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Tractor Supply CEO Hal Lawton knows how to handle the new round of expected tariffs, particularly who will pay the anticipated cost increases.
Lawton said he’s dusted off his playbook from 2018 when U.S. President Donald J. Trump imposed tariffs on goods during his first presidential administration.
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“We’re all waiting to see how this plays out,” Lawton said in an interview with CNBC TV on Thursday. Lawton emphasized that while it’s “anyone’s guess” as to what percentages and in what countries, one thing he’s clear about is Tractor Supply has a “tried and true playbook” that it has used before.
“It’s roughly kind of a third, a third, a third. You’re putting some of it back on the manufacturer, we’re finding some ways inside of our P/L to offset the impact of the tariff, and then some maybe pass along to the customer as well,” Lawton said.
The good news for the rural lifestyle chain is that it is less exposed to tariffs than his retail competitor. He said only 12 of the business is direct import, and less than 70 percent of that is from China.
The retailer on Thursday posted fourth-quarter earnings results. Lawton said in a conference call that while tariffs are an unknown, “We are confident in our ability to navigate these circumstances as they evolve.”
Net income slipped 4.6 percent to $236.4 million, or 44 cents a diluted share, for the three months ended Dec. 28, from $247.9 million, or 46 cents, a year ago. Net sales were up 3.1 percent to $3.77 billion from $3.66 billion, while comparable store sales were up 0.2 percent. The company said the average transaction grew 2.3 percent.
For the year, net income slipped 0.5 percent to $1.1 billion, or $2.04 a diluted share, from $1.11 billion, or $2.02, in 2023. Net sales rose 2.2 percent to $14.88 billion from $14.56 billion.
The company opened 80 new Tractor Supply stores and 11 new Petsense by Tractor Supply stores in 2024, and closed three Petsense locations. Since the end of the fiscal year, Tractor Supply said on Dec. 30 that its has completed its acquisition of Allivet, a privately-held online pet pharmacy. The retailer said the acquisition expands its total addressable market by $15 billion to $225 billion.
Tractor Supply held an Investor Day this past Dec. 5, noting plans to open 90 Tractor Supply doors in 2025 and 10 Petsense locations. The meeting also provided a strategic roadmap for growth called Life Out Here 2030. That initiative was first disclosed in October 2020, and since then has added over 22 million members to its Neighbors Club loyalty program, opened 13 distribution facilities, and scaled its Project Fusion store layout and remodel program to 50 percent of its stores. The chain also is planning to open its 11th distribution center in the Pacific Northwest in either late 2026 or sometime in 2027. Long-term targets include 6 to 8 percent in net sales growth and 3 to 5 percent in comp sales increases.