Tractor Supply Co. posted another solid quarter of sales gains, including its impressive 39th consecutive quarter of double-digit ecommerce gains. And its latest marketing push shows America’s love affair with the rural lifestyle isn’t slowing down, even as many people limp back to urban office life.
The Brentwood, Tennessee-based retailer says net sales for the first quarter of the year climbed 8.3% to $3.02 billion, compared with $2.79 billion in the prior-year quarter. Comparable store sales grew 5.2%, with people spending a little more but shopping a little less often.
Those results beat expectations, and the company held firm on its bullish forecast for the year ahead, even though supply-chain constraints and unpredictable inflation trends have many retailers cutting back on earlier predictions. Tractor Supply predicts sales of between $13.6 billion and $13.8 billion for the full year.
Demand was strongest for everyday merchandise, including the consumable, usable and edible products consumers can’t skimp on, like animal feed. But it slowed in more discretionary categories.
And while inflation is casting a shadow over all retailers, farmers face even more uncertainty, with the war in Ukraine impacting the costs of fuel, grain and fertilizer.
“While we anticipate that we will continue to operate in a highly inflationary and volatile environment, we believe Tractor Supply is uniquely positioned for growth with a resilient, domestic business model that has stood the test of time,” said Hal Lawton, president and chief executive officer, in its announcement. “The strength of our business and the needs-based, demand-driven nature of our product categories complemented by our 'Life Out Here’ strategy gives us confidence in our outlook.”
Still, Seth Basham, who follows the company for Wedbush Securities, is cautious and continues to rate the company as “neutral.”
While he believes Tractor Supply continues to execute well on its longer-term initiatives and benefit from de-urbanization trends, he thinks inflation may lead consumers to cut back on discretionary spending, affecting sales.
The company is the largest rural lifestyle retailer in the U.S. and supports its country mission with a steady stream of ads full of happy farm animals: cuddly chickens, happy herding dogs and horses with personality.
Observers think that’s a sturdy niche. While Tractor Supply competes directly with chains like PetSmart and Lowe’s, it “derives its success from its evolving customer-led store layout, which makes it a destination store for many of its customers,” writes Jaime Katz, an analyst who follows the company for Morningstar. “In addition, since Tractor Supply focuses on an active do-it-yourself rural consumer, many of its products are higher-end than those found in retailers that focus on a casual consumer.”
These hobbyists and recreational farmers form a “generally resilient consumer base that allows for more consistent revenue growth.”
Separately, the retailer kicked off its 12th Paper Clover campaign, a partnership to raise money for the National 4-H Council. In all, it’s helped raise more than $17 million through the Paper Clover campaign, including $1.3 million last year.