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Tractor Supply's Frankfort Distribution Center to Aid Sales

Zacks Equity Research

Tractor Supply Company TSCO is persistently focusing on growth initiatives, which include expansion of stores and distribution center as well as incorporation of technological advancements. To this end, the company recently announced the official opening of its largest distribution center in Frankfort, NY. This new 925,000 square-feet facility presently serves more than 140 flagship stores and is expected to serve more than 200 stores in the Northeast region in the first year of operation.

Notably, the distribution center, which broke ground in August 2017, is built with energy-efficient design and heating systems, water saving plumbing and irrigation systems, recycled and regionally sourced building materials, and LED lighting to meet high environmental standards.

Tractor Supply has been seeking LEED Silver certification by the U.S. Green Building Council. If it gets the certification, the Frankfort center will become its third facility to achieve LEED Silver certification, following the Store Support Center in Brentwood, TN, and the distribution center in Casa Grande, AZ.

Encouragingly, this new distribution center will help the company to increase store count beside enhancing the digital fulfillment strategy and improving customer services with quick and efficient delivery. The distribution facility will also create jobs, thereby serving and reinforcing the respective community. Evidently, the Frankfort facility already has created more than 280 local jobs, and is likely to create more than 350 full-time jobs in five years. We expect this facility to drive the company’s top line and overall profitability.

Meanwhile, Tractor Supply’s sales and comparable store sales have been considerably gaining from the addition of stores in every quarter. The company is well positioned to increase store base, remaining on track to grow domestic store count to 2,500 in the long term.

In 2018, Tractor Supply opened 80 namesake and 18 Petsense stores. However, it closed 11 Petsense stores throughout the year. In 2019, management plans to open about 80 namesake and 10-15 Petsense stores.

Additionally, Tractor Supply is focused on integrating its physical and digital operations to offer a seamless shopping experience to consumers. It remains on track with the “ONETractor” initiative, aimed at connecting store and online shopping. The company is reaping significant benefits from the Buy Online Pick Up in Store program. It also continues to expand the Neighbor’s Club loyalty program, surpassing targeted membership growth goals in 2018. Management expects these strategies to play a major role in boosting the top line. Notably, in fourth-quarter 2018, the company reported robust double-digit e-commerce sales growth for the 26th straight quarter.

 


 

All these growth endeavors are well reflected in the company’s price performance. This Zacks Rank #3 (Hold) stock has surged 41.6% in a year, outperforming the industry’s 18.7% rally.

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