Here's How Tractor Supply (TSCO) Appears Going Into 2020
Zacks Investment Research | Dec 17, 2019 09:23PM ET
Given the changing consumer trends, Tractor Supply Company (NASDAQ:TSCO) is striving to provide the best customer experience by striking a balance between physical and digital operations. Notably, this Brentwood, TN-based company looks well-poised to enter 2020, given its sound fundamentals and growth efforts. The ONETractor initiative, store growth efforts, inventory management and improved loyalty program have been favoring the farm and ranch store retailer.
This Zacks Rank #3 (Hold) stock has risen 12% so far in the year, outperforming the VGM Score of A reflect its inherent strength. Moreover, the Zacks Consensus Estimate for its 2020 top and bottom lines indicates improvements of 6.8% and 11.6%, respectively, from the year-ago reported figure.
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Tractor Supply is on track with the ‘ONETractor’ strategy, which is aimed at connecting store and online shopping. Backed by the initiative, the company continues to drive growth, build customer-centric engagement, offer suitable products and services, and reinforce core infrastructure capabilities. Moreover, Tractor Supply is benefiting from capabilities like Stockyard Kiosk and mobile point-of-sale, enhancement of the Tractor Supply credit card offering, and investments in its supply chain.
The company’s omni-channel business is gaining from the combination of its Buy Online Pick Up in Store ('BOPUS') and direct delivery to store facilities. Apart from easy e-commerce fulfillment, the BOPUS facility helps improve sales by encouraging customers to make additional purchases during store visits.
The company is also consistently expanding its Neighbor’s Club loyalty program, which is resulting in membership growth, increased sales, greater frequency and higher average ticket sales. It uses the rich customer data from the loyalty program to pitch offers to existing customers and also find new customers with similar interests on social media. Management expects all these strategies to play a major role in boosting the top line.
Additionally, the company is focused on the expansion of store base and incorporation of technological advancements to induce traffic and drive the top line. Its sales and comps have been considerably gaining from the addition of stores in every quarter. Moreover, the company expects to drive comps by improving marketing and merchandising initiatives as well as supply-chain efficiencies. It is well-positioned to increase its domestic store count to 2,500 in the long term.
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Furthermore, Tractor Supply remains focused on efficiently managing inventories to minimize the impact of weather on its business and capitalize on seasonal demand. It is on track with constant investments in new systems, including demand planning, improved pricing and inventory allocation, all of which are directed toward generating supply-chain efficiencies to better manage global inventories. Additionally, the company remains focused on the execution of digital priorities to bolster growth at its merchandising, customer facing and logistics capabilities.
The above-mentioned factors suggests that there are plenty of reasons to be optimistic about the stock going into 2020.
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