TSCO - Earnings call transcript Q2 2020

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning, ladies and gentlemen, and welcome to Tractor Supply Company's conference call to discuss second quarter 2020 results. [Operator Instructions]. Please be advised that reproduction of this call in whole or in part is not permitted without written authorization of Tractor Supply Company. And as a reminder, this call is being recorded. I would now like to introduce your host for today's call, Mrs. President and Vice Tractor Relations Senior Company. Supply Pilkington, of Public Investor for Mary go ahead. please Winn, Mary

Mary Pilkington

Thank and you, Carol, good morning, everyone.

On our question-and-answer CEO; Merchandising Officer, After are session. Seth Estep, Hal Barton, your join and up today we'll CFO. Chief EVP call remarks, our the our prepared us questions. the for will our and call Kurt open Lawton, for the

certain the Securities This operating me the reference uncertainties, safe statements contain Litigation call beyond these cases, Act let under and Private In and harbor company. subject Now the and are uncertainties our XXXX. Reform of may risks of to are forward-looking that provisions control. many risks financial significant performance future including

undertakes remain with statements at The Securities of are the in this the filings of release obligation and operative time. today discussed. Investors update accurate forward-looking such can no be results no any date Supply included prove call. the to risk that and cause this forward-looking statements actual materially are Although reflected company's will correct, results or believes the those explanations a Exchange assume end of that will from actual could expectations. the the issued Commission. its company reasonable, call assurance in statements information in differ its give as from any its contained the expectations materially that to press -- to information is at the and in expectations only or Tractor any statements or not factors differ discussed forward-looking it in may Important should reflected later

limit to a of cooperation. number Given appreciate ask you the followup. X with want and to that questions who time participate, your your I constraints we quick related people the please

the after available be followup. for call will We

my the Hal. pleasure to call it's turn to over Now

Harry Lawton

you for this to Winn, Thank joining thank everyone us you, Mary and morning.

moment, take acknowledge just generational United the moment. the thought no for States second Before quarter, There's environment right a a results back, we address in step I now. in I'd the our we're doubt

all all also this racial in We're focus began measures before continued through to deal members our these members moved and team purpose-driven with the functions, and has of in at area. and health come And safety. all extensive quarter of so by Tractor temperature in and and situations company screening then all focused the pandemic on just We've and to are this seen that's symptom inequality and dynamic with protests entirety responded. in and take along I'm times. required across how inspired the all all incredibly quarter, executing proactive of widespread stores. all environment impressed this and customers that. America. Before address taken the and team team sales. of team for record-breaking while our Start and for end through stepped work. Masks the together we've a off a go Supply Each proud led coming their values, with day, on has back towards and We've with talking about delivering team member, to COVID-XX really Been and come it. the our quarter, And we've speed

be We stay DCs who conducting members biweekly population. top in our of and robust large to testing XXX implementing travel, are process team all the over for on within testing of that sample will we

how rapid X widespread weeks summary, and response there where all Arizona, case those teams in being the value care -- reflection we progress, are areas Additionally, thought promote dedicated shop such for safety. sent to core team a industry-leading in support at of conduct our all in In been social this reinforce to tracing on wide in diversity built XX,XXX and inclusion to there's all robust tracing time over Supply we've we We parameters work for members did I'd provide practices in community to case COVID-XX. and and by health are conduct in to by centers, add, our as diverse distribution we team. for place committed of to to areas discuss a impacted Grande, each, inclusive by who have just we a I members To management and Waco, importance invested And of team safe outbreaks, last committed where management. are facility contact to committed best across Tractor team arranged and contact company. respect. in Costa want the also concert We're also, implementing Texas of we how testing culture, advancing and with independently team where

to inclusion we few and ESG Director our and donated our Additionally, hired weeks, published first in can diversity of many from front cause and strength supporting over the on local more moving Inclusion, forward. of us the last quality we report. expect Diversity and communities, the you We a actions

and by experienced product Now earnings we were elevated of with turning across the comparable when to XX% But highlights. on they approximately some of here numbers week, certainly triple-digit XX.X%. XX% each moment of over saw Diluted percentage had turn the we did what quarter, e-commerce you per The all XX.X%, through strong record sales our sales. a sales. improve work of strong turning now our has a numbers. overall sales channels, grew results a greater our categories significantly with transaction I'd increase entire to to all in had levels X and will the We of comparable and consistent, the do shift unprecedented you and is details to ticket XX.X% average And the our e-commerce resonated regions. driven quarter capabilities quarter quarter. We I months. Notably, it Kurt increased sales growth, $X.XX. some walk comparable to plus count of geographic to grew share operational through the a Kind outlook in and store growth as Net customers. increase growth significant and I more walk him. thought

QX. it to then about more normal, and appreciation $XX with clear really future quarter, we bonuses During announced progressed I'll team the the operating moving totaled Totaling in strategic talk relationship members several through of in are a and expanded responses COVID-XX, bonuses. our And to leave our the benefits our investments quarter, we became at Early that pandemic customers. benefits were paid foreseeable with the heart for and and we who appreciation million sick second as that later. new -- the the included

stores And distribution enhance per so across centers $X and benefits, for a minimum our the hourly including of decision consequently, made we increases of all team to our wage all hour permanently members. and compensation

are X,XXX units benefit increases, distribution goal success. managers than allowing entrepreneurial stores them spirit the long-term centers fuel company's restricted In addition stock wage our to at receiving with in the to and frontline the and now annual more of helping their

health We was the what also supporting we opportunity our our part-time members. took members. to the team chose of to to ensure did team and benefits care offer wellness health we we're And and

of in are with competitive investing elevated XX our a are for Operating in differentiator customers. committed a challenges. our to key team weeks comps as believe We number we members they presents

centers. supported members, work of our across we speed primarily we with second contributors And team also, net closely critical new volumes. service our like customers. a They've for express X,XXX Florida. mixing distribution new distribution nimbleness. our to chain members quarter, center team ability at support in supply sincere opened added appreciation capacity, we the These in mutual with to facilitate and key our been vendor these success During stores partners. our over and customers elevated our our and collaboration were our and Also, We'd our their to to network's

