Tractor Supply Stock

Tractor Supply Company is the largest rural lifestyle retailer in the United States (U.S.). The company focuses on supplying the needs of recreational farmers, ranchers, and all those who enjoy living the rural lifestyle (which it refers to as the Out Here lifestyle).

The company operates retail stores under the names Tractor Supply Company and Petsense by Tractor Supply. The company's stores are located primarily in towns outlying major metropolitan markets and in rural communities. The company also offers an expanded assortment of products through the Tractor Supply mobile application and online at TractorSupply.com and Petsense.com.

The company has one reportable industry segment which is the retail sale of products that support the rural lifestyle. As of December 30, 2023, the company operated retail stores in 49 states (Tractor Supply retail stores and Petsense by Tractor Supply retail stores). The company's Tractor Supply stores typically range in size from 15,000 to 20,000 square feet of inside selling space, along with additional outside selling space (Side Lot), and its Petsense by Tractor Supply stores have approximately 5,500 square feet of inside selling space. The company's online selling websites and its mobile application offer an extended assortment of products beyond those offered in-store and drive traffic into its stores through its buy online and pickup in-store and ship to store programs. The company's retail store locations and digital capabilities provide the convenience to allow its customers to engage with it anytime, anywhere and in any way they choose.

Business Strategy

The key elements of the company's strategy include supplying the lifestyle needs of recreational farmers, ranchers, animal and pet owners, and all those who enjoy living the rural lifestyle; seeking to serve a customer base that primarily lives in towns outlying major metropolitan markets and in rural communities; providing its customers reliable product availability and a convenient, customer-centric experience across shopping channels; and making shopping an enjoyable experience and to maximize sales and operating efficiencies.

The company's long-term growth strategy is to expand and deepen its customer base by providing personal, localized, and memorable customer engagements by leveraging content, social media, and digital shopping experiences, attracting new customers and driving loyalty; evolve customer experiences by digitizing its business processes and furthering its omni-channel capabilities; offer relevant assortments and services across all channels through exclusive and national brands and continue to grow its total addressable market by introducing new products and services through its test and learn strategy; increasing space utilization, and implementing advanced supply chain capabilities to support growth, scale and agility; and expand through selective acquisitions, as such opportunities arise, to add complementary businesses and to enhance penetration into new and existing markets to supplement organic growth.

Target Market

Supplying the lifestyle needs of recreational farmers, ranchers, animal and pet owners, and all those who enjoy living the rural lifestyle remains the company's primary objective. By focusing its product assortment on these core customers, the company is differentiated from general merchandise, home center, and other specialty retailers. The company caters to the rural lifestyle and often serve a market by being a trip consolidator for many basic maintenance needs for farm, ranch, and rural customers through convenient shopping options both in-store and online.

Customers

The company's target customers are home, land, pet, animal and livestock owners who generally have above average income and below average cost of living. The company seeks to serve a customer base that primarily lives in towns outlying major metropolitan markets and in rural communities. This customer base includes recreational farmers, ranchers, and all those who enjoy living a rural inspired lifestyle.

Customer Service

The company provides its customers reliable product availability and a convenient, customer-centric experience across shopping channels. In its stores, the ability of the company's motivated, well-trained team members to provide friendly, responsive and seasoned advice helps its customers find the right products to satisfy their everyday needs, as well as the specialty items needed to complete their rural lifestyle projects. The company also engages with its customers through its e-commerce websites and mobile application, which provide the opportunity to allow customers to shop anytime, anywhere, and in any way they choose, while delivering enhanced product information, research, and decision tools that support product selection and informational needs in specific subject areas. Additionally, the company maintains a Customer Solutions Center at its Store Support Center located in Brentwood, Tennessee, to support its in-store and online customers, as well as its store team members.

The company uses a third-party provider to survey and measure its level of customer service. The company carefully evaluates the feedback it receives from its customers and implement improvements at both the company and the individual store level based on that feedback.

Merchandising and Purchasing

The company offers an extensive assortment of products for all those seeking to enjoy the Out Here lifestyle. The company's product assortment is tailored to meet the needs of its customers in various geographic markets. The company's full line of product offerings includes a broad selection of high quality, reputable brand name and exclusive brand products with approximately 17,000 to 25,000 products per store, as well as over 300,000 products online. The company's comprehensive selection of merchandise consists of the following major product categories:

Livestock, Equine and Agriculture: Livestock and equine feed and equipment, poultry, fencing, and sprayers and chemicals;

Companion Animal: Food, treats and equipment for dogs, cats, and other small animals as well as dog wellness;

Seasonal and Recreation: Tractor and rider, lawn and garden, bird feeding, power equipment, and other recreational products;

Truck, Tool, and Hardware: Truck accessories, trailers, generators, lubricants, batteries, and hardware and tools; and

Clothing, Gift, and Decor: Clothing, footwear, toys, snacks, and decorative merchandise.

