Tractor Supply is opening new stores and gaining new customers. The retailer ended its third quarter with 12 new namesake stores, for a total of 1,967 in 49 states. It also added more than 5 million new loyalty club members this year, according to Telsey Research Group, for a total of more than 22 million.
Those members spend about triple what non-members do and account for almost 70% of Tractor Supply's sales, CEO Hal Lawton told analysts last week, according to a Seeking Alpha transcript. In Q3, the number of high-value customers in the program grew almost 30%, and their retention rate continues to top 95%, he said.
Most of Tractor Supply's new customers are aged 18 to 45 years old, a typically higher-spending group, according to research from Telsey Advisory Group.
Tractor Supply lately has been the beneficiary of several trends outside its control, including a U.S. population drift into more rural areas, a lasting tendency to spend money on one's own home and growing pet adoption.
But the retailer has also positioned itself well to make the most of that, through improvements to its stores and its loyalty program in recent months. The mass merchant, once a feed and farm supply store, has also scored higher on customer service since increasing its starting hourly pay, Lawton said. In June the retailer raised its starting wage to $11.25, bring its average to close to $15, with distribution centers paying more.
Tractor Supply stores are enjoying some of the industry's biggest traffic gains, according to Placer.ai, which found a 44.7% increase in visits there in the third quarter. The company is also seeing e-commerce growth above 40%, and its mobile app has more than 2 million downloads and represents over 10% of its online sales, the company said.
The company said its 13.1% third quarter comp rise marked the sixth consecutive quarter of double-digit comparable store sales growth. Net sales in the period rose 15.8% year over year to $3.02 billion, as net income rose 17.7% to $224.4 million, according to a company press release.
"Overall, Tractor Supply continues to execute at a high level (and better than expected), dominating in rural America," Telsey analysts led by Joseph Feldman said in emailed comments. "The company's high mix of essentials (over 50% of sales) and robust strategic initiatives —1) the addition of side lot lawn & garden centers; 2) a more comprehensive store remodel program; 3) an increased focus on pets; 4) expanded omni-channel capabilities; and 5) growth of the loyalty program — should continue to fuel growth and market share gains."