we ensure on us that focus our working merchandising for customers dependable support stock to for categories Our their the make remains lifestyle. that remain in together products supplier need to

curbside new acceleration time. of website. or we early the we've rates consumer in next-day our initiatives And day, weeks' app. out adoption relaunched And seen into pickup, delivery, During years out rolled of technology compressed multiple XX we adoption mobile our being in same with July, XX rolled quarter,

way platforms behaviors. relationship growth digital in preferences digital And increase whether buy in acceleration e-mail, through a communications, This of focus and frequent were And included consumer or online our pickup we're orders. accelerating impressive we're on results the triple-digit is sharp our becoming growth increases. shopping in customers' ingrained e-commerce fostering and Our this services. marketing in it's triple-digit in-store with this and transformation our digital

customer we're scale, an of that to on relationships have We opportunity. create laser-focused opportunity deeper and

initiatives. we Speaking quarter, investment was of during made the customers, in our brand-building another

in weeks to the on media, the And March the X notably, campaign our opportunity we're the advertising over spend, dynamic, TV. traditionally and Given And and campaign pandemic, we've the marketing to to more national print is what decade. been country's pandemic. working national matching cycle initial shift the X last during evolve. done early commercials on the we which the the our campaign the digital of has launched COVID of We current mood different in continued months. had a And we first launched in and capitalized

most for TV here. to a place as been your Supply need for out recent and reinforcing all summer Tractor Our safe has you ad convenient on shop focused

set in for and are shopping Our unaided brand increasing. Tractor the research trips awareness indicates both that our being consideration Supply

customers -- our had increased than we customers with customer ever in we with existing customers, customers base had More us re-acquired new customers. our experienced importantly, more shop before across growth robust we shop as and sales

of of and our we do I'd have. kind based thought that I to market you what so the observations share customer key research X with And behaviors is data on

customers I'll are So and spending trips customers we're mention are -- us. our is spending observation the our more and growing existing first with

these shopping have are categories than are us our and their trip we finished Neighbor's we've are And customers, close the core million their XX with from baskets shopping existing benefit consolidation. Club before. they as ever customers customers larger quarter frequently members. to And more from Our more

gaining share the rate observation the history new in is of the we're second I'll The at fastest customers that company.

represents we identifiable increase. the and For quarter, XX% million customers, that saw a second over year-over-year X.X almost new

is third with ever we're reengaging they're our The returning observation to a shop and customers, that before. at rate higher lapsed than us

our fifth points to becoming our female, trends I'll to XX% rate customer our brands. is acquiring an share which a we increase The the XX such compared at an and customers new core an are our customer time customers quarter, overall XX% is tailored customers, a engagement. all-time strong of product levels fourth are product customers, million almost closer a the keep XX% as are are compared This we're high. the that our is and customers being fastest our service shop, customers which them at purchasing X these to Notably, repeat was aspects to our income higher scores reengaged of in-stock lifestyle-oriented service reactivated satisfaction believe and We the as they're us. that place male. engaged customer when at our customer new convenient the increase I'll that category, of For observation category percentage new younger, skewing That's legendary ever. to attracting what's patterns behaviors important customers for observation to And to our new to that and similar and last is very year-over-year. existing historical share with key

course, spending from being trapped an marketing tool and results product kits movement, kind spend travel entertainment want share trends consolidation, back is we're onboarding adoptions, all-time from in advertising that and to favor and self-reliant macro spent know plans and to are place gain to to a customers land; to of national continuation with these shifting opportunity broadly market our adoption, and retain robust what perspective. including is capitalize working trends; rural high. share. a include these ahead, on customers step trends we actions, omnichannel home pet executed. revitalization, offerings, lifestyle nurture now CRM consumer from QX Taking our being and on I digital to And have that but of DIY Key seeing campaign, are we at our seeing they're these and strong our Looking we're of trip

the bolster In for from believe while addition, continue, many our economy. of not we're stimulus planning business the the activity helped And to we benefited activity government that stimulus this government over other as trends we and those pet and few continue our quarters. consolidation revitalization, rural I customers prevalent expect to to definitely adoption trip and such be next mentioned, with the and

going in as to we look but and to continue we behaviors or of Speaking be of the some saw believe these going are we ahead, that, the over X some months last differences. half, that many there's second X consumer nuances

be their expect expect be still But with we It oasis. instance, definitely land things will the their For -- they their safe different. do to that will is homes. and [indiscernible] we consumers

will the winterizing it's customers going kayaks just will think were and more fall are we gates. that to to the and winter and lawnmowers but be continue, second will higher still continue and leaves lawnmowers related, also As they're it's to their an things that fencing than outdoor spring, going fire of the we higher example, of of their in going believe into things their and be to on it continue raking to and gardens. been that's buying oriented, on and their going the on like in to the believe but in firewood fall and working but they're homes. in a level pits, things And like yard patio in as spring, kayaks, and category fall, their there and there do are and such working land going heaters winter buying participation their They're like categories, we shift some different, the instead the in and past, to be was be half. just Overall,

planning to we're is be We're even at that future and assumption. pandemic the looking next that dealing significant half our our a assumption, orienting amount predict uncertainty, we and Now with operating is we further, team in can't around while still of will premise first of the under the the buying year. that there

Over few We before. from we than stronger will purposeful allow the believe us our actions to navigated better it past have conditions. unprecedented that emerge months, and ever

and growth in drivers our initiatives years back the and QX. to to to come opportunity the to I extend over insights I'll outlook on an depth future some have leadership with We our and to quarter And for that, other turn Kurt strategic and come. our create call define give more now before review our of

Kurt Barton

Hal, you, call. everyone and the hello Thank on to

this I our together more discussing team. ways like recognize results, in and customers the serve taking prouder unprecedented XX face inspired incredible Before than have and the and second team. with could team be to embrace environment, quarter of of Tractor actions personally current years decisively of to part our our I not new come working everyone been I'd to With be face Supply, thank to our conditions. watching a

