July 20, 2011 / 8:19 PM / 6 years ago

UPDATE 3-Tractor Supply misses sales expectations; shares fall

* Q2 EPS $1.23 vs est $1.20

* Q2 rev $1.18 bln vs est $1.19 bln

* Sees FY11 EPS $2.75-$2.82 vs est $2.77

* Shares fall 10 pct (Adds conference call, analyst comments, background in paragraphs 2-5)

By Arpita Mukherjee

July 20 (Reuters) - Tractor Supply Co reported quarterly sales that missed expectations after six straight quarters of market-beating results and said it would combat rising costs of cotton, grain and oil-based productsplans by increasing prices.

Retailers across the board have been forced to increase prices to counter rising commodity costs.

"If we know (costs are) moving ... we'll start escalating and moving prices up to where we believe it needs to be," a company executive said on a call with analysts.

Suntrust Robinson Humphrey analyst David Magee said the company will not struggle to pass on modest price increases to its consumers.

Magee reckons investors were expecting a bigger beat and that resulted in the company's shares being pulled down as much as 10 percent in extended trade.

Shares of the Brentwood, Tennessee-based company were trading down 4 percent at $68.00 in trading after the bell. They had closed at $70.67 on Wednesday on Nasdaq.

Tractor Supply, which operates 1,043 stores in 44 states, saw sales at stores open for at least one year increase 4.6 percent, compared with a 6.1 percent rise, last year.

For the second quarter, Tractor Supply, which competes with Home Depot , Lowe's Cos and Wal-Mart Stores in different segments, earned $1.23 a share, topping analysts' expectations of $1.20 a share. (Reporting by Arpita Mukherjee in Bangalore; Editing by Viraj Nair, Prem Udayabhanu)

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