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Tractor Supply (TSCO) Strategic Efforts Good: Apt to Hold
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Tractor Supply Company (TSCO - Free Report) has been doing well, thanks to its sturdy business strategies, including the Life Out Here and ONETractor initiatives. The Neighbor's Club loyalty program is performing well. Hence, the company has been experiencing sturdy demand and strong market share gains for a while.
Analysts seem optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $14.9 billion and $10.23, respectively. These estimates indicate corresponding growth of 2.5% and 1.4% year over year.
Strategic Details
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s omnichannel investments include curbside pickup, same-day and next-day delivery, a re-launched website and a new mobile app. Earlier, it launched Tractor Supply, Visa Credit Card, which allows customers to earn points on their everyday purchases, both in-store and anywhere Visa is accepted. The buyout of Orscheln Farm and Home is also contributing to the results.
The company’s live goods performance also bodes well, which comps well above the chain average despite the warm weather hurting most of its other seasonal categories. Digital sales grew double digits in the second quarter of 2024. The company has been accelerating its digital capabilities, which has led to higher customer engagement and conversion rate improvement. The overall customer base has been robust with healthy customer engagement.
Tractor Supply’s store expansion initiatives also bode well. The company is well positioned to expand its store base, remaining on track to increase its domestic store to 2,500 in the long term. In the second quarter, it opened 21 Tractor Supply stores and three Petsense by Tractor Supply stores. It has opened its 10th and largest distribution center in Maumelle, AR during the quarter. Management is likely to continue with its store-opening initiatives in 2024. The addition of product categories, greater ease of shopping and robust services help the company serve its customers efficiently.
Image Source: Zacks Investment Research
The company has been seeing strong growth in customer counts and retention due to the Neighbor’s Club loyalty program. It had significantly expanded its Neighbor's Club offerings to reward members faster and reduce the spending for tier qualifications. Tractor Supply had launched Hometown Heroes, which helps recognize military service members, veterans and first responders. This program comes with one banner, supporting selfless men and women. We note that nearly 20% of the members of the Hometown Heroes program as of the second quarter are new to Neighbor's Club while15% are new to Tractor Supply.
During the reported quarter, the Neighbor's Club comp sales surpassed the company’s overall sales. Tractor Supply has reached an all-time high in its sales penetration, recording membership of more than 36 million members. It has added about 5 million members in the last 12 months. Moving ahead, the company is focused on improving personalization capabilities, mainly its customer data platform, which are expected to be implemented later in the year.
Bottom Line
Buoyed by such endeavors, shares of the leading retail farm and ranch store chain have gained 22.2% year to date against the industry’s 12.2% decline. We believe that Tractor Supply stock will stay ahead of the curve in the near term. This Zacks Rank #3 (Hold) company boasts a VGM Score of A.
In its last earnings call, management revealed an encouraging view for 2024. The company expects net sales to be in the range of $14.8-$15 billion compared with sales of $14.6 billion delivered in 2023. The operating margin is likely to be in the band of 9.8-10.1% compared with 9.7-10.1% expected earlier. EPS is expected to be in the range of $10.00-$10.40 compared with the prior forecasted range of $9.85-$10.50 and $10.09 delivered in 2023. Management expects gross margin expansion in the second half, with the third quarter registering the best expansion on favorable transportation costs.
Key Picks
We have highlighted three better-ranked stocks, namely Gap , DICK'S Sporting (DKS - Free Report) and Deckers (DECK - Free Report) .
The company has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year EPS implies growth of 21.7% from the year-ago reported figure.
DICK'S Sporting, a sporting goods retailer, currently carries a Zacks Rank #2 (Buy). DKS delivered an average earnings surprise of 4.7% in the trailing four quarters.
The consensus estimate for DICK'S Sporting’s current financial-year sales indicates growth of 1.8% from the year-ago reported figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an average earnings surprise of 42.8% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 15.6% from the year-ago reported figure.
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Tractor Supply (TSCO) Strategic Efforts Good: Apt to Hold
Tractor Supply Company (TSCO - Free Report) has been doing well, thanks to its sturdy business strategies, including the Life Out Here and ONETractor initiatives. The Neighbor's Club loyalty program is performing well. Hence, the company has been experiencing sturdy demand and strong market share gains for a while.
