Earnings Labs

Tractor Supply Company (TSCO)

Q3 2008 Earnings Call· Thu, Oct 23, 2008

$35.37

-0.86%

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Transcript

Operator

Operator

Good afternoon, ladies and gentlemen and welcome to Tractor Supply Company’s conference call to discuss third quarter results. (Operator Instructions) I would now like to introduce your host for today’s conference, Ms. Cara O’Brien of FD.

Cara O'Brien

Management

Thank you, Operator. Good afternoon, everyone, and thank you for joining us today. Before we begin let me take a moment to reference the Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. This conference call may contain forward-looking statements that are subject to significant risks and uncertainties, including the future operating and financial performance of this company. Although the company believes that the expectations reflected in those forward-looking statements are reasonable, it can give no assurances such expectations or any of its forward-looking statements will prove to be correct. Important risk factors that could cause actual results to differ materially from those reflected in the forward-looking statements are included in the company’s filings with the SEC. The information contained in this call is accurate only as of the date discussed. Investors should not assume that the statements will remain operative at a later time. Lastly, Tractor Supply Company undertakes no obligation to update any information discussed in this call. Now I’m pleased to introduce Jim Wright, Chairman, President, and CEO. Jim, please go ahead.

James F. Wright

Management

Thank you, Cara, and good afternoon everyone. I’m here today with Tony Crudele, our Chief Financial Officer, Stan Ruta, EVP of stores, and Greg Sandfort, EVP of Merchandising. I am very pleased that through our team’s hard work we delivered an exceptionally strong quarter. We’ve been able to navigate the headwinds as consumer sentiment continued to weaken throughout the year and we’ve leveraged our leadership position in rural markets by taking advantage of key sign opportunities to serve our customers. Let me briefly review a few of the highlights and Tony will go into more detail in his section. First our team has remained focused on consistent execution of our key initiatives to both grow and to improve our business. We continue to make progress on our store expansion, on our inventory management, and merchandising programs. Our aggressive expense control management program has continued to gain traction as we’ve positioned Tractor Supply Company to operate as a leaner organization. As a result of our solid efforts and the overall resiliency of our business model, we grew total sales by 16.6%, comps by 6.2%, and earnings per share by 20.5%. Second, during the quarter we experienced a significant contribution from core consumables and certain seasonal product categories. We continued to derive repeat traffic and average ticket increases through our compelling merchandise assortment. Our core consumable category, such as animal and pet-related products, continued to perform well. Emergency preparation and response items such as generators and pumps were driven by demand created from the impact of Hurricane Ike. As many of you know, in the third quarter we are also focused on preparing our stores for the important fall and winter and holiday seasons. We are pleased that other seasonal products such as our home heating units and wood pellet fuel experienced…

Anthony F. Crudele

Management

Good afternoon, everyone. During the quarter we were extremely pleased with both our top line results and expense control. Our sales performance provided us the ability to effectively manage gross margin and control inventory levels. For the third quarter ended September 27, 2008, sales increased 6.6% to $733.9 million compared to last year’s third quarter. Net income was $19.8 million or $0.53 per diluted share compared to $17.5 million or $0.44 per diluted share in the same period last year. Total comp sales for the period increased 6.2% and non-comp sales were approximately $63.8 million or 8.7% of sales. Going into greater detail about sales in the quarter, our core consumable business remained an outstanding performer in the third quarter. Our customers also responded extremely well to our pre-season heating assortment. We believe they wanted to ensure they secured wood heating stoves, furnaces, and pellets as an alternative energy source. It’s important to note that based on our analysis of year-over-year heating sales trends, we believe a large portion of the advanced purchases we saw in Q3 normally would have occurred in Q4. Total comp sales benefited from an increase in emergency response sales as a result of the landfall hurricanes in Louisiana and Texas. Although we lost some selling days from store closures, we had an overall sales increase. We estimate the hurricanes benefited comp sales by approximately 100 to 150 basis points and EPS was approximately $0.03. We increased average comp transactions by approximately 90 basis points. An average ticket increased 5.2%. We believe this was primarily as a result of increased retail prices related to commodity cost increase. Consumers continue to be cautious with their spending on discretionary and big ticket items except where it was a particulars need or they perceived a compelling value. For example,…

