid quarterly cash dividends totaling $60.6 million, returning $314 million of capital to shareholders in the first quarter of 2021.

The Company opened 21 new Tractor Supply stores and 2 new Petsense stores and closed 7 Petsense stores in the first quarter of 2021.

Fiscal 2021 Outlook

The impact that the COVID-19 pandemic will have on the broader economy and the Company’s fiscal 2021 results remains uncertain. Given the nature of the COVID-19 pandemic on the macro economy and the consumer, the Company continues to plan for fiscal 2021 based on a range of potential outcomes. Given the strong performance in the first quarter of 2021 and what the Company can reasonably predict at this time, the Company is updating its fiscal 2021 financial guidance.

Expected capital expenditures remain in the range of $450 million to $550 million. Anticipated capital expenditures include new store growth of approximately 80 new Tractor Supply and 10 new Petsense store openings. In addition, the Company plans 150 to 200 Side Lot transformations and 150 to 200 Project Fusion store remodels of existing Tractor Supply stores as part of its Life Out Here Strategy.

The Company continues to have a strong liquidity position with current cash and cash equivalents of approximately $1.15 billion and no amounts drawn on its $500 million revolving credit facility as of March 27, 2021.

The Company’s outlook for fiscal 2021 does not contemplate the impact of the pending acquisition of Orscheln Farm and Home previously announced on February 17, 2021. The acquisition is conditioned on the receipt of regulatory clearance and satisfactory completion of customary closing conditions.