This quarter of like exceptional Tractor other and history no Supply. was in the certainly

The the you. second quarter Hal benefited trends macro from with shared

The favorable in While time, with at was the same we country a had a the consistent ideal breaking early spring/summer season. the and spring. weather providing sustained temperatures great spring across moisture,

This order interests Out driver living for comparable Here shifted our and categories like As pets, and a maintenance poultry, more desire animals as From our store hobbies homes priority. living the lifestyle, largest backyard entertainment self-reliant have fencing, rank their travel, also performance, bird lifestyle new their is other their care product land in for land we from caring backyard customers' improvement and customers sales of and studying, was adopting like that supported gardening a and feeding. and made clearly they and home dining. and the our inclusive

from the of Now spring/summer brand I open that increase an government primary the we performance the being categories. discussed followed performance. across benefits second remained the and the favorable likely awareness earlier sales these weather the all believe as comparable largest such stimulus the Hal drivers, early during checks in store tailwinds part our mentioned customer board essential This the by Underlying new spending business quarter. that that driver was was of and

transitory compared structural comp look store to is this like checks animal re-engaged break and at stimulus and in government the consolidation, another trends growth the more sales growth new revitalization sales such as increase sustainable, between rural quarter's COVID-XX-related customers, the in down and to way the to as ownership. factors, companion comparable Now customers trip tailwinds

wrap my drivers, these to opportunity store growth from impact with can be the estimate structural us it sales half difficult other each to sales nearly growth. comparable performance discussion that highlights. sustainable While QX a the I'll giving believe up tailwinds, is few for of on a of attributed we

line big which had by sales mowers, comp trailers, categories, overall robust was our performance in washers strength pressure equipment. growth. in with First, we driven in This our ticket and was generally safes, X-point

flat edible, usable Second, lastly, products, is and our of sales consumable, our inflation solid representation strength had for which quarter. business, mid-teens core CUE essentially a comp was And commodity of our the growth.

a and in reduction as was increase by result profit percentage increase was profit. basis frequency gross XX.X% product the Gross for to This principally points. in strong of demand promotion sales on categories. depth of a as driven the of quarter, a second XXX our Moving of an

also XX.X%, and costs XX was an sales. We income increase transportation along share significant achieved increase $XXX.X was in profit XX%. occupancy mix, in was to as with nearly attributable per labor our team basis hours including was earnings sanitation. increase net This including offset to costs with store categories of percentage The of sales. leverage points. was to XX%. in XXX Diluted million, store incremental of the members, $X.XX, labor points. fixed profit improvement approximately for we the related in other of volume benefited and store strong support an related quarter. COVID-XX We a performance comparable of product depreciation margin supplies for -- to from strong leverage by distancing percentage the SG&A, dedicated the incremental and costs as Operating partially incremental increase sales as and significant million, in a the PP&E leverage achieved increased in pandemic, COVID-XX primarily amortization these appreciation social SG&A net cleaning lower favorable hours well $XX of and XX.X%, achieved -- as decrease of to a was given incentive pandemic decrease increased the XX% Net compensation incurred costs the stores operating the basis managing increased of wages sales, an

at $X.XX and to store. per in increase inventory average remains the Turning inventory sheet in decline Merchandise quarter. were trends reflects robust our inventory the the quarter, billion the reduction which principally in The second average sales balance solid inventories per X.X% now an during the of store strong. representing turns end

at with a vendors borrowings and We meet the supply and revolver. our executing cash current billion of $X.X chain are quarter cash to level equivalents Our and very high the finished demands. million our $XXX on customers' no

Moving now we to To the see continue strong in the our date, quarter. guidance for the third business. sales to momentum

this quarter. momentum to the albeit sales third expect profitability than lower forecast second level for continue, we at as the delivering quarter, strong a We and

typically we While due view on situation a third to our we don't COVID-XX, are providing unique quarter. the provide

to Given our stimulus would the creates about beyond Overall, the include recognize, store the this QX we backdrop, of trends for just sales through significant is up anticipate the level heightened provide the a a comparable and our elevated strength very But leading we benefits, at of good cycle. uncertainty of in uncertainty, all QX. measures, tapering government to the level as it November elections. consumer. business we election to guidance move levels November moderate feel right to level and now. unemployment With we as contributing and impact of shelter-in-place it distancing Factors uncertainty the duration restrictions even of difficult social

million growth be our consider customers to will impacting approximately of strategic costs $XXX $X.XX approximately COVID-XX-related this million previously to comp diluted to XX% XX% cost safety Two And $XX $XXX $X.XX. move million initiatives. and approximately outlook range range we disclosed, to for ensure to to sales for and is For permanent and quarter our the mind, the $XX as Net the of well. as of quarter, $XX XX%. share XX% earnings forecast million factors our team include changes million members and million our expect our sales the quarter we keep please and to are of in $XX health to the of of benefit to per third that in the growth income in wage third prioritization of growth net and

will our capital growth initiatives momentarily. raising that to are We our spending strategic Hal discuss outlook support

to estimate million previous was $XXX Our $XXX million.

spending to For we technology. to in the of range initiatives majority a spending million $XXX attributable anticipate XXXX, million. now of in-store supporting $XXX new increase and capital capital Vast is

the anticipate be we comp to beyond quarter we fourth Looking performance quarter, expectations above when third year. the our enter sales original

to As products. our we back of moderate business will as mentioned earlier, into mix lower and and quarter to become our believe seasonal that get throughout we expect outdoor a we the continue moderation CUE sales concentration fourth trends QX, a higher of current

stronger more moderate we planning normal, but online with season holiday a Additionally, than are for growth.

continue investing the we we of goal always, how growth. for to initiatives performance, strong consistent, be with delivering our strategically As long-term while financial in in disciplined manage capital

