Analysts Leave Meeting With Tractor Supply Management With Mixed Feelings

Tractor Supply, an operator of rural lifestyle retail stores, is more concerned about the impact of volatile weather on its business.

"Unusual weather across the US has impacted sales at TSCO over the past several quarters. Top-line trends at the chain improved somewhat lately, but have yet to snap back," analyst Brian Nagel wrote in a note.

However, the analyst noted that management clearly indicated it is not seeing 2008-style leading indicators of a more meaningful pullback in sales.

"TSCO is managing inventories very well, despite more erratic sales lately. The company's new customer loyalty program, while still in test mode, is helping the chain better resonate with core customers," Nagel highlighted.

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In addition, Tractor Supply reaffirmed its 2,500 store target and is prepared to make the investments in distribution capacity needed to support its longer term unit growth.

"Our Outperform rating, at least in part, reflects a 'relative call' on the company and its shares. Unit growth potential and still-positive customer traffic make for unique characteristics for investors in an increasingly mature and challenged retail landscape, in our view," Nagel added.

At time of writing, shares of Tractor Supply were down 5.33 percent on the day, seen trading at $86.04.

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