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Reflecting On Specialty Retail Stocks’ Q1 Earnings: Tractor Supply (NASDAQ:TSCO)


Max Juang /
2024/07/11 7:48 am EDT

Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Tractor Supply (NASDAQ:TSCO) and its peers.

Some retailers try to sell everything under the sun, while others—appropriately called Specialty Retailers—focus on selling a narrow category and aiming to be exceptional at it. Whether it’s eyeglasses, sporting goods, or beauty and cosmetics, these stores win with depth of product in their category as well as in-store expertise and guidance for shoppers who need it. E-commerce competition exists and waning retail foot traffic impacts these retailers, but the magnitude of the headwinds depends on what they sell and what extra value they provide in their stores.

The 4 specialty retail stocks we track reported a mixed Q1; on average, revenues missed analyst consensus estimates by 1.7%. while next quarter's revenue guidance was 0.5% above consensus. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and specialty retail stocks have had a rough stretch, with share prices down 5.9% on average since the previous earnings results.

Tractor Supply (NASDAQ:TSCO)

Started as a mail-order tractor parts business, Tractor Supply (NASDAQ:TSCO) is a retailer of general goods such as agricultural supplies, hardware, and pet food for the rural consumer.

Tractor Supply reported revenues of $3.39 billion, up 2.9% year on year, in line with analysts' expectations. It was a mixed quarter for the company with a decent beat of analysts' earnings estimates but a miss of analysts' gross margin estimates.

“For the first quarter, Tractor Supply’s results were in line with our expectations with positive comparable store sales and robust earnings growth. I want to thank our more than 50,000 Team Members for their enduring commitment to living our Mission and Values and providing exceptional customer service, which allowed us to deliver solid financial performance in the first quarter. We saw several positive signs in our business during the quarter, including ongoing market share gains, transaction growth and strength in big ticket sales. Most importantly, we believe that our customer base remains healthy and engaged. We remain confident in our outlook for 2024 given our share gains and the continued scaling of our Life Out Here strategy. We remain committed to disciplined investments to capture the significant long-term growth opportunities in our market,” said Hal Lawton, President and Chief Executive Officer of Tractor Supply.

Tractor Supply Total Revenue

Tractor Supply delivered the weakest full-year guidance update of the whole group. The stock is flat since reporting and currently trades at $260.

Is now the time to buy Tractor Supply? Access our full analysis of the earnings results here, it's free.

Best Q1: Petco (NASDAQ:WOOF)

Historically known for its window displays of pets for sale or adoption, Petco (NASDAQ:WOOF) is a specialty retailer of pet food and supplies as well as a provider of services such as wellness checks and grooming.

Petco reported revenues of $1.53 billion, down 1.7% year on year, outperforming analysts' expectations by 1.1%. It was a decent quarter for the company with optimistic earnings guidance for the next quarter but a miss of analysts' earnings estimates.

Petco Total Revenue

Petco delivered the biggest analyst estimates beat among its peers. The market seems happy with the results as the stock is up 35% since reporting. It currently trades at $3.32.

Is now the time to buy Petco? Access our full analysis of the earnings results here, it's free.

Slowest Q1: Leslie's (NASDAQ:LESL)

Named after founder Philip Leslie, who established the company in 1963, Leslie’s (NASDAQ:LESL) is a retailer that sells pool and spa supplies, equipment, and maintenance services.

Leslie's reported revenues of $188.7 million, down 11.4% year on year, falling short of analysts' expectations by 6.1%. It was a weak quarter for the company with a miss of analysts' gross margin estimates.

Leslie's had the highest full-year guidance raise but had the weakest performance against analyst estimates and weakest performance against analyst estimates in the group. As expected, the stock is down 27.8% since the results and currently trades at $3.38.

Read our full analysis of Leslie's results here.

National Vision (NASDAQ:EYE)

Operating under multiple brands, National Vision (NYSE:EYE) sells optical products such as eyeglasses and provides optical services such as eye exams.

National Vision reported revenues of $542.5 million, up 4.2% year on year, falling short of analysts' expectations by 1.8%. Looking more broadly, it was a slower quarter for the company with underwhelming earnings guidance for the full year and a miss of analysts' gross margin estimates.

National Vision delivered the fastest revenue growth among its peers. The stock is down 31.6% since reporting and currently trades at $12.22.

Read our full, actionable report on National Vision here, it's free.

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