Tractor Supply Company (NASDAQ: TSCO), like everyone else, began 2020 with optimism for a new year and new decade led by a new CEO, Hal Lawton. The Company’s carefully laid plans were seemingly put on hold when, by March, the world began battling a global health crisis. As the year unfolded dictated by COVID-19, political and social justice crises, the rural lifestyle retailer chose to move to an offensive position and accelerate strategic investments in the Company’s culture, future performance and ESG initiatives. Those investments paid off as Tractor Supply announced its fiscal year 2020 net sales had grown by 27.2%, making it a milestone year, and the Company’s success comes alongside significant progress in environmental, social and governance issues.
Operating with Safety as the Number One Priority
The health and safety of its Team Members and customers has always been a top priority for Tractor Supply, but this took on a new meaning in 2020. As an essential retailer serving the needs of pet and animal, land and homeowners, Tractor Supply stores stayed open throughout the initial surge of the pandemic. The Company quickly adopted best practices and took steps to proactively communicate how it was keeping people safe.
Tractor Supply focused on taking care of its more than 42,000 Team Members first, so they could, in turn, take care of customers. By mid-March, the Company began offering Team Members an additional two weeks of paid sick leave for anyone affected by COVID-19. From March 16 to June 27, Tractor Supply paid incremental appreciation bonuses and adopted permanent wage increases beginning June 28 for Team Members who were required to be at Tractor Supply and Petsense facilities to assist customers and operations during the COVID-19 pandemic. The Company also enhanced benefit offerings by offering 100% coverage of COVID-19 medical treatment and waiving cost-sharing for telehealth visits. Additionally, a new benefit package was offered to part-time Team Members with medical, vision and dental coverage, paid sick time and life insurance.
For customers, Tractor Supply increased the inventory supply for essential products like livestock and equine feed, pet food and other critical consumable items. Stores received additional daily cleanings and added social distancing signage, floor markings and plexiglass barriers. The Company began requiring all customers and Team Members to wear masks/facial coverings in June, while investments in technology like Mobile Point of Sale, Same-Day/Next-Day Delivery, first-ever mobile app and Contactless Curbside Delivery meant customers could shop on their own terms and from the safety of their home or vehicle.
Running the Business at Elevated Levels
Tractor Supply has always focused on being the most dependable supplier of relevant products and services for the rural lifestyle. With the pandemic, Tractor Supply stores were as essential to caring for pet and animal needs as the grocery store was to humans. By the second quarter, the business was running full steam ahead to keep up with the increased customer demand across all product categories as people adopted pets and animals and spent more time at home and outdoors.
Those trends continued throughout the remainder of the year, with comparable store sales up 23.1% year-over-year and 17 million new and reengaged customers. The supply chain team worked to keep up with demand and keep products in stock, and a new TractorSupply.com was rolled out to better assist customers shopping online, resulting in three quarters of triple-digit e-commerce growth.
Laying Track for ESG & Life Out Here Strategy
Since launching a Stewardship Program in 2008, Tractor Supply has been focused on minimizing its environmental impact, while simultaneously serving its customers. As a process of continuous improvement, this commitment to sustainability has expanded over time to focus on broader environmental, social and governance issues (ESG). While combatting the health and racial justice crises of 2020, Tractor Supply increased transparency and disclosure on its environmental operations, commitment to racial equality, community giving and governance practices for long-term shareholder value creation.
ESG actions from the year include:
- Releasing inaugural ESG Tear Sheet and TCFD Reports
- Joining American Connection Project Broadband Coalition and donating up to $1 million to improve rural broadband
- Receiving Great Place to Work Certification
- Submitting inaugural CDP submission
- Donating $12 million to community organizations and disaster relief efforts, including establishing the Tractor Supply Company Foundation
- Surpassing 2025 emissions reduction goal five years early and announcing a new renewable energy goal
- Creating Diversity, Equity and Inclusion Council led by the CEO
- Reaching “power of three” females on its Executive Committee
Additionally, Tractor Supply announced in October its new Life Out Here Strategy focused on:
- Delivering Legendary Customer Experiences
- Advancing ONETractor Capabilities
- Operating the Tractor Way
- Going the Country Mile for the Team
- Generating Healthy Shareholder Return
Even in a year filled with challenges, Tractor Supply prioritized strategic investments in ESG initiatives and its Life Out Here Strategy that will allow the Company to better serve its Team Members, customers, communities and shareholders in the long run.