Unlike most retailers, Tractor Supply's
Much of the company's success comes from its diversified sales mix. It offers a wide range of products, including staples like pet care and work clothes as well as big-ticket items like outdoor power equipment and heaters. Additionally, Tractor Supply's unique positioning is another reason for its success. It is a one-stop shop for farmers and ranchers with locations in rural areas. This strategy helps it avoid taking on household names like Wal-Mart Stores
That strategy helped the company report solid third-quarter results. Net sales increased 1.9%, to $747.7 million, from the year-ago quarter. Net income increased 38.5%, to $22.0 million or $0.60 per diluted share, compared to the third quarter of 2008.
Still, the company's same-store sales decreased 5.1%. Weak sales of its seasonal big-ticket items resulted in shoppers spending 10.4% less, on average, per visit. That more than offset the 5.9% increase in store traffic. While the big-ticket sales were disappointing, sales of its core categories did much better. Those sales include animal and pet-related products and repair/replacement parts, which are staples for Tractor Supply's customers. Looking ahead, management expects its customers to continue to put off big-ticket discretionary purchases in favor of non-discretionary purchases.
The market didn't hide its disappointment about the company's third-quarter report, and shares are off more than 9% since the news. However, this overreaction ignores the company's long-term potential. Like Costco
Those investors with an eye on the long term may want to think about stocking up on Tractor Supply shares while they're on sale.
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