Tractor Supply Is Riding The Rural Lifestyle And Pet Ownership Trends To New Highs

Just two weeks after Tractor Supply Company reported record full-year sales and earnings plus announced a 30 percent increase in its dividend, the rural lifestyle retailer is making waves again by announcing the largest acquisition in the company’s 83-year history.

In an all-cash transaction valued at $297 million, the Tennessee-based retailer announced it has acquired Orscheln Farm and Home along with 167 stores located in 11 states, spanning Ohio to Oklahoma.

The deal caps a remarkable first year for CEO Hal Lawton that began in January 2020, slammed immediately into the pandemic before rebounding, retooling, adding 80 stores, $2 billion in revenue as well as a 65 percent increase in the stock price along the way.

Today, with the stock at an all-time high and a $20 billion market cap, the former Macy’s executive not only has some breathing room, but some very clear momentum and wind at his back.

“This is an exciting step for Tractor Supply as we expand our footprint in the Midwest with the high-quality assets of Orscheln Farm and Home,” Lawton said in the company’s press statement. “We look forward to bringing together our highly complementary cultures and teams to realize the long-term value and benefits that we expect this acquisition to deliver.”

An Encore To Q4

Before landing in Brentwood, Tenn. 13 months ago, Lawton spent the past 20 years at Macy’s, eBay, Home Depot and McKinsey and has wasted no time making his mark since taking the helm in his present role.

Praising the exemplary effort of the company’s 42,000 associates, Lawton told investors that operating the business at elevated rates had enabled Tractor Supply to deliver fourth-quarter comparable store sales growth of 27 percent, compared to the prior year when they were flat.

“Going forward, we believe our resilient business model with a differentiated and loyal customer base, our strategic investments to capture growth opportunities and the strength of our balance sheet position us to capitalize on the momentum in our business in 2021 and beyond,” he said.

Even so, Lawton told analysts on the company’s recent conference call that it will take at least until fall before there can be some return to normalcy and that there is as much uncertainty this year as there was in 2020.

According to Mary Pilkington, senior vice president, investor relations and public relations, the company is planning use its momentum and keep growing with plans to add another 80 Tractor Supply locations this year, as well as 10 more Petsense stores.

“2020 was a remarkable year for Tractor Supply,” Pilkington said in an email to PYMNTS, noting that more customers than ever shopped at Tractor Supply Company, and they also spent more money per basket size than ever before. “We continued to gain market share and benefit from structural / macro factors like trip consolidation, rural revitalization, pet ownership and homesteading,” she added.

Timing Is Everything

According to CFO Kurt Barton, who has worked at Tractor Supply since 1999, the company’s record financial performance has come at a time when increasingly homebound U.S. consumers have turned to Tractor Supply to buy everything from UTVs (utility terrain vehicles), to backyard fire pits, garden tools as well as feed and supplies for pets and home-raised livestock.

“This year was like no other in the history of Tractor Supply,” Barton said on the call, pointing to macro trends that had worked in its favor.

“This trend also includes living a more self-reliant lifestyle,” he added. “The adoption of new hobbies like backyard poultry, hunting, gardening and bird feeding have continued and we believe these hobbies and trends are becoming more ingrained in our customer’s behavior.”

With a portfolio that now consists of over 1,900 Tractor Supply stores, nearly 200 Petsense pet food locations, some 20 distinct brands, a private label credit card as well as a thriving eCommerce business and expanding pet wellness and medication unit, it could be said that greener pastures lie ahead for Tractor Supply.