We greater capitalize operations. share of are from a increase we sustain taking to the significant and have opportunity on in cash actions capture to a market. generated Year-to-date, the

cash As portion of this from flow in the will with business goal strategic The a Hal innovative at incremental Tractor our how reinvesting about our leader will than team be we crisis of this stronger an is continue we channel. emerging discuss excited before. in Supply to into a are moment, meaningful

it to I'll back Now Hal. turn

Harry Lawton

Kurt. Thanks,

unique capitalize have think powerful and on our as sales that goal customers retain on customer we benefiting Look, look reengaged to is now and from ahead. our about to productivity. to new a of record seeing. our higher number drive the trends we're we And business, ability the opportunity to Let's and capitalize we're

focused as strength stay even term, on investing we're Our fuel long-term growth. advantage to financial allows long the competitive us greater creating an to

future. continue of we're the groundwork from to We the position operate strength. And laying a for

to that being new implemented we're the within stores strategic introduce across today, company. so are initiatives all excited And X

enhancements and the consumer focused the is support the in-store is second activity productivity improving the execution. that's on and And capitalize field service first to technology of The our expansion expectations. of build-out team, on of several

stepping initiative area improve our Tractor addressed which last merchandising in of store, support program, on body activity for to largest the of designed the goal Turning tasking builds away want to is drive is work rollout second customer-facing a of This hours represents members. we team the keep can approach. the And of from broadly, possible store activities initiative receiving the ways way Way year back, as customer-facing of improve is in more and to our so merchandise. successful shift our in to stocking be efficient field stores, kind This tasking, our to of The work And And this in hours. productivity and we to our finding largest the team. what do we which that payroll. as very common retail

so with strategy seasonal activity. work product. team and FAST partners, -- of we're the in your as teams type teams been process from and in is of to receive sales, driving And more team includes resets, be This each common and allow prioritize store up. retail, ramping the the drive the they'll per on-shelf week. store-level related to vendor the and of teams would starting proven drive and in and more will district. store like X Caps, customer so teams team comparable the sales These team anticipate that merchandising initiatives. each in up, allow And the driving the of August, will the your court, team, potential execution labor members The their customer And of executing be for is in team they've help cross-sectors and every time, in center store to on directly is every and efficient the in -- drive address the is than execution on particular be productivity spend sales. work to service, customer FAST of FAST End lead which also rates the we focus our teams sales and planogram through their support and a are to help goal time service very to will them team improve programs to the hiring measures FAST to satisfaction FAST store-specific X,XXX stores to store as tasking. higher industry, the a ultimately store get continue programs FAST mentioned, in-store Over these ramp team teams has the team efficiencies dedicated of proven improve as will the These to

the on in building of initiative expansion includes and in-store quarter, increased Our online this WiFi payment And our of technology and capabilities, rollout delivery contactless second services capabilities. capabilities. ship-from-store the is our fulfillment enhanced

Club. last of that a the Within with integration had customer few greater soft weeks, app new convenience for our allows mobile and launch our we Neighbor's

more We and to weeks. to in will We is access app know shopping begin to makes and communicate new important easier app about the our customers more the convenient. customers, mobile upcoming our our

that store in stores. Further, and access is we substantially supporting X implementing move our from capacity mobile of points at access each access X the this registers In at store. our contactless contactless This we're payments capabilities. all tied addition, to each we're stores to earlier hardware and at year. increasing wireless the points stores we expanding doubled point-of-sale our ship-from-store We're adding in as in subscriptions the point-of-sale our our in payments

advantage are becoming Supply. Our a technology capabilities strategic for Tractor

also we chain-wide In our activities, driving across these -- are driving driving space addition to focused X focused space -- stores. on our productivity we're our of on

of productivity space store. outside is that of substantially productivity the the inside this is of as The like our Typically, driving our much below talk today the as side chain we lot to about space in lot. first average. And side the the have stores we'd initiative there's

categories select become In the we're in categories some Our sales ability about terms we Supply here of new of really what lot take wider drive it quarter. progress, lot higher customers and XX per already also through to the it in convenience to at in with enhancing buy through side pickup. to transform online, third categories, -- beginning our side expansion Tractor and offer square this for in will tests And and of have we'll the ability help shopping continue can be foot in assortment is do that and it right us leveraged reworking up can the a transformation of our offered level. engaged to side is are of through lots. online, pick there. enter drive can to stores categories, the store buy now keep product transformation in expanded experience next the year offerings product to out the our And total, experience be offer our select This customer

lot store the the our During space our in fusion in Similar Tractor retail to about been for consumer's third to customer completing state-of-the-art pilots. brand enhance base overlap customers shopped there mature mature visit. to mature XX us and active may square across and the higher sales of XXXX, stores give designed program from the more will in X productivity of per protect some stores is view. we important testing deployed a proven with to our the point test, interior quarter, to the like teams, productivity anticipate past of we will also experience Supply. between the have proven space stores. side is have foot also drive Much have a when concepts productivity -- FAST productivity not new An image new fusion program Project space space reasons begin our programs program be that

continue a opportunity sales. drive refresh for create comp to our of efforts both categories further and to these multiyear new our customers the our base, of size store shopping Given store base, are

animal, in here will This have for new Makita, expansion reset robust for As dog a key This In tools. On winning will with MuttNation dog ahead, high-quality we with along space their known the addition and addition introduction occurring for reallocate our look new have now exclusive a line power offerings Miranda right companion brand tools and the innovation of of from our we of Lambert's The food Victor the food. power exclusive allow the August. brands, is significant pipeline. introductions. Farm for reset of also we brand reputation product a One

to it excited time, some we're offering. our carry Our customers Victor add us have been food asking dog for to brand the and quite to

and a is to be and Across We first rolling the in and start the national it's will to Victor the of winter launches out of exciting online we environment. available dog see SKU currently now. with food retailer for can -- product, limited adapt today Victor. all you we right the stores our as store, current serving parts fall in the customers products our had offering,

change stores the move as seasons of to Our into be fall. we ready will for begin

excited coverage announce On with the Sports the the to we're upcoming marketing partnership NBA of Turner restart the our of season. front, during