The company's buying team continuously reviews and updates its product assortment as necessary to respond to customer needs and to offer new, relevant products. The company focuses on providing key products that its customers use on a regular basis for their lifestyle and maintenance needs with emphasis on C.U.E. products. Examples of C.U.E. product categories include, but are not limited to, livestock feed and bedding, pet food, bird seed, lubricants, propane, and various seasonal products, such as fertilizer, weed control, mulch, pest control, and twine.

The company's products are sourced through both domestic and international vendors, each of whom are expected to adhere to a code of conduct that guides its relationship. The company purchases its products from a group of approximately 1,000 vendors, with no one vendor representing more than 10% of its purchases during fiscal 2023. Approximately 400 core vendors accounted for 90% of the company's merchandise purchases during fiscal 2023.

Intellectual Property

The company's subsidiary, Tractor Supply Co. of Texas, LP (TSCT), owns registrations with the U.S. Patent and Trademark Office (USPTO) for various service marks, including TSC, Tractor Supply Co., TSC Tractor Supply Co., and the trapezium design for retail services.

The company's exclusive brands include 4health (pet foods and supplies); American Farmworks (livestock, farm and ranch equipment); Bit & Bridle (apparel and footwear); Blue Mountain (apparel); C.E. Schmidt (apparel and footwear); Country Lane (grooming preparations, animal feed and feed supplements); Countyline (livestock, farm and ranch equipment); Country Tuff (lubricants, fluids and oil treatments); Dumor (livestock and horse feed and supplies); Farm Table (pet food and treats); Groundwork (lawn and garden supplies); Huskee (outdoor power equipment); JobSmart (tools); Paws & Claws (pet foods and supplies); Producer's Pride (livestock and horse feed and supplies); Red Shed (gifts, collectibles, and outdoor furniture); Redstone (heating products); Retriever (pet foods and supplies); Ridgecut (apparel); Royal Wing (bird feed and supplies); Strive (pet foods); Traveller (truck and automotive products); Treeline (hunting gear and accessories); TSC Tractor Supply Co (trailers, truck tool boxes and animal bedding); and Untamed (pet foods).

The exclusive brands identified have been registered as trademarks with the USPTO for certain products and some are the subject of additional applications for registration pending before the USPTO for other products.

The company's patents (both United States and foreign) have expiration dates ranging from April 2027 to December 2041 and protects various elements, designs or functions of farm and ranch equipment, as well as light systems for trucks and other vehicles.

Distribution

In 2023, the company's Tractor Supply stores received approximately 81% of merchandise through this network while the remaining merchandise shipped directly from its vendors to its stores or customers. The company's distribution centers utilize warehouse and labor management tools that support the planning, control, and processing of inventory. The company manages its inbound and outbound transportation activity in-house through the use of a transportation management system. The company utilizes multiple common carriers for store and direct to customer deliveries.

Marketing

The company promotes a broad selection of merchandise and its Life Out Here brand messaging through digital and social media initiatives, targeted digital video (connected TV and streaming programming), e-mail and direct mail. The company's vendors also provide assistance with product presentation and fixture design, support for in-store events, point-of-purchase materials for customer education, and product knowledge for its team members.

Omni-Channel

The company provides its customers the opportunity to shop in a manner that fits their lifestyle and is most convenient for them. The company offers buy online, pickup in-store, and curbside pickup, which provide convenient access for customers to pick up merchandise from its store locations. Additionally, the company's online experience offers an expansive product assortment including a direct to consumer assortment. The company provides its customers the ability to have products shipped directly to its retail store locations or delivered to their homes or offices. For select products, the company offers same day delivery. The company uses its distribution facility network, as well as its stores to support its e-commerce activities. The company's digital capabilities have further enhanced its in-store shopping experience, allowing it to engage with its customers more effectively, and expanded its target markets outside of its current retail store locations.

Petsense by Tractor Supply

Petsense by Tractor Supply is a small-box pet specialty supply retailer focused on meeting the needs of pet owners, primarily in small and mid-sized communities, and offering a variety of pet products and services. As of December 30, 2023, the company operated a total of 198 Petsense by Tractor Supply stores in 23 states, and an e-commerce website (Petsense.com). The Petsense name is registered with the USPTO.

Seasonality

The company's business is seasonal. Historically, the company's sales and profits are the highest in the second and fourth fiscal quarters (year ended December 30, 2023) due to the sale of seasonal products. The company usually experiences its highest inventory and accounts payable balances during its first fiscal quarter for purchases of seasonal products to support the higher sales volume of the spring selling season, and again during its third fiscal quarter to support the higher sales volume of the cold-weather selling season.

History

Tractor Supply Company was founded in 1938. The company was incorporated in 1982.