James F. Wright

Management

Thanks, Tony. Our performance throughout this year has been the result of our team’s steadfast execution and our passion to serve those customers living the rural lifestyle, combined with our ability to rapidly analyze and adapt our plans to an ever-changing marketplace. I’d like to spend a moment today discussing some of the actions we’re taking to navigate the current environment as we head into the important winter and holiday selling period. Clearly consumers have been heavily impacted by the economic turmoil the last few months and all of the headlines point to this being one of the most difficult seasons in many years. Our store and store support center teams continue to fine tune our strategies for the season by analyzing the most recent consumer spending behaviors. We know it’s essential for us to be responsive not only to yesterday’s sales data but even more importantly to be proactive and anticipate where the consumer trends are going. To that end, we must remain nimble and forward-looking. Entering the season, we focused our merchandise assortment of items that are very relevant to our customers’ basic lifestyle needs. Our gift assortment for this season is focused on key basics and compelling values. Much of our gift assortment this year is basic in-line merchandise allowing us to limit markdown or carry over risk. We’ve also focused on offering a range of gift items at mid and lower price levels and we expect that this will be well received by our customers. We maintain record in stock levels at this point in time and continue through the fourth quarter but while we will be able to continue reducing our overall inventory levels per store as part of our efforts to enhance working capital. We’ll complement our merchandising strategies with advertising that features core…

Operator

Operator

(Operator Instructions) Your first question comes from David Cumberland from Robert Baird. David Cumberland - Robert W. Baird & Co., Inc.: On the plan to open 70 or 80 stores in ’09 instead of 90, all else equal, would that have a slight benefit to ’09 EPS versus opening 90 due to lower opening expenses?

Anthony F. Crudele

Management

Yes, it should just have a slight benefit. We will obviously make that up in some of the pre-opening expenses. Generally since we have targeted a majority of these stores we’ll maybe front load it this year and obviously the longer the store is open, the better they will perform throughout the year, so it should have a slight benefit. David Cumberland - Robert W. Baird & Co., Inc.: Then in home heating, in the typical Q3, what percentage of the cold weather seasons sales of home heating are in that typical Q3 and then maybe what increase percentage did you see in this just past Q3?

Anthony F. Crudele

Management

A little bit more difficult to answer and only because the analysis winds up being very subjective based on the trends that we saw. We tried to benchmark versus last year and tried to look at the seasonal pattern and then again since there’s a lot of different assumptions that we use to try to track it, I’d rather not get into the specific details. We did see a significant trend of sales in the third quarter that generally we have not seen in the past and that ramp was a lot quicker and earlier in the third quarter which generally drives us to believe that some of those sales were pulled forward into the September and late August time frames. Other than that we can’t give you too much more detail. David Cumberland - Robert W. Baird & Co., Inc.: Can you comment on whether you see enough fall off in that category in early Q4?

James F. Wright

Management

Generally our overall comment is that through October we have had generally the same trends as we’ve seen in September. David Cumberland - Robert W. Baird & Co., Inc.: Then my last question, is historically on stores that have benefited from storm activity and sales of disaster relief items, what type of follow on business or increase in traffic in the customer base like those stores have seen in later periods?

James F. Wright

Management

We’ve seen a bit of a step function in comp trend and average volume per week and David, it sticks with us. We believe it’s principally the fact that customers previously not aware of shopping Tractor Supply are exposed not only to the service but to the assortment that the store holds, but it’s certainly not a double digit kind of a number. Historically it’s a mid single kind of a step function for the stores that are most significantly involved and then that goes... the further out the less more evolved they were with hurricane response, the less significant that function becomes.

Operator

Operator

Your next question comes from John Lawrence from Morgan Keegan.

John Lawrence - Morgan Keegan

Analyst

Jim, would you start off by talking just a little bit about private label for holiday, how much is inventory up for both Schmidt and for Red Shed going into the holiday?

Gregory A. Sandfort

Analyst

John, I’ll answer that. Red Shed is actually slightly down. We had some earnings from last year and we have tuned up those assortments, I’ll use that terminology, so it’s slightly down, but Schmidt is up double digit. Schmidt continues to perform. It’s a terrific alternative to the brands that sit above it. It continues to sell across the board in every category that we have it places, so you’ll see an increase there.

Operator

Operator

Your next question comes from David Magee with SunTrust Robinson Humphrey.

Analyst for David Magee - SunTrust Robinson Humphrey

Analyst · SunTrust Robinson Humphrey.

Hi this is Chris. First question is just with your clearance activity and third quarter. Can you say whether that was generally on plan? You mentioned some seasonal items that drove that activity and I was just wondering if there were any particular categories that were maybe weaker than you expected.

