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.
For additional reading:
Costco, Home Depot, and Wal-Mart are Motley Fool Inside Value recommendations. Costco and PetSmart are Stock Advisor recommendations. The Fool owns shares of Costco. Try any of our Foolish newsletters today, free for 30 days.
More from The Motley Fool
Why Tractor Supply Company Rose 13% in November
Tailwinds from the prior month continued as investors snapped up more shares in November.
Tractor Supply Keeps on Creating Value for Shareholders
Retail has been a difficult industry in recent years. But Tractor Supply could be a good opportunity that investors should consider.
Tractor Supply Posts Broad Third-Quarter Sales Gains
Customer traffic gains powered another growth uptick for the rural lifestyle retailer.