Americas Retail: Analyzing the Impact of US Drought Conditions on Tractor Supply

Goldman Sachs analyzes the impact of extreme US drought conditions on Tractor Supply, noting that nearly 40% of the retailer's footprint is in affected areas. Despite current traffic headwinds, the firm maintains a Buy rating on the stock.

Key Takeaways

• 1.Nearly 40% of Tractor Supply's store footprint is operating in severe or extreme drought conditions, with an additional 20%-25% in moderate drought areas.
• 2.Store traffic has decelerated in key impacted states (TX, NM, OK, AR, FL, GA) in 2Q QTD.
• 3.Management views drought as a mixed impact: negative for lawn/garden demand, but positive for emergency response and agricultural supplies.

Table of Contents

• Update on weather conditions in the U.S
• Impact on Tractor Supply stores
• 2Q QTD traffic trends
• Commentary by Tractor Supply on drought conditions
• Takeaways from our recent call with the company on 6/12
• Valuation & Risks
• Disclosure Appendix

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