Tractor Supply's CEO on How It Escaped the Post-Pandemic Curse

Tracy Alloway (0:03)

Bloomberg Audio Studios. Podcasts, radio, news.

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (0:24)

And I'm Joe Weisenthal.

Tracy Alloway (0:25)

Joe, you know what I did this weekend?

Joe Weisenthal (0:27)

Something outdoors in your garden, or maybe a home construction project, but something that was very dirty and costly and time consuming and uneconomical.

Tracy Alloway (0:38)

Thanks, Joe.

Joe Weisenthal (0:39)

Yeah, but I'm sure it was very satisfying. I'm sure it's very satisfying on some level.

Tracy Alloway (0:44)

Well, I did do a lot of that.

I'm restoring an orchard at the moment, and it's a lot of hard work and a lot of supplies, as you pointed out. I'm currently building a gate, and I think the gate is going to be phenomenally expensive by the time I finally finish it. But what I actually did this weekend, or one of the things I did, was I went over to Tractor Supply.

Joe Weisenthal (1:04)

Oh, I'm jealous. You know, amazingly, I still haven't been to one. Wait, Tracy, are you a hobbyist farmer?

Is that, would you call yourself that? If you have an orchard, right?

Tracy Alloway (1:14)

Yeah, I mean, I guess. We have blueberries and raspberries and strawberries and apples and apple pears and all of that stuff. So yeah, yeah, I guess it's my hobby.

Joe Weisenthal (1:25)

You know, we did that episode about Tractor Supply last year with the professor who had done the HBS study. And by, it sounds like you are the modal Tractor Supply customer.

Tracy Alloway (1:36)

Please, Joe, I prefer Cottagecore Elder Millennial.

Joe Weisenthal (1:39)

Okay, well that's-

Tracy Alloway (1:40)

No, it makes me sound like a character out of like Final Fantasy or something.

No, so I went over to Tractor Supply and the reason I went is because it's chicken season. So they have all the baby chicks over there and you can kind of see them in their little enclosure and I can fantasize about the day when I will have my own chickens and what kind I will get.

Joe Weisenthal (2:01)

But in the meantime, you have to build like 10 other things like, and then you can get around to building the chicken coop.

Tracy Alloway (2:06)

Yeah, that's right. I've got big plans for the chicken coop. All right, but the reason I bring it up is because Tractor Supply is a company that is sort of of perennial interest to us. So last year, we recorded an episode with Michael Roberto when he published a case study for Harvard Business School on Tractor Supply. And even before then, I remember Samuel Rines, the Corbu analyst, he had always called this company one of the most interesting retailers on the planet.

So it sort of loomed large over our consciousness. And I think the interesting thing about the Tractor Supply Co is, there's this question of cyclical versus structural. So this is one of the companies whose share price and revenue really boomed during the pandemic. Lots of people were staying at home. Lots of people became hobby farmers, as you point out, Joe, buying tomato cages and growing their own vegetables from seed, whatever.

And so there was an expectation that a lot of that business would start to subside or at least slow down as people started going back to work or some of the moving from urban areas to the suburbs started to reverse. But instead, seems like this particular market just continues to grow and Tractor Supply's share price is still very, very high.

Joe Weisenthal (3:28)

You're absolutely right. So the stock is really close to an all time high, continues to power higher.

You know, like 15 years ago, this was like an $8 stock. Today, it's a $249 stock. You look like you could be looking at a chart of Nvidia or something. And it is striking that you don't have to be an AI company to see charts like this. If you like find the right product, the right lane, the right store mix, et cetera, and you are on the right secular trends, such as the rise of the hobbyist farmer, people moving out to the eggs herbs, growing their own chickens, et cetera. It's an amazing case study on how to like, how to execute.

Tracy Alloway (4:03)

Absolutely. So today, I'm glad to say, we really do have the perfect guest, because we are going to be speaking to the CEO of Tractor Supply, Mr. Hal Lawton. He joins us now. Thank you so much for coming on the show, Hal.

Hal Lawton (4:16)

Hi Tracy, hi Joe. Thanks so much for having me on. Look forward to talking with y'all today.