By MATT BLOIS
Tractor Supply Company reported record high sales for its fiscal year 2018, but the company expects to do even better in 2019.
On Thursday morning the company announced its financial results for its 2018 fiscal year.
The company reported total sales of $7.91 billion in 2018, an increase of about 9 percent compared to 2017. Sales at established stores increased by about 5 percent and gross profits increased by about 8 percent.
The company’s profit margin decreased slightly last year. On a conference call with investors on Thursday CFO Kurt Barton, said 2018 was a tough year for profit margin and predicts those numbers will improve in 2019.
On Wednesday, the Trump Administration entered into new trade talks with Chinese officials. The uncertainty about tariffs on Chinese goods led to several questions from investors on the conference call.
The U.S. has already imposed tariffs on $250 billion in Chinese imports, and has threatened to impose more. However, President Donald Trump agreed to delay tariff increases until early March while the two countries try to resolve the conflict.
On Thursday morning, President Trump tweeted that he expects to reach a trade deal with Chinese officials.
China’s top trade negotiators are in the U.S. meeting with our representatives. Meetings are going well with good intent and spirit on both sides. China does not want an increase in Tariffs and feels they will do much better if they make a deal. They are correct. I will be……
— Donald J. Trump (@realDonaldTrump) January 31, 2019
CEO Greg Sanford said that the company was prepared for a rise in tariffs, but didn’t think it would have a big impact on the business.
“We continue to monitor this very closely and what impact it may have on our products from China,” he said. “Please keep in mind we have a large segment of our business, such as our consumable, usable and edible products that would be impacted very little to none at all if these tariffs do go into place. Depending on the product category, the team is executing plans to mitigate the potential impacts of tariffs.”
Barton said the company baked potential changes to tariffs into its financial predictions for 2019. He said those predictions wouldn’t change drastically if tariffs rise or stay at current levels.
In 2019, Tractor Supply expects to reach more than $8.3 billion in sales, an increase of five to seven percent over 2018. It expects sales at established stores to increase by 2 to 4 percent. The company hopes to open 80 new Tractor Supply stores and 15 new Petsense stores.
On a conference call, executives said stores benefited from two hurricanes in the fall and cold weather near the end of the year. Those types of events tend to drive sales at Tractor Supply stores.
COO Steve Barbarick said the business has become less affected by the weather over time because it now has stores in 49 states. However, he expects weather will always play an important role in Tractor Supply’s business.
“We look at weather, quite frankly, as an advantage to Tractor Supply Company,” he said. “Our customers live the out here lifestyle. What I will tell you is we benefit because we are in 49 states, so we’re a bit more desensitized … But I would always tell you there will likely be some sensitivity to weather, just in the nature of who are customers of are and the lifestyle they live.”
Tractor Supply returned $496.6 million to shareholders through cash dividends and share repurchases last year. In 2019, Tractor Supply expects to repurchase about $350 million to $450 million in stock next year.