After experimenting with Carhartt branded "store-in-store" areas in 10 retail locations, rural lifestyle company Tractor Supply (TSCO -0.75%) announced this morning it is adding 100 more locations in 2021. The chain will add Carharrt areas to at least 25 more Tractor Supply locations during 2022.
Carhartt is a privately held manufacturer of sturdy work clothing, hunting garments, and other outdoor apparel. Testing of the store-in-store setup began in 2018. Tractor Supply's executive vice president Seth Estep says the Carhartt partnership doubled the product selection at the outlets involved, giving the stores "even more of what makes Tractor Supply a destination for everything – workwear and otherwise."
The move also greatly expands Carhartt's retail footprint. Though the company has products on the shelves of various retailers, it has only 33 of its own stores. The Tractor Supply arrangement gives it an opportunity to sell a larger range of clothing and have a more prominent in-store presence than simply having its clothing racked alongside other brands.
Tractor Supply is trading up today not only on the expanded partnership news, but because of a bullish update from Wells Fargo. The analyst thinks the rural retailer's strong sales, boosted initially by COVID-19, will continue well into 2022. It predicts Tractor Supply will see earnings per share (EPS) improvements this year and next, noting there are "ample reasons for FY21 consensus EPS to inch its way north of $7" and expecting 2022 EPS to exceed $8.
Wells Fargo also says Tractor Supply's sales initiatives are key to growing value into the longer term, with the Carhartt shop-in-shop expansion likely counting as one such initiative.