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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Executive
Gregory A. Sandfort

as additions to our drop ship vendor ecommerce programs. We've seen double-digit growth in visits to our Web site now that we've added our mobile site capability, and although online sales are not material at this point, we have seen a significant increase in the store locator feature and believe our online and mobile sites are driving footsteps into our stores.

Now regarding our supply chain. We purchased land and have started construction on our new distribution center in Casa Grande, Arizona. This distribution center is an important part of our Western expansion strategy. Not only will it support our continued growth in those markets, it should lower our transportation costs and improve delivery times to our stores in that region. The new facility is expected to be operational in the fourth quarter of 2015 and will have the potential to ultimately serve in upwards of 250 stores in the Southwest region.

In 2015, we also plan to open two mixing centers in our Texas region. These are smaller cross-docking style distribution facilities that handle many of our palletized products and faster turning C.U.E. items such as [feed] [ph], shavings and wood pellets. With our vendors delivering products directly to these mixing centers, which are located closer to our stores, we can shorten our supply chain stem miles and reduce in-store inventory levels through more frequent store deliveries.

As we move into 2015, we will continue to invest in the analytic tools and supply chain assets necessary to strategically drive our growth. Our priorities in

Executive
Gregory A. Sandfort

2015 include opening approximately 110 to 115 new Tractor Supply stores, opening our new Southwest distribution center and Northeast D.C. expansion, the addition of two mixing centers in our Texas region, continued growth in the state of Washington through our Del's conversion to Tractor Supply stores, system enhancements to increase scalability and analytic capability for inventory allocation, omni-channel engagement and CRM, and continued system security enhancements.

As we all know, the cold harsh start to the year and the late spring selling season required us to carefully manage seasonal inventory investments and monitor our product sell-throughs. We had to react swiftly and we're successful in meeting the seasonal and everyday needs of our customers in both the first and second halves of the year. Throughout the year, the team did an excellent job of managing product flow and adjusting merchandize assortments and depth of inventory to capitalize on seasonal demands in the markets that we serve. We believe this continues to be a core competency and strategic advantage for Tractor Supply Company.

In my closing comments, I'd just like to say thank you to all of our hardworking and dedicated team members who serve our customers each and every day out there. We are pleased with our fourth quarter performance and our finish to the year. While it is difficult to predict the timing of seasonal demand trends, we know our customers do depend on us for everyday basic items and we continue to stay