Together productive launched to that Stronger visible season the We will focused we're To more Tuesday. and enhance make our legendary more campaign role ad in in expansions to wrap our ability on improvements. on compelling with our be and very our our improve driving to our service key a up, play them category space even throughout the our execution stores, and Product transform stores customers. innovation productivity

a to and rest like of My questions. and and team structural to the believe we pandemic our enhancements and lines appreciation expansions And and on technology stronger more open confidence Tractor each to remain the this open strategy Supply. of emerge Our every their XX,XXX that we'd one Despite we're mission will that time. is and our and I going the like allow out the be larger will the the have to execution that, experiencing, from team a for values. a our to the operator, trends with Supply a dedication Tractor sincere backdrop now to than -- company. macro us members for for confident we'd that goes stronger will long shift continue current we U.S., service build operating in offering of reflective are

Operator

Instructions]. [Operator

today Sachs. question McShane first from Kate comes from Goldman Our

Katharine McShane

quarters? centered inventory. based store, this? the flip versus are demand. you strong question on is over And you very, Inventory a per was piece My the down had around very next how know it's pretty strong But comp. how evolve I couple of inventory expect to managing do strong your very

Harry Lawton

question. for Thanks absolutely. Kate, the

working in strains that remarks, XX% weeks I receipts proud to not those obviously like our into truck. very do vendors about would right to with mentioned we operating more business And And on my levels XX%, off more We challenges a XX-plus increasing has prepared of working that to And have closely very we've our I closely But to puts inventory one a higher we've are in to with our of like taken we vendors, historically through when kind many ask right As how bit the of team of the been them, a minute is comps customers. cases, of vendor to interactions. it selling of inventory actions what seen some certainly with levels I'd will and stores. lean increasing and and -- all meet plus number in the worked would be challenges. of In be product little that. in of our inventory Seth at those the for talk say in-stock really to visibility we're our our comes forecast back needs terms now. our a XX%,

think we As the I tanks of United stock States. in an seller largest example, are the

We are $X,XXX week. selling close those a to of

able Our is week. make manufacturer a $X,XXX to

the soon So hit we've them or hit they a side immediately lot. and the off customers as we will outside our taking got And lot. truck, as floor in the get calls the

on we again, turn we very on I'll more focused more a it our make front. We're vendors maybe And our to focused that. very just more inventory. over comments levels, getting getting our in so, had that few We're to with closely on in-stock very working we're And on Seth stores. and wish

Jonathan Estep

but team suppliers Hal. ways much at get reallocate of to sure that and really space to whether I that can the inventory products in things doing our with are each also opportunity is merchant so and one our the out looking around Thanks, and of as setting, that the sell our every each is to Yes. partnering things as the been nimble supporting can activity court are team for possible nature. of is available Kate, we as in ways that can there when that that's obviously, up supplier that day has backyard we today, things make that home looking what And we and buys. desire has the tell mentioned, be Hal and lifestyle in you how center base it's get which product been in stepping our

pivoting the one and to new So gone that new we've sell items had of also really that categories. strong benefits is And as throughs. route, we've

Hal overall we drive-out we're we our about. also the well, our inventory XX% when But the -- items as on look time sitting year, that clearance than So -- were programs about at of this strength our less replenished than last based you have have each on talked business. today just we

we us to as every then also throughs, now number one of it's your couple which benefit clearance in which benefited significant has two, opportunity sell have in it's after again sure want for Number to that some day well. product that programs. drive inventory, are which buys, seen have we the that driving strong fold. -- stock a have But is right less couple own So allowed a can comps go bids each to make we and

Operator

Keith comes question from from Piper next Our Sandler. Peter

Peter Keith

Maybe a prepared results, question remarks. thanks Great Kurt. the for guidance and for thorough

that understand in margin and Given these with via what's of guys you some of us QX, backdrop? could guided sales continuation posted the potential QX help solid the gross you strong drivers

Kurt Barton

Yes. gross ideal, to Certainly, This saw board I'll will on were that, while always QX, several the the balance be to on that of by favorable our priority able solid that. continue Kurt. very and to first were to to And start back trying continuation good and in is gain and Peter. regards And market where capitalize margin. we factors gross across we reflecting margin share

stay support and compare continue does we EDLP, versus we'll So forward, QX to promotions. less QX on as focused looking ahead, which for

heard is its in Seth mention, inventory our As shape. just cleanest you

And continue so product performance to efficiencies. margin clearance. strong We see going and of did And [Technical as half, but promotional less we or level benefit some we a key anticipate of will to not on more we that transportation in with but opportunity it. into albeit inventory we some in both clean solid, good, drivers offseason and of continue, a anticipate that the QX may start benefit do the as strong benefits think then some moderated benefit think there's have Difficulty]. gross those The the we mix of year-over-year. from in the second transition at We cycle have

performance gross So momentum you'll in margin. that from our year-over-year continued see anticipate guide we or and growth strong

Peter Keith

another numbers And acquisition new quite for Kurt. question helpful, you that customer impressive. That's Okay. gave The were just maybe Hal.

months the any elevated acquisition, recent what Now you April? have retain in in be that several you're and stores to on months into March seems perhaps that have into to ability do people the come observations the

Harry Lawton

Yes.

a the counts with at they historically us continuing strong seeing customer time trends to with that. have those customer continuing and we're them year higher shop into second the say rural. and comes And and able platform very -- last probably us. a set along see slightly see all part set analytical repeat a our we're we monitoring new up to I skills and we're all they've we're of been than to of to we're leverage analytical is were of more consistent counts, and team that muscle with on, had Azure, strong now. of what third reacquired and have customers. So It's slightly rates migrated new this or pandemic have until year reacquired the purchase of from was that QX -- And that are customers as mentioned, regular as rate more did work tool it's Microsoft early the seeing And the in early up. QX our It suburban. we the days we a there now I'd

satisfaction And as hired those kind pickup, a are new X,XXX curbside for customer mix was that with provide shopping can And serve course, But actions, that's us store remarks. as in in in online, shop scores. that tendency that repeat is strong engage as us specifically over saying our they to their then those more well. to in we're giving in net pickup of with some we and penetrate they new they're And one does we they're of online, female, toolkit I intend customer stores. between reasons their significantly this kind team the to little whether surveys, with in suburban quarter, it's then to team to the customers. as we in service us. be have moderating. of increased continue prepared counts a CRM buy a invest ensuring or it's digital legendary It's members and sales customers the direct does in -- rural. reasonably our members, Now our the aspiration marketing new of And And It mentioned national continuing ship and well with of customers. to to known have effectively

Operator

comes Our Peter next question from Benedict from Baird.

