DEVELOPMENT/REDEVELOPMENT

Tractor Supply Company hits store milestone

BY HBSDealer Staff

Tractor Supply Company is celebrating the opening of its 1,600th store, which opened in Brentwood, Calif.

The new store will hold its grand opening on Saturday, Feb. 4th.

"We are extremely proud to be opening our 1,600th store in Brentwood, CA, and to have reached another significant milestone, as we continue to deliver on our long-term growth strategy and strategic expansion across the country, including the Western region," CEO Greg Sandfort said. "We have seen strong regional performance in the West and look forward to building long-lasting relationships with new customers, as we continue to expand our store base and bring Tractor Supply closer to more customers who live the rural lifestyle."

Tractor Supply has been in business for 79 years, today standing 24,000 team members strong, and with retail stores in every state (minus Alaska).

The retailer opened 113 new stores in 2016 and is still going strong in 2017.

"We continue to be encouraged by the strong comparable sales we have seen from new store openings, which gives us great confidence as we continue to grow our footprint, enhance our merchandise product offering, and meet the evolving needs of our customers," Sandfort added. "We are thrilled to open the doors of our Brentwood, CA, store and look forward to serving this great community, as we get one step closer to our goal of opening 2,500 domestic Tractor Supply locations."

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FINANCE

Commentary: Starbucks now “firmly in middle age”

BY CSA STAFF

Neil Saunders, CEO of retail research and consulting firm Conlumino, comments on Starbucks’ first quarter results in the remarks below.

While Starbucks has kicked off its new fiscal year with the lowest same-store sales growth since 2009, we are not overly discouraged by these results. Certainly, there are a few areas of softness, but the uplift of 3% in the Americas comes off the back of a 9% rise in the prior year. For a mature, fairly saturated company operating in a competitive segment of the market, we believe the numbers show resilience.

In any case, the overall revenue numbers are somewhat more robust – both within the Americas and on a global basis – thanks to a healthy program of store expansion. Starbucks may be reaching its peak in some localities, but it has demonstrated that even in its more mature markets it can still find headroom for new openings.

We also believe that Starbucks has done a reasonable job of managing its profitability at a time when margins are being squeezed by higher staffing costs. During this period, overall operating income increased by 7% on a global basis and by 3% within the Americas – partly thanks to the price increases of last year.

All of that noted, there is no doubt that Starbucks is now firmly in middle age: It is finding growth more difficult to come by and, in financial terms, the business is not moving upwards at the pace it once did. In our view, this is not demonstrative of a company in trouble, or even a company doing the wrong things, it is simply a reflection that Starbucks is a more mature business.

Given that this dynamic is only likely to intensify over the next few years, it is incumbent on Starbucks to find new avenues for growth. In our view, the company is managing this well and has already set out its stall in terms of the innovations it intends to pursue to drive both the top and bottom lines.

Some of these future plans lie outside the existing business model. We applaud Starbucks for having the courage to look beyond its existing core operation, and to indicate its commitment to these ventures by putting Howard Schultz in charge of the new division.

In truth, the push into premium through the development of the Princi chain and the Roastery and Reserve-only stores are not going to deliver sales volumes anywhere near those of the main business. However, their contribution will take the edge off the more subdued growth coming from core markets.

As much as new initiatives will help, we also maintain it is important for Starbucks to look for ways to improve productivity at existing stores. This includes improvements to the food offer, which remains fairly low key and lackluster.

The year ahead will be both exciting and challenging in equal measure. However, we maintain our view that Starbucks is a solid operator that will deliver single digit comparable sales growth, with total revenue uplifts just nudging into double digits.

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FINANCE

Ulta Beauty is one hot retail property

BY CSA STAFF

There is no denying it: Ulta Salon Cosmetics & Fragrance is on a roll.

The retailer will open 100 stores this year, including its first-ever location in Manhattan.

Shares of Ulta rose 38% last year, about four times higher than the Standard & Poor’s 500 Index’s gain, Bloomberg reported, and its annual revenue has quadrupled to $3.9 billion since it went public 10 years ago.

“They are changing the way people shop as they have allowed people to buy both mass and prestige, as well as get salon, brow and other services which historically would have been done at multiple locations,” said Brian Yarbrough, an analyst at Edward Jones & Co., in the report. “No other retailer offers all three in the same spot.”

To read more, click here.

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