What we think about Tractor Supply (TSCO)

Tractor Supply in Three Words: Recurring, Loyalty, ROIC

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Background

Tractor Supply faithfully serves the “out here” lifestyle, providing farming supplies, animal products, and tools for rural communities in all American states except Alaska. The majority of its products are consumable, usable, or edible — “CUE” — which are heavy and typically inexpensive. Amazon has no interest in shipping these types of products from centralized warehouses and big-box retailers like Home Depot often can’t financially justify building locations in less-populated areas. These factors provide Tractor Supply with a few unique and not-immediately-obvious advantages to shield it from its larger competitors.

Well-recognized and solidly profitable, Tractor Supply looks to the recurring purchases from its 31 million loyalty rewards members (which increased 15% in 2023) as a way to boost its comparable store sales. Customers often place orders on their Smartphones and then have them ready for pickup on-site.

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