Peter Benedict

questions. two So

-- on just maybe just First, cadence. the

in You mentioned that's pretty across XQ. continued consistent top and that XQ line

forward, you're looking which mentioned some sense. as expecting makes So you moderation,

comp for was first your understand kind there? you planning my how benchmark balance moderation you're good trying XQ? XQ? Just Is stuff. with maybe structural what think thinking a in thought question. obviously, that you're mean, the about That's more of maybe to I us moderation some And then, of what XQ, of -- maybe about in of to you the level half said sustainable

Kurt Barton

And to Yes. anticipate We amazingly, for and we prepared to elevated in falling from anticipate quarter of potentially strength the the we indicator with the kind is June. months the We and And just believe of as fairly at the level April, volatile and there can Peter, see point the I while to regards your sales, today you just reasons I the with it's In the that we I'll quarter help in half could quarter, when level. point the there moderation. comp having Thanks address And the the earlier, continue a as seeing consistent on where the a the Kurt. all last of July. and throughout quarter. performance range. X-year saw, core performance volumes between stack third strong unprecedented second look continues what uncertainty do second third more show even -- consistency business some in mentioned, the third see pivot a and that first remarks, would question. made I this mentioned May we is good of of the the through quarter X to at month-to-month, then the

less of in while prudent that some that the off some we evaluation causing the gave our giving have in end us to strong tailwinds quarter range guidance. really starting to overall in could benefit, third we're So the

Peter Benedict

That's maybe Seth. then fair. And Okay. just a question Hal for or

know equine, I are that's poultry and other around you surge that maybe large understand Just guys rank your here? capitalize could also you we animals, if on can -- most continuing backyard important the of so kind which then so categories. animal within trends, backyard rank serving to are dog to you the mentioned adoption, business, the ownership particularly animal the what order overall trend poultry just the importance doing robust. has but And just trend you're of been Maybe businesses those

Jonathan Estep

Seth. and overall and bit When talking I of animal rank our you of little at those at a independently. businesses look would the order of Peter, pet about kind look two, this is each

up we're the in and And the on lot are. food strength are of that's as supplies The efforts rates. So for it is place, make showed trends the reset the in that be to business that and Obviously, customer see pet obviously, adoption a coming incredible own to go marketplace. sure Hal those rural we of record these have continuing as mentioned have desire, going continue going the primary us, we And product resets there seeing where to pet just strength. the whether where pet pet customer kind we quarter. to continue a our in supplies we're

obviously, as we obviously, And on side the to want tractor it's we rural approach. that for be category, so pet with other on multi-species the sure own that it look whether at something its to that, those, Animal own. marketplace. us is with sense category And is well obviously the in want make we as that pet

And of we together about really and at that as go each about puts areas categories. backyard talked You poultry, regional categories. regionalization, merchant most see the we times of animal so the can really the of one talked And team differences talk localization areas side about attack merchant equine. localized you the some independent those is we that to strategies these and of the after

has just is So our really sales strength done feed basis And poultry these continuing here. that our events is not to of Days, the has we center and an local the after example relative go actually is give want what the after about to Days, to is we're ended. call throughout of nimbleness obviously typically Chick which team, a put assortment. on That have the Backyard some court nice our some to Chick seen a event actually one of rack in something go in. spring that event. we -- the we store-by-store big And X-week occurred year, things,

seeing momentum The with reallocate that. continue all that throughout So as continuing Most of the to the capitalize come we've that customers as as space. seen are stores be fall, and we'll on flock. court we we're the the team be in to of can want dependable the these supplier that category. strength to make category was as well our only adding that trends, nimble, And current but new able customers center into not as also sure we

the but look drive of forward the I both, only we going pillars as would and comp year for are to years come primary say, overall not animal, and X just be business. pet So this the to drive to

Mary Pilkington

Winn. Mary X question is am follow-up. X please and I to keep ask everyone This that going to

able queue, as people as many people we'd the to a We lot in get to like have and of to be possible.

So thank you.

Operator

Michael comes from next Our question UBS. from Lasser

Michael Lasser

you remarkable a follow Tractor are yourself setting your up year. at tough had a but you've next Supply, act to for Hal, XX-year start to

acquisition significant today, So in can knowing customer these Tractor initiatives productive all amount do XXXX? you Supply and of know what in positive comp place, think with new you

Harry Lawton

the reference next COVID-XX I of start Great of XX least months, plans building I'll that, our our that I me the uncertainties we're by a referencing in the that acknowledge prepared to crystal through at in got We're to we're I've our remarks the and that. And range but assortment one. And shopping planning of for don't United factor But we is -- pandemic about next operational ball significant just what and question. on bind putting and place -- think we're can year. behavior, plans talked be wide what I'll to in the to that. over front in around States XX support consumer middle would I in the

to XX the we a we're the -- it's our stronger we're As company space about we're we than other make early square days, as what our productivity lot look efficient, of been to think, just beyond this that, things of slab. program, side operationally of a I for on format holds followed there. we're at of time, with, about always since see FAST initial more easier similar technology then investing we're project fusion -- to are we're productivity the us by they like more terms -- it like doing all but we're gone it has to our we have that kind We've and our products inside stores. concrete we've lot year. that's focused And big saying, in productive. initiatives we're make a where improvement that's accounts, in going make team our our those And while for XX,XXX how in pandemic. And out we business a of entered much to and it's in space lot store opportunity do for We why XX,XXX talking we our us. on got very And and our this do that. of a feet truly initiative looking how we're some importantly, emerging anywhere us side actions agricultural -- between and efficient stores, growth today. and strong side Typically, a have think investing more a And use lot. in business that quite been retailers of those you on you It's most taking

next to expand standing tests attractive in And transform different right our now. And our through is year retail on so investing that fall. come the then in we us position the how want XX radically, see more XX company X We like from lock as side We shop our goal to that as radically stores make more years how this well. we're get to new that year lot. a out those up we've and to And got would a play our transform beyond. into of sitting from not we at And business, these I said, and also want we're more come on to to laurels. a customers. it strength efficient We're store retailer

what the exiting make And here to so can as of predict could QX next that all the is company I our sure taken we've we're but exit not better comp a make we for sure in company time, have at leaning in pandemic. the point to we this you tell I'm pandemic the that year, time I

