Tractor Supply Company has increased prices across its business in the face of inflation and supply chain constraints, headwinds that the retailer’s CEO believes are here to stay for the foreseeable future.
“We have had some moderate price increases across our business. To date our customers have not demonstrated any elasticity or concerns there,” Tractor Supply CEO Hal Lawton said on Friday during an interview at the National Retail Federation’s online conference.
“It’s our obligation to try to keep the prices as low as we can for them, even as we navigate this inflationary environment that we are in that I suspect is more structural than transient, despite some of the other rhetoric,” Lawton said.
The company is facing price increases across the board, including the costs of raw materials and the transportation of goods.
“There is inflation in the market across almost all facets,” Lawton said. “A big raw material component for us is corn, and we’ve seen corn prices up dramatically over the last three months. Another big raw material component for us is steel, we’ve seen significant increases there. Not to mention the freight cost increases and the cost of imports.”
Lawton also doesn’t expect delays in the supply chain to go away anytime soon.
“There’s substantive disruption occurring in the supply chain,” Lawton said. “I think we are going to see it this way for quite some time as we migrate through the second half of the year. This is going to be an issue for us for the foreseeable future.”
Despite significant delays in its supply chain and increased demand, the company has been able to maintain enough stock in its stores due to its relationship with its suppliers, Lawton said.
Like other retailers, the delays the company is experiencing are occurring at all stages of the supply chain, which is why it could take time to return to the speed it was operating at.
“It’s really in all facets of the supply chain, whether it’s back in the ports in China, whether it’s the ports here in the United States, access to containers and them being in the right locations, ships, truck drivers, obviously labor to run your distribution centers, you could go on and on,” Lawton said.
“Our manufacturers are having trouble keeping up and getting their assembled goods into the U.S. or getting raw materials [and] they are having labor pressures as well,” he said.
Tractor Supply’s stock has risen more than 28% this year, putting its market cap at nearly $21 billion. The company has seen significant growth in its sales with over 14 million new customers in the last five quarters.