Tractor Supply Company ups store expansion target; to open 90 stores annually
The nation’s largest rural lifestyle retailer is accelerating its store growth program.
Citing “market insights,” Tractor Supply said it is increasing its long-term store target to 3,000 locations, up 200 stores from its previous guidance. The company plans to increase its annual new store openings to 90 beginning in 2025, with a “step up” to 80 locations in 2024. It’s on track to open approximately 70 stores this year
“With significant share opportunity in a total addressable market of more than $180 billion, we have a long growth runway ahead of us as we continue to execute on our Life Out Here strategy,” stated CEO Hal Lawton.
Tractor Supply revealed its updated expansion plans in its second-quarter earnings release. The company posted net income of $421.2 million, or $3.83 a share, for the quarter ended July 1, up from $396.5 million, or $3.53 a share, in the year-ago period. Analysts had expected estimates of $4.26 billion.
Sales rose 7.2% to $4.18 billion, missing estimates of $4.26 billion. Comparable sales increased 2.5%, driven by comparable average transaction count increase of 1.8% and comparable average ticket growth of 0.6%.
Comp growth reflected continued strength in core year-round merchandise, which offset softness in demand for seasonal goods and declines in big-ticket items, the company said.
“As has been well documented, U.S. consumer spending on goods is moderating,” stated CEO Hal Lawton said in a statement. “Additionally, our business was further impacted by seasonal underperformance, particularly in June. “Consequently, our second quarter results, while solid, were below our expectations.”
In light of the chain’s first half performance and its belief that customers will continue to be “discerning” in their spending for the rest of the year, Tractor Supply lowered its full-year guidance and said it now expects sales to range from $14.8 billion to $14.9 billion, down from prior guidance of $15.0 billion to $15.3.
As of July 1, the company operated 2,181 Tractor Supply stores in 49 states, including 81 stores acquired from Orscheln Farm and Home in 2022 that will be rebranded to Tractor Supply by the end of 2023.
It also owns and operates Petsense by Tractor Supply, a small-box pet specialty supply retailer, with 192 stores in 23 states
Real Estate Strategy Update
Tractor Supply is updating its real estate development and portfolio management strategy for its store real estate to include owned development and sale-leaseback capability.
The company said the owned development program enables it to capture incremental cost savings through a fixed fee model and have more control in the development process of new stores. It expects executing a sale-leaseback transaction of new stores built under this program within a reasonable time after construction is completed.