Operator

Gutman Our next Simeon Stanley. question comes from Morgan from

Simeon Gutman

improving space I the productivity. for maybe and related bit then you about little the ask wanted to Hal. A outside

around improvement Kurt and retailer, home that I your doing improvement does And to mentioned work any just And testing opportunities should or to foot some the think structural big? per store illustrate doing of you if land? these drive I this used sales And store. at, store difference. foot think incremental sense includes not you foot, the thinking productivity the you're are we I'm Curious per a could $XXX. be tests, still here where that then home $XXX you're to a know tailwinds. or where You're sales about e-com. The

Harry Lawton

Yes.

What the value the the XX are and So are in targets in it's what our in would we're certainly I the of are the share these down format. Every new product bulk sales. we'll and and the more much in programs around categories done drive [indiscernible] tests each say more is cutting hard really up we're redefine -- And earn just Seth -- yet. all get connectivity The in into changes of that at out room have its more not lot fantastic its data both and store. program store got SKU see side data step has of clarity prepared brands, as forward allocate performance earn both fall. the to standing how And inside -- job team way in to And and aisles space, what a radical stores to for we look store, every and areas in has and we new them company's it's way. as and lay pilots notably, to step looking about We've here a of think the leveraging those, express goals proposition is to significant that And a we appropriate. -- the the in our like. of that transformation. talk to should

racking square merchandise over that to X,XXX about this the of XX,XXX X,XXX, it have to it X,XXX, through kind feet taking that feet compressing shifting basically square now, were there product. we You

see shoppable. bundled drive you up drive-through racking. customers with on you'll now walked through We're up. pickup We're like feed. the stock certain laying at typically, at that lot you putting looking and they're drive And that corals, our We're through opening up gates. together. and see and the see feed store, drive-throughs how allow these automatic do We're now looking and If floor on We're to gates pick a merchandising you'll categories garden. of you'll tanks, times, they're

staffing orders, of it. online, new store in front to all don't out also in so have Theatro store, headsets We outside. drive up for do We're through you selected online, pick stores. buy in the up dedicating buy pick high-volume you for wait We're putting can

our see talk larger to will going way, what can home XX,XXX other much be store essence, stores. really, and forward, manage you some that center that, to in a members foot of to like and move each the will XX,XXX lot to store. square covered mass So be might what side in foot square XX,XXX The XX,XXX from team now more a

a is productivity of done we an program before It we're the were it opportunity. than these it to significantly was really with about when store productivity very transform So And us opportunity rollouts. different the excited gives our we has categories forward. going Seth new opportunity an this in change the was outside to serve to CUE bring transformation in. as think kind of very involved and led step us XXXX, another and for

Simeon Gutman

And Hal? count up, goes the SKU

Harry Lawton

new and and There some support some inventory of outdoor focused those there add additionals add would we're will sales volumes count, modest we've area, very certainly, we're be where that be reflective be on SKUs But SKU footage got merchandising. to that we're higher -- anticipating. the of still but more some But of productivity. productivity inventory space will that square those

Operator

from question Steven from Forbes Guggenheim. comes next Our

Steven Forbes

The field here, mentioned be vendor will some vendor you X either Maybe then right, some for think dialogue your of the type district these we of to put you today versus I'll And should XX after team as And productivity -- they Maybe support peers, about form community, focus here. wrong the if at that's into be? team. the servicing box I maybe on where members funding of initially for some tasking talk prove and whether level. the initiatives. right X,XXX versus district. just about X just there per believe activity where the two I'm vendor gains think big right, organized hours questions correct about just real you gotten have out, or with participation, some quickly, right, these just are your of support the me then

Harry Lawton

Yes.

a So those. of me kind few of let hit

customer-facing. product we Way significantly receive which looking we with working been that other ask many to get The biggest Cap that's had et activity. next our mentioned, that line cetera. now, make that off, in approach call to to more truck team tried that. our it's are categories the we activity and started again, -- executions of they stores When seasonal on we the labor and they're process, as we been executed program. existing program year as our that a are and FCIs, resets And to to across Tractor the stores, It's a doing tasks you technology them with time. and at that And you and shift First those our task of to is put to core that. that's that is do the second hours they're such the tasks, know, retail. together with members executions, those And largest XX, improved efficient get and focused reset a because have the the at is our That merchandising tried we very true XX you certain efficient, aggregate that's methodically use same our And stores team more putting we execute we a and you those on last End efficient stores can completion and successfully. across solely implemented the We resets, shelves. happens through #X them whether task in true are retailers across could a right what review,

-- your into You you whether systems the processes and that product you that drive way to your also the comes it on in store gets load it's your planograms, the cetera. and as efficient your more aside, on pallets get it's way set the et build execution, whether

stores, we more and so And we all are make count. in tasks committed how resources do to down to just our our company our very it service. And more all shifting about we to this how efficient customer it driving making is productive, company continue our do make

directly and to of it the are funding my those remarks the those the the to sort common industry I for vendors kind related As the support is to activities of of that as program, in because execution was for it in headcounts, programs. implying very vendors' that you said, relates on-shelf

in efficient get think vendor over opportunity in then the payroll with time, in for points And their the our as more well. is we'll there's conference discussion our tasking, one to stores as a a be be them. and having stores month, of more efficient have We do this I also,

making little this we're transitory, have and team not structural. the QX, the in long we in into in is cost So will some think long incremental slide term, while investment this QX in term, a we it bit

