Tractor Supply Company ( TSCO), a farm and ranch supplies retailer, said second quarter earnings rose 19.8% from the year-ago period, on improved margins. The company earned $42.9 million, or $1.05 a share, in the quarter, compared with $35.8 million, or 87 cents a share, a year ago. Analysts surveyed by Thomson First Call were expecting earnings of $41.7 million, or $1.01 a share. Second-quarter revenue rose 16.6% from a year ago to $714.9 million. Analysts were expecting a revenue of $720.6 million. The company, as a result of its lower than expected sales in the second quarter, lowered its full year 2006 earnings and revenue guidance. It now expects full year 2006 earnings to be at the low end of its earlier forecast of $2.32 a share to $2.39 a share. (The range reflects a relatively complex assumption about stock options expense: it includes 11 cents worth of options costs but excludes 3 cents worth that were added after the original forecast was issued.) Full year revenue is expected to be about $2.34 billion to $2.38 billion, compared with earlier forecast of $2.35 billion to $2.40 billion. Same-store sales are expected to increase about 2% to 3% over fiscal 2005. Analysts were expecting earnings of $2.4 a share on revenue of $2.41 billion for the full year. ''While we did not achieve the level of sales we had anticipated, due to a combination of macro economic factors and a decline in demand for big-ticket items, we made substantial progress on our growth initiatives,'' the company said. Second-quarter gross profit rose 19.8% from a year ago to $227.4 million and gross margin increased 86 basis points to 31.8%. Operating income for the quarter rose 22.4% to $68.9 million and operating margin increased 46 basis points to 9.6%. Same-store sales, or sales at stores open at least one year, rose 0.5% during the quarter. Weaker-than-expected performance of seasonal power equipment and generators partially offset a rise in sales of clothing/footwear and equine/pet/animal categories.