What Tractor Supply’s CEO Says About Millennials and Retail Crime

Vicki M. Young
·3 min read
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A growing number of millennials moving into rural communities is encouraging Tractor Supply Company to open 90 new stores a year starting in 2025, after 70 this year and 80 next.

The 2,181-store Carhartt stockist wants to run 3,000 brick-and-mortar locations at some point, up from an original 2,800-store target. Data from the 85-year-old rural lifestyle retailer’s 32 million Neighbors Club rewards members—about double what it had four years earlier—”gave us the confidence [to open] not only in new markets, but to really fill-in in markets where there’s just been tremendous growth,” Kurt D. Barton, Tractor Supply Company‘s executive vice president and chief financial officer, told attendees Tuesday at the Goldman Sachs Global Retailing Conference in New York.

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The company sells farm equipment, animal feed, and lawn and garden essentials, in addition to men’s and women’s apparel and footwear from brands including Wolverine, Dickies, Reebok and Timberland. It also operates 192 Petsense by Tractor Supply stores in 23 states.

CEO Hal Lawton addressed one of retail’s hot-button issues: shoplifting and crime that fall under the broader umbrella of shrink. Shrink is worse than anything the former Macy’s president has seen in nearly 30 years in retail. “We are a bit of an aberration, though, on that trend,” Lawton said. “And I think there’s a variety of reasons why, but our shrink in 2022 was less than 2021 and our shrink results here today in 2023 are less than they were in 2022,” he said.

While Tractor Supply’s loss prevention staff have helped curb shrink, Lawton pointed to other factors at play, including the average 20,000-square-foot store size, significant storewide staffing, and single-entrance, single-exit store design.

“You put all that together and then also combined with where our stores are located in more rural areas of the country, where there’s less organized retail crime and also less proclivity for the homelessness and those sorts of things which can contribute to [shrink],” Lawton said.

While perhaps not the biggest victim of retail crime, the Brentwood, Tenn.-based chain has been affected by people acting outside the law. On Christmas Eve, a 33-year-old man in Mississippi was arrested when police called to a Tractor Supply store discovered he had swapped his clothes and boots for new ones without paying for them. In addition to a shoplifting charge, he also was charged with felony possession of a controlled substance.

Tractor Supply, like most other retailers, is facing a business climate that’s ” been more challenging than we anticipated, Lawton said. People today have less savings, mounting credit card debt, upcoming student loan bills to pay and mortgages on the rise. But the CEO is confident that the “Life Out Here” retailer is “priced right every day,” giving shoppers a reason to visit and spend.

With freight, container and fuel costs falling, Tractor Supply is keeping an eye on what happens with consumer spending. “The bigger pressures right now for us are on units per transaction, as consumers are just being very mindful of what they’re spending,” Lawton said.

For the second quarter ended July 1, net income rose 6 percent to $421.2 million, on a net sales increase of 7 percent to $4.18 billion. Tractor Supply issued revised guidance for fiscal 2023. It expects diluted earnings per share at $10.20 to $10.40, versus the previous $10.30 to $10.60 guidance. Net sales are projected at $14.8 billion to $14.9 billion, versus $15.0 billion to $15.3 billion.

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