Tractor Supply: A Focus On Pets

Summary

• Tractor Supply is a unique rural retailer with strong brand loyalty and a focus on livestock and pet categories but faces pricing pressures.
• Comparable store sales growth is lackluster, and deflation in key categories like livestock feed creates vulnerability, especially among price-sensitive rural consumers.
• Valuation is expensive relative to peers, and the pet category offers slim margins with increasing competition from Chewy and Petco; current fundamentals warrant caution.
• I rate TSCO as a hold, preferring to wait for improved inventory management and comparable sales before considering a more bullish stance.

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Summary

Tractor Supply Company is the self-proclaimed rural lifestyle retailer, with its ~2,500 store count across the United States, and targeted focus on farmers, ranchers, homesteaders, and pet owners. Management boasts of a strategy to expand the customer base, grow the total addressable market via new product

Analyst’s Disclosure:I/we have a beneficial long position in the shares of TSCO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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