Mary Pilkington

the we the in call of go longer. would we the Carol, hour, number people I few but queue, have Operator, of have top minutes given the the reached elect for a

question. we will move to So next maybe, the

Operator

Our comes Ciccarelli Scott from RBC. next from question

Scott Ciccarelli

followup had on I new the front. customer another

and importance, let and customers are other on these this are In to rural urban Supply? ability data trend. to out its who they're of other suburban Supply? you to of to latter, channels Tractor Tractor the from? more words, it's environment because moving new Or your venues new I customers kind leaving the they are that at And areas? if any shopping have you're migrate where given if they're was coming and what it year's come wondering is Just your to guys

Harry Lawton

a It's of both, little Yes. bit Scott.

than already and stores. even don't we on for where So are it's -- speak. variety have are mobile new cities, a people United you're coming it's from out I suburbans we and suburbia customers and the seeing And to density and of left coming the seeing we Here we customer that in they're past and we they're kind all share suburbs, density also in same and It's -- our in And read into some, out mobile look customers of here, customers, to with moving are because rural. more data where moving so seeing that They're sets out moving and more people cities -- at they're of embracing gaining so Supply They're the about the the have think the we're And you're Tractor and but customers of States, are shopping the from reacquired then a data density that. communities. places. data Out seeing when less in rural lifestyle lifestyle. these

give examples. So categories, -- to head some and I'll you the into just

all the So pet our in from benefiting we really animal there. that pet to said, say kind categories been have of a a were in that to want apparel they're we that about pet, food into on X new get strong, they Supply. about or there coming They're Instead element, We and item buy kind have and they're picking while customers that kind they of safety clothes retailer trip sales their pet consolidation comping. any or maybe Mars. take as that or double-digit are feed, to they're you Tractor in in or the high we already to X up customers Then in or of apparel going stand-alone where apparel, area. think going there do customers items of and lot shop maybe for boots to be or all-time adoption, think in food market used other of

focus Our vocal and square store XX,XXX on that. about safety, being big a been with to we've very feet XX,XXX

right of location. cleanliness. We're our safety #X when convenient we're marketing. actions I of we also many that And and think our and survey a fact, and our shopping our probably from -- in customers, results in customer kind do then have our criteria is into leaned now we

our having are we you some now. maybe And go share of on coming more we're who think from are that just right capturing pet product some farm so of around getting share, we're then feed. we and comfortable access where difficulty to There, into our taking think And ranch competitors, people more store.

we service price. have stay talked are And the being to focused, of size Tractor been very As with the that Kurt think Seth maybe more as customers. of earlier scale low and everyday connections we our a you the all retailer know, earlier, essential vendors, Supply where was those this as that and for really about some is little on, allows stock mentioning us in chains we've we of that And the and are struggle. co-op having a

around Our we way pricing lot of as been. we've is now in as sharp and food right garden. animal then the it's feed And you share And pet all think go ever a share. it's gained our of format. garden the lot And this that a gained think spring. even But we I context that a again think spring, And in great we've to in year. into of speaks been

ourselves for merchandising team I up setting think year. great a job the garden this did

we really parking in products on as big get us well feel a not in worked the store, in I'd have quickly, going equivalent really for customers XX,XXX, can parking a planning XX,XXX, where swing out go category are We have this foot to I that said, usually our what the that lot." in, rather other And And it a standalone lot, elsewhere. taking out and really options are stores year. I an to they XX,XXX comfortable "hey, square overwhelmed

you our is shopped. they it's bit customers, would existing it many the been of triple-digit had or And players places We've I multichannel the thing on from So that online it's online. we're a online existing both, mention think aggressive last customers, We think own of and The online. would mentioned from growth we're quarter. we this customers, taking whether holding we and think e-commerce well from historically taking little new I'll as only. have share

Operator

comes James. Matt from Our from next question Raymond McClintock

Matthew McClintock

Hal, My a this everything you said a congrats, call, job through just and here, of call, we this And of that main is may really think as you on question lot said great I initiatives. lot that there's say executing. on

before planning were already I on space think productivity focusing on COVID. you

COVID? the out new that of behavior understand X be about And that that you're today in or So I understand are already in before what parse investments putting initiatives now initiatives, how place of can we better kind changing those seeing might consumer what you're so you COVID? just understand want you're because to maybe talking things place? were fundamental Can things you making

Harry Lawton

that. question. would say, for I'd thanks things X Yes, the and say Matt, Yes, I on

we that off, an had thinking, and New with we did talk when attack and were we sharing opportunity in and greet March, opportunity. recall saying plans of was say thought And we First in go the in I'd of days kind that up early this space to about we our you to if going meet mid-March, were in was kind take put productivity. you start to -- place York,

team just by of also and doing thing this out his first team. productivity our team months, strategically construction Seth business years. in and XX to this John team of members, plans outstanding all place is our X we're say base all in look his Ordus X years, the the pandemic, midst midst to and and The to a address We're They're activity I'd and drive work putting support activity the in it. and

together have in It talked chewed what idea. but March only gum we team an the for I'd the last of didn't and is kind over the was not a has about X rope road think plan to place X the say pulled in company. and of it. jumped transformative compelling, at walked potentially we And months, off, map first more when very a really same So time I a

thing XX second leaning want might aggressive is swing we we which a those We're out a of the we in now pretty we The given of each also aggressive that are more execute of the solution of pilot, bullishness the but otherwise. have is get and at say those tests strength into for we to demonstrates in though the sets pilots. one I'd speed way, the right doing which just our business the a have once stores, data that

Operator

back Q&A comments. call, portion I Mary final This and for would concludes of turn to our the it Winn like to

Mary Pilkington

few Well, in the more very Carol. you glad thank Q&A. for to And able we were there I'm much, people a get

And on We our cooperation. third us. call you to does for our I'm speaking needs So joining to anyone look thank you in your Marianne with forward quarter and This all if thank October. anything. for call today, around you along conclude

Take So you all. thank care.

Operator

conference Thank you. does participation. today's again, your for once Thank this conclude call. And you

You may now disconnect.

Tractor Supply (TSCO) 23 Jul 202020 Q2 Earnings call transcript