Tractor Supply Company (NASDAQ:TSCO) Q4 2014 Earnings Conference Call - Final Transcript

Jan 28, 2015 • 05:00 pm ET

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Tractor Supply Company (NASDAQ:TSCO) Q4 2014 Earnings Conference Call - Final Transcript

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Q & A
Operator
operator

(Operator Instructions) Alan Rifkin with Barclays

Analyst
Alan Rifkin

Thank you very much. I appreciate you taking my question. First question is with respect to demand planning system. Can you maybe provide some color as to how you think that will help you improve your turns or how much you think it will help you improve your working capital? If you could just maybe provide a little bit of color on what we can expect to that? Thank you.

Executive
Gregory A. Sandfort

Alan, this is Greg. The system itself is designed to do really several things. It's to help us understand that we're probably not maximizing, I would say, individual SKUs within the assortment as they sell-through in the stores. For example, if we got an item on a peg and we're selling through three items by Wednesday or Thursday of the week but yet we still have Friday and Saturday of selling days before replenishment runs and pushes inventory back to the store, demand planning is looking at that and recalculating that throughout the week and saying, wait a minute, potential missed opportunity, let's push more than three as a replenishment, let's push for six depending upon how it's pretty packed.

That's the basic sales side of this and what that can mean we don't know yet. We just turned on several categories. We do think it will give us some sales lift over time. But this is a new system, work with [SaaS] [ph] on it. And the other thing it should do for us, it should enable us to push more inventory to the stores on a more ready-time basis, meaning that instead of us waiting for several weeks for things to get adjusted, this will start pushing inventory a little faster which should move it through the supply chain a little faster. So what we may find is our turns may speed a little bit as we go through this, but I'm not going to give you any forecast or guarantees at this point because we've just turned it on in several departments.

We like what we're seeing so far, but it's more about maximizing that inventory that's in the store today making sure that we're not running out of inventory in certain periods of time for our customer.

Analyst
Alan Rifkin

Okay. Thank you, Greg. And one follow-up, if I may. With respect to converting the former Del's stores, can you maybe provide a schedule either by half as to how many stores we can expect will be converted? And what are the dynamics of those conversions compared to an average store with respect to incremental revenue increases? Thank you.

Executive
Anthony F. Crudele

Alan, the way we look at it, as we go through the year, we'll try to update as to the schedule and how we'll handle the Del's stores. But generally, we look at it more on a top level basis that as we opened the new stores that Del's stores would represent about half of

Executive
Anthony F. Crudele

SC store and our general direction would be to count