Analysts seem optimistic about the company. The Zacks Consensus Estimate for 2024 sales and earnings per share (EPS) is currently pegged at $14.9 billion and $10.23, respectively. These estimates indicate corresponding growth of 2.5% and 1.4% year over year.
Strategic Details
Tractor Supply is focused on integrating its physical and digital operations to offer consumers a seamless shopping experience. The company’s omnichannel investments include curbside pickup, same-day and next-day delivery, a re-launched website and a new mobile app. Earlier, it launched Tractor Supply, Visa Credit Card, which allows customers to earn points on their everyday purchases, both in-store and anywhere Visa is accepted. The buyout of Orscheln Farm and Home is also contributing to the results.
The company’s live goods performance also bodes well, which comps well above the chain average despite the warm weather hurting most of its other seasonal categories. Digital sales grew double digits in the second quarter of 2024. The company has been accelerating its digital capabilities, which has led to higher customer engagement and conversion rate improvement. The overall customer base has been robust with healthy customer engagement.
Tractor Supply’s store expansion initiatives also bode well. The company is well positioned to expand its store base, remaining on track to increase its domestic store to 2,500 in the long term. In the second quarter, it opened 21 Tractor Supply stores and three Petsense by Tractor Supply stores. It has opened its 10th and largest distribution center in Maumelle, AR during the quarter. Management is likely to continue with its store-opening initiatives in 2024. The addition of product categories, greater ease of shopping and robust services help the company serve its customers efficiently.
Image Source: Zacks Investment Research
The company has been seeing strong growth in customer counts and retention due to the Neighbor’s Club loyalty program. It had significantly expanded its Neighbor's Club offerings to reward members faster and reduce the spending for tier qualifications. Tractor Supply had launched Hometown Heroes, which helps recognize military service members, veterans and first responders. This program comes with one banner, supporting selfless men and women. We note that nearly 20% of the members of the Hometown Heroes program as of the second quarter are new to Neighbor's Club while15% are new to Tractor Supply.
During the reported quarter, the Neighbor's Club comp sales surpassed the company’s overall sales. Tractor Supply has reached an all-time high in its sales penetration, recording membership of more than 36 million members. It has added about 5 million members in the last 12 months. Moving ahead, the company is focused on improving personalization capabilities, mainly its customer data platform, which are expected to be implemented later in the year.
Bottom Line
Buoyed by such endeavors, shares of the leading retail farm and ranch store chain have gained 22.2% year to date against the industry’s 12.2% decline. We believe that Tractor Supply stock will stay ahead of the curve in the near term. This Zacks Rank #3 (Hold) company boasts a VGM Score of A.
In its last earnings call, management revealed an encouraging view for 2024. The company expects net sales to be in the range of $14.8-$15 billion compared with sales of $14.6 billion delivered in 2023. The operating margin is likely to be in the band of 9.8-10.1% compared with 9.7-10.1% expected earlier. EPS is expected to be in the range of $10.00-$10.40 compared with the prior forecasted range of $9.85-$10.50 and $10.09 delivered in 2023. Management expects gross margin expansion in the second half, with the third quarter registering the best expansion on favorable transportation costs.
Key Picks
We have highlighted three better-ranked stocks, namely Gap , DICK'S Sporting (DKS - Free Report) and Deckers (DECK - Free Report) .
Gap, a fashion retailer of apparel and accessories, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The company has a trailing four-quarter earnings surprise of 202.7%, on average.
The Zacks Consensus Estimate for Gap’s current financial-year EPS implies growth of 21.7% from the year-ago reported figure.
DICK'S Sporting, a sporting goods retailer, currently carries a Zacks Rank #2 (Buy). DKS delivered an average earnings surprise of 4.7% in the trailing four quarters.
The consensus estimate for DICK'S Sporting’s current financial-year sales indicates growth of 1.8% from the year-ago reported figure.
Deckers, a footwear and accessories dealer, currently carries a Zacks Rank of 2. DECK delivered an average earnings surprise of 42.8% in the trailing four quarters.
The Zacks Consensus Estimate for Deckers’ current financial-year sales indicates growth of 15.6% from the year-ago reported figure.