Tractor Supply's Expansion Plows Through Recession

Tractor Supply Co. (TSCO) considers itself a growth company, and the seller of farm equipment, animal feed and other goods is not letting the recession stop that mission. The retailer will continue an ambitious store-opening plan that it barely abandoned in the rough economy, in efforts to double its portfolio.

The move is certainly a good one for owners of retail real estate that see tenant bases contract and retailers shutting their doors. And the strategy might prove good for Tractor Supply, a company that's dealt with some year-over-year sales pain during the recession but consistently records strong earnings.

Tractor Supply's management plans to open between 70 and 80 new stores next year on top of the 930 it already operates in 44 states. That number is about on par with the 76 new units opened during the prior year and just below the 91 locations the retailer added in 2008.

Bigger plans are in the works. Tractor Supply's goal is to bring its total number of stores to 1,800 across the country. "We're going to continue to open 70 to 80 new stores a year, for the near-term, and keep our eyes on the economy and trends, and hopefully we'll ratchet that up when we feel the time is right," said Stan Ruta, chief operating officer, during Tractor Supply's fourth-quarter conference call.

The company's numbers, as of now, shouldn't cause alarms about over expansion. Though stores open at least a year only saw sales increase 0.7 percent in the fourth quarter, Tractor Supply's fourth-quarter earnings soared 55 percent, hitting $38.3 million, and total revenue rose eight percent.

Meanwhile, Tractor Supply's full-year guidance has earnings per share coming in between $3.50 and $3.62, beating Wall Street's $3.27. And its stock saw rewards in the past year, with shares just under their 52-week high of $54.50, nearly double a $28.67 low over the period.

It's natural to be leery about a retailer with such explosive expansion plans during rough economic times. But Tractor Supply's strong performance in the recession amidst its growth proves that those ambitions probably aren't far fetched.