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Tractor Supply Company TSCO has partnered with the PORTER-CABLE brand to provide power tools and accessories across its stores in the United States. PORTER-CABLE, which is an original portable power tool brand, will feature in all Tractor Supply stores. The company also has plans to expand the tools and accessories line with the launch of exclusive cordless product innovations in 2022.
The partnership will help PORTER-CABLE to expand its reach through Tractor Supply’s extensive retail footprint in the United States. It is expected to result in greater demand for PORTER’s products, with innovations like PORTER-CABLE 20V MAX cordless systems and accessories on the cards.
For Tractor Supply, the addition of the latest line is likely to help in meeting customers’ needs better. The deal will give the company access to nearly 12 million shoppers already owning the PORTER-CABLE 20V battery platform.
Tractor Supply plans to launch the PORTER-CABLE products in its stores and online through its Neighbor's Club and "Ultimate Workshop" promotion. This is expected to be completed by fourth-quarter 2021. Coming to the expansion of PORTER-CABLE, the brand is expected to roll out cordless tool and accessory innovations by 2022, featuring exclusively in Tractor Supply’s stores and online portal.
Shares of Tractor Supply did not react much to the news. Overall, the Zacks Rank #2 (Buy) company’s shares have risen 15.3% in the past three months against the industry’s decline of 15.8%.
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What’s In Store for Tractor Supply?
Tractor Supply is on track to build up on its Out Here lifestyle assortment and convenient shopping format to gain customers and market share. The strategy is essentially based on five key pillars, which include customers, digitization, execution, team members, and total shareholder return. Some of the key initiatives undertaken to support the strategy are boosting space productivity, enhancing omni-channel initiatives, the evolution of Neighbor’s Club loyalty program, and augmenting in-store merchandising execution.
As part of the Life Out Here Strategy, the company provided long-term financial growth targets for three to five years, after the normalizing of macro conditions from the impacts of the COVID-19 pandemic. It envisions achieving net sales growth of 6-7%, while comps are expected to grow 4-5%. The operating margin is expected to be 9-9.5% and earnings per share are expected to increase 8-10%.
The company launched the Field Activity Support Team, and is implementing various technology and service enhancements across the enterprise. It is also in the initial phase of transforming its side lots and mature stores to improve space productivity, bringing the latest merchandising strategies to life and advancing efforts to remain nationally strong and locally relevant.
Tractor Supply is benefiting from the rollout of capabilities like stockyard in-store kiosk and mobile point-of-sale in all its stores as well as enhancing the Tractor Supply credit card offering and investments in its supply chain. Its newly launched mobile app as well as the Neighbor's Club loyalty program have been key growth drivers.
Notably, its mobile app recorded more than 1.6 million downloads in second-quarter 2021 and now accounts for more than 10% of its digital sales. The Neighbor's Club added 5 million members year over year, representing nearly 65% of sales. The expansion of its Buy Online Pickup in Store service to include drive-through pickup service is also likely to aid growth in the near term.
The company plans 150-200 Side Lot transformations and 150-200 Project Fusion store remodels of existing Tractor Supply stores as part of its Life Out Here Strategy. Tractor Supply currently boasts 160 Project Fusion stores, which have been performing well with positive customer feedback. The company has completed 60 side lot transformations, with more than 150 to be completed by the end of 2021.
Better-Ranked Stocks to Watch
Ulta Beauty Inc. ULTA has a long-term earnings growth rate of 16.5%. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Abercrombie & Fitch Company ANF, with a Zacks Rank #1 at present, has a long-term earnings growth rate of 18%.
Tapestry, Inc. TPR, also a Zacks Rank #1 stock, has a long-term earnings growth rate of 11.7%.
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