Postcard from our visit to Tractor Supply
One of our Investment Partners, Terry Coles, has just been out to see one of our companies in Nashville – Tractor Supply. Tractor Supply provide the US market with products for the recreational farming industry, including pet and livestock supplies, which now account for half of sales. (Despite the name, they don’t sell tractors!) They have over 2,000 stores across the country, which welcome both customers and their animals – one customer brought a horse into the store!
Making a trip like this allows us to get to know our companies inside out, and we liked what we saw:
1. They are built for resilience
Several recessions have shown us that spending on pets is nondiscretionary (you don’t put pets on a diet in a downturn). 75% of Tractor Supply’s customers have pets, and their pets weigh 20 pounds more than the national average – more horses and fewer chihuahuas. As highlighted by CEO Hal Lawton, whom Terry met during his visit, Tractor Supply sells one out of every four bags of animal feed in the US.
2. People Focused
Tractor Supply is very focused on its customers and staff, who are often the same people. In the photo you have store manager Naomi, who owns 60 chickens, and district manager Teresa, who raises 25 buffalo on her small farm.
Since Hal Lawton joined as CEO, he has added 18,000 jobs, and wages are up 30%. Staff are entitled to benefits after working for only 10 hours per week; by comparison, Walmart requires 30 hours. As a result, staff turnover is low and customer satisfaction scores are at an all-time high. Low staff turnover = good for productivity.
Our priority, as always, is to protect and grow your assets. We will continue to dig deep on all aspects of our stocks, working in your best interests. We are happy that this visit confirmed the strength of Tractor Supply’s investment case as a high-quality operator in its industry.
The Investment Team
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