Tractor Supply company: the unknown growth superstar
Have you heard of Tractor Supply company? Probably not.
Despite not very well known outside of US, the company has been a stellar growth story over the last years. Since recruiting Macy’s CEO Hal Lawton to lead the company in 2019, the Tractor Supply company became much more well known. During the tenure of mr Lawton, the growth has picked up significantly: +70% in three years.
Tractor Supply’s growht trails farther than only Hal Lawton. The company has grown consecutively for the last 40+ quarters. In fact the grown every year from at least 2005. During this impressive growth spurt the company has been able to increase all of its profitability measures.
Gross profits have increased from 32,5% to 35%
Operating margin has climbed from 6% to 10%
Net margin has increased from 3,7% to 7,7%
The core reason why Tractor Supply is so succesful is probably due to the fact that the company is focused on what it does and how it differentiates. Tractor Supply claims to be the “largest rural lifestyle retailer in the United States”.
This niche is not the most lucrative, but serving it well seems to be paying off handsomly for Tractor Supply.
Stewards of Life Out Here
The niched nature of the business is illustrated by the revenue distribution of Tractor Supply company. Livestock & Pets & Agriculture constitute half of revenue and one fifth goes to Hardware & tools. Not many multibillion dollar revenue retailers have similar product categories as biggest.
Contrasting to Macy’s
Tractor Supply is illustrative of the changing retail landscape. As the discount department stores (Target), discount variety stores (Dollar General) and other price lead general merchadise retailers have grown, the traditional department stores have suffered. This is illustrated most succinctly by the troubles of the previous employer of Hal Lawton, Macy’s. Since the height of it’s growth in 2015, Macy’s has struggled to grow back to those levels. This has lead to a difficult spiral of cost-cutting and store closing. Latest of which was seen this year.
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