Dollar stores get a lot of the credit for negatively impacting Walmart’s U.S. sales the past few years and it’s no wonder. The big three – Dollar General, Family Dollar and Dollar Tree – have grown rapidly and collectively operate more than 20,000 conveniently located units that offer sharp prices on an expanding assortment of food and consumables.
However, competition can take many forms and one retailer often overlooked is Tractor Supply Company. It has been on fire lately and just reported a 43 % increase in profits and an 11.5% comp increase for the third quarter ended Sept. 24 on top of a prior year gain of 5%. The company now operates more than 1,000 stores, including a unit a few miles south of Walmart’s home office on Walton Boulevard, in 44 states, and there is considerable overlap in product assortment and the type of customer served.
For example, Tractor Supply stores are focused on supplying the lifestyle needs of recreational farmers and ranchers in addition to the maintenance needs of those who enjoy the rural lifestyle, as well as tradesmen and small businesses. Stores are located in towns outlying major metropolitan markets and in rural communities where the offering of merchandise includes such things as equine, pet and small animal products, hardware, truck, towing and tool products, seasonal goods including lawn and garden items, power equipment, gifts and toys, maintenance products, and work and recreational clothing and footwear.
It’s been a good strategy as was again evidenced by the third-quarter performance.
“We generated double-digit increases in both sales and earnings on top of last year’s record results while improving gross margin and leveraging (selling, general and administrative expenses), said Jim Wright, Tractor Supply’s chairman and CEO. “This strong performance, which also included positive ticket and traffic, reflects the impact of our strategic initiatives and our ability to respond to our customers’ everyday rural lifestyle needs. Additionally, we executed exceptionally well and successfully managed through the inflationary environment. We are delighted that we continue to experience broad-based strength across the business.”
For the period ended Sept. 24, the company’s sales increased 17.9% to $978 billion and net income increased 43% to $4