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$35.66 -0.10 (-0.28%)
12/3/2008 3:59 PM

Tractor Supply Company (TSCO)

CAPS Rating:
****

The Company is an operator of retail farm and ranch stores in the United States. It is focused on supplying the lifestyle needs of recreational farmers and ranchers and of those who enjoy the rural lifestyle, as well as tradesmen and small businesses.

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Avatar NetscribeRetail (53.57) Submitted: 1/19/07 7:43 AM : Outperform Start Price: $49.35 TSCO Score: 11.00

Tractor Supply serves a unique recreational market niche, including farmers and ranchers, tradesmen, small businesses. It operates the largest U.S. chain of retail farm and ranch stores, with more than 650 stores in 37 states as of September 2006 offering a comprehensive selection of merchandise. Pet and animal products contribute 37% of revenue, hardware and tool products including lawn power equipment, truck, trailer and towing products account for 54% and work clothing and footwear make up for the balance.

The Company's business is highly seasonal with sales and profits being highest in the second and fourth quarters of each year due to the sale of power equipment products. Its specialized product assortment is sold through an everyday low-pricing strategy for branded and private-label goods.

Tractor Supply's sales have been growing at an average rate of 18% for the past 7 quarters. Sales for nine months ended 2006 have risen by 21.4%, strongly driven by sales of pet and animal products as well as clothing and footwear products apart from contribution from 64 new stores.

The company expects sales to increase by 16-18% during 2007. It also aims to expand its geographic market presence through the opening more than 90 new retail stores during 2007. Further, it is simultaneously working to enhance financial performance through better inventory management, improving sales mix, aggressive merchandising programs and low price philosophy. All these efforts will finally help in boosting comparable-store sales during first and third slow-growth quarters.

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Avatar NetscribeRetail (53.57) Submitted: 5/23/07 7:49 AM

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Tractor Supply differentiates itself from home centers and specialty retailers by catering to different sets of customers, the retail recreational farmers and tradesmen, and small businesses. Each store stocks about 13,500 to 15,000 unique products, and the company strives to style store inventory according to regional and geographical needs. Tractor Supply has a diversified revenues mix with no one product accounting for more than 10% of sales.

For the first quarter of 2007, the company came up with strong results. Increase in same stores sales 8.5% by led to 20.3% gain overall revenues. The company's same-store sales improvement was strongest in winter- related merchandise such as insulated outerwear, snow removal and heating products as well as in the apparel and animal health categories. These results were driven primarily by cold weather during January and February in the northern and mid-western states.

During the first quarter, sales performance in the apparel and animal health categories were strong and customers continue to respond positively to the expanded merchandise offerings in these categories. The rollout of the expanded pet department to an additional 100 stores in the third quarter and the continued rollout of the expanded clothing departments throughout 2007, will sustain sales momentum in these categories.

Management reaffirmed its fiscal 2007 sales expectations of $2.70 billion to $2.75 billion. Same-store sales for the year are expected to increase approximately 3.0% to 4.5%. The company also expects full year net earnings to range from $2.49 to $2.56 per diluted share, representing 12.2% to 15.3% year-over-year growth. Also 85-90 stores are being expected to come up during the fiscal, making investors feel positive about TSCO.

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