Investing.com -- Shares in Tractor Supply Company (NASDAQ:TSCO) plunged 7% in after-hours trading after the largest rural lifestyle retail store chain in the U.S. posted weak preliminary second quarter results and lowered its annual outlook on Wednesday afternoon.
While Tractor Supply increased revenues by 4.5% to $1.85 billion for the second quarter of Fiscal Year 2016, comparable store sales edged down slightly by 0.5%, amid cooler than anticipated seasonal temperatures over the Spring sales period. As temperatures spiked following the Memorial Day holiday, Tractor Supply enjoyed its strongest month of the quarter, providing indications that the company can regain footing over the final two months of the summer. Last year, Tractor Supply's comparable store sales surged 5.6% over the second quarter.
"As our preliminary results show, we had a challenging second quarter. While our traffic trends remained positive and the sale of core pet and animal offerings remained strong, we did experience weakness in many of our seasonal and big ticket categories. We tend to look at the business by the half, and following a strong first quarter with an early start to the sale of seasonal merchandise driven by favorable March weather and an early Easter, we saw a reversal in trends with the cooler temperatures throughout much of the country in April and May," Tractor Supply CEO Greg Sandfort said in a statement.
"As the weather patterns normalized in early June, so did our sales trends, but it was not enough to offset the weakness earlier in the quarter. Traffic trends in the second quarter remained healthy, and our team members in the field, distribution centers and store support center continued to meet our customers' everyday basic needs."
Moving forward, Tractor Supply expects its gross margin rate for the quarter to be down 25 to 30 basis points from last year's rate of 35.3%. The downbeat projections reflect higher product and transportation costs, which offsets declines in general and administrative expenses. Consequently, Tractor Supply anticipates that its net income per diluted share for the quarter will fall within a range between $1.15 and $1.16. Previously, analysts said they expect to see per share earnings of $1.26 on revenue of $1.93 billion.
Shares in Tractor Supply plummeted 6.67 or 7.01% to 88.50.