BRENTWOOD, Tenn. - Tractor Supply Company (NASDAQ: NASDAQ:TSCO), a leading retail chain catering to the rural lifestyle, has signed a definitive agreement to acquire Allivet, an online pet pharmacy. This move aims to enhance offerings for Tractor Supply's Neighbor's Club members, particularly the 75% who own pets.
The acquisition is expected to expand Tractor Supply's market by $15 billion and is seen as a strategic complement to its current product lineup for companion animals and livestock customers. Allivet, established in 1992 and operating with distribution centers across all 50 states, is recognized for its efficient service and next-day delivery capabilities.
Hal Lawton, Tractor Supply's president and CEO, expressed enthusiasm about the acquisition, stating it will provide Neighbor's Club members with an easy and cost-effective way to obtain pet medications and specialty items. Ujjwal Dhoot, Allivet's CEO, echoed the sentiment, anticipating accelerated growth and innovation as part of Tractor Supply.
The transaction, expected to close in the first fiscal quarter of 2025, is subject to customary closing conditions, including regulatory approvals. Tractor Supply plans to fund the all-cash deal through its balance sheet and anticipates earnings per share accretion in the first year post-acquisition.
Tractor Supply has a history of over 85 years serving the rural community and operates 2,270 stores in 49 states. Its subsidiary, Petsense by Tractor Supply, operates 205 stores in 23 states, providing products and services for pet owners.
This acquisition is based on a press release statement and contains forward-looking statements subject to risks and uncertainties. The actual results may differ materially from those projected due to various factors, including the potential for regulatory hurdles and integration challenges.
In other recent news, Tractor Supply Company disclosed its third-quarter financial results, revealing a slight beat on earnings but a miss on revenue. The company reported earnings per share (EPS) of $2.24, marginally above the analyst estimate of $2.23, while revenue was recorded at $3.47 billion, slightly below the consensus estimate of $3.48 billion. Net sales saw a 1.6% YoY increase, although comparable store sales noted a minor decrease of 0.2%.
Despite the mixed results, Tractor Supply demonstrated financial resilience with a 3.2% increase in gross profit to $1.29 billion, primarily due to reduced transportation costs and effective product cost management. The company also adjusted its annual guidance, now forecasting a full-year 2024 EPS between $10.10 and $10.40, and revenue ranging from $14.85 billion to $15 billion.
In addition to the financial updates, Tractor Supply announced its plan to acquire Allivet, an online pet pharmacy. This recent development is part of the company's strategic growth plan, aiming to enhance its service offerings to its 37 million Neighbor's Club members.
InvestingPro Insights
Tractor Supply Company's acquisition of Allivet aligns well with its strong market position and financial health. According to InvestingPro data, Tractor Supply boasts a substantial market capitalization of $31.51 billion, reflecting its significant presence in the rural lifestyle retail sector.
The company's robust financial performance is evident in its revenue of $14.71 billion over the last twelve months as of Q2 2024. This solid revenue base provides a strong foundation for strategic acquisitions like Allivet, which are expected to drive future growth.
InvestingPro Tips highlight Tractor Supply's commitment to shareholder value. The company has raised its dividend for 14 consecutive years and maintained dividend payments for 15 years straight. This consistent dividend policy, coupled with a current dividend yield of 1.51%, underscores the company's financial stability and shareholder-friendly approach.
Moreover, Tractor Supply's strong return over the last year and decade, as noted in the InvestingPro Tips, suggests a track record of delivering value to investors. This historical performance bodes well for the company's ability to successfully integrate and leverage the Allivet acquisition to enhance its pet-related offerings.
It's worth noting that Tractor Supply operates with a moderate level of debt and has liquid assets exceeding short-term obligations. This financial flexibility positions the company well to fund the all-cash Allivet deal through its balance sheet without compromising its financial health.
For investors seeking more comprehensive insights, InvestingPro offers 12 additional tips for Tractor Supply, providing a deeper understanding of the company's financial position and growth prospects.
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