Tractor Supply Farms Growth

CHICAGO-During the 25th annual William Blair & Co. Growth Stock Conference Wednesday at the Four Seasons Hotel in downtown Chicago, Joe Scarlett, chairman of Tractor Supply Co., discussed his company’s plans for growth and its proven success due to a solid employee base.

Scarlett says the company plans to grow its number of units by 12%, adding 63 stores this year. Based in Brentwood, TN, the lifestyle needs supplier of recreational farmers and ranchers operates 547 stores in 34 states.

Scarlett says the company’s motto is: “Work hard; have fun; make money.” By implementing an incentive program for employees, and offering training programs through the company’s Tractor Supply University, Scarlett says employee turnover has dropped by 50%.

With trained employees, who often start out as customers, Scarlett says the company is able to offer its clientele a knowledge that competitors often lack. For that reason, says Scarlett, Tractor Supply has moved past the ranks of Home Depot and Lowe’s.

“We’ve seen a lot of evolutionary trends from our customers; they are more upscale,” Scarlett says. Today, the biggest challenge with big-box chains is the financing programs they are able to offer, he says.

The company anticipates net sales for fiscal 2005 (a 53-week fiscal year) will range from $2,000 million to $2,025 million, an increase of 15% to 16.4% compared to fiscal 2004. This assumes a same-store sales increase of approximately 4% to 5% and the addition of 60 to 65 new stores.

Net income for the year is expected to range between $79.2 million and $80.8 million, or $1.89 to $1.93 per diluted share. This compares to fiscal 2004 net income of $64.1 million, or $1.57 per diluted share.

“We’re a dominant player in a proven nitch, and there is a lot of room for growth,” Scarlett says. “We are building the infrastructure ahead of growth and aligning our management; we’re all in it for the long term.”