September 30, 2016

Nashville Post
by Geert De Lombaerde

Tractor Supply executives have bought an Arizona-based retailer of pet supplies and services that they think can grow in the coming years to 1,000 stores from its current 136.

Brentwood-based Tractor Supply paid $116 million in cash and debt for 11-year-old Petsense, which does business in 25 states. The deal won’t add or take away from the earnings of Tractor Supply for several years, executives told analysts and investors Thursday afternoon, but is expected to grow into a meaningful contributor as it grows its store count between 15 percent and 20 percent per year and as its sales approach $1 billion.

“We believe the pet specialty industry is an attractive expansion opportunity and, with 136 stores across 25 states, we think Petsense is an excellent complement to our Tractor Supply retail operations,” said Greg Sandfort, Tractor Supply’s CEO. “The Petsense team’s expertise in growing smaller format pet specialty stores combined with our proven expertise in the category as well as site selection and store growth, will enable us to accelerate the growth of our pet specialty retail business and enhance long-term shareholder value.”

The Petsense management team will continue to run the company from Scottsdale as a subsidiary of Tractor Supply. President and CEO Bob Angstead said his team and Tractor’s share “an appreciation of the opportunities presented by smaller towns and communities.”

Tractor Supply execs two years ago launched the Hometown Pet brand with two Williamson County stores designed to test some new ideas and find out more about how a pet owner client differs from the core Tractor Supply farmer and rancher.

Shares of Tractor Supply (Ticker: TSCO) ended Thursday at $68.24, down slightly on the day. They’re down more than 20 percent in the past three months, due mainly to a profit warning from Sandfort and his team last month.