James F. Wright

Management

For the most part it was a little accelerated from a historic level of clearance activities. There were several test initiatives, most significantly those involved in our My Garage initiative, also the Master Hand tool brand. While we had some successful learning in My Garage and we were able to take a few lines and some SKUs and merchandise chainwide, on the overall, I guess it was a failed concept and we are moving and have already moved some of that merchandise out of the store through markdown processes. Additionally we also chose to launch the Master Hand brand of private branded power tools and hand tools a little over a year ago, actually coming up on two years, and we’ve determined that we pretty much overshot the price value proposition that our customers would be attracted to, so we built too much into the product and we are now again moving through that product. Beyond that, it was perhaps a normalized environment with a little more rigor placed around the slowest selling product and a little more rigor around the regionality of inventory.

Analyst for David Magee - SunTrust Robinson Humphrey

Analyst · SunTrust Robinson Humphrey.

Okay, and then secondly, can you describe what sort of advertising venues you’re focused on for the holiday period?

James F. Wright

Management

We will see an equal number of print events as with last year with a more compelling assortment of both product and price point. We will shift some TV spending to our CRM effort and ultimately through direct mail as we continue to gain expertise with CRM and continue to increase the number of attributed sales.

Operator

Operator

Your next question comes from Jack Murphy from William Blair. Jack Murphy – William Blair & Company: First, if you look at the comps excluding the hurricane in September in particular, was the traffic and ticket roughly similar to the first couple of months and can you just talk about the trend line across the three months for consumables in particular?

Anthony F. Crudele

Management

Generally we saw throughout the quarter that it was fairly consistent from both the consumables and from a traffic standpoint. As I mentioned in my points, comps were a little bit stronger in July, and September’s strength was driven by the hurricanes, but throughout the quarter we felt that the trend was relatively consistent for both traffic and consumables. Jack Murphy – William Blair & Company: I’d just like to follow up on the real estate question from earlier and the comments you made. You talked about rationing down to 70 or 80 stores because of financing with developers and the like. But given the fact that real estate for retail is likely to continue to soften, it’s already softening a lot, would you consider being opportunistic as you move throughout the year and that sites are kind of coming up, these second use sites are coming up that you would consider getting to 13% for ’09?

James F. Wright

Management

The overall kind of macro retail real estate trends are not impacting our markets or our size boxes nearly to the level that you might imagine. The further from the mall, the further from the urban/suburban areas you get, the less of a trend that is. Frankly, Wal-Mart’s slowing growth is also ultimately... will dry up a little bit of the pipeline for us as we fairly frequently will use the garden shop end of a Wal-Mart when they move to a super center, so thus far we have not seen a significant change in cost or increase in availability. Obviously with our balance sheet we... and our pipeline of capable store manager trainees, we have some dry powder should that situation change.

Operator

Operator

Your next question comes from Peter Benedict from Wachovia.

Peter Benedict - Wachovia Capital Markets

Analyst

Just a couple things. First of all on the fourth quarter, it sounds like the range that’s implied for comps is pretty wide but it sounds like from your comments that at least so far you’re running up in that low to mid single digit range, but you’re saying that October is the easiest comparison? I just wanted to clarify that.

James F. Wright

Management

October is the easiest, November is the toughest. At this point in time it looks like the model’s working, customers are responding, obviously when the news was the darkest they changed behavior for two or three days but they have subsequently returned to the stores.

Peter Benedict - Wachovia Capital Markets

Analyst

On the inflation front, Tony, maybe you can talk a little bit about how much inflation is impacting the comp. You kind of mentioned it last quarter. Is it getting stronger? And when did you first start to see it? As we look to ’09, when do we start to anniversary the real lift of comps that came from price inflation?

Anthony F. Crudele

Management

It clearly has been staggered throughout the year and we’ve seen it ramp each quarter. We definitely in the third quarter are running above what we saw in the second quarter and I think as we continue to have our moving average cost ramp up we will continue to see that retail move along with it. We do expect to have some relief and we’ve seen some relief over the past few weeks on some of the commodity price increases. It will be some time before that translates through our moving average cost and/or the vendors translate that back into lower prices. I would anticipate starting to anniversary more at the end of the first quarter next year. That’s when we started to see it more significantly impact the retail prices.

Peter Benedict - Wachovia Capital Markets

Analyst

Okay, that’s fair, then as you think about SG&A next year, what type of comp you’d need to kind of leverage that number. I know the occupancy trends are supposed to get a lot better next year. Can you just talk about how we should be thinking about that?

James F. Wright

Management

Generally in the past we’ve said about 4.5 is the comp number we’d like to leverage with our expense control this year and the sustainability of that program through next year. I would anticipate that we are closer to 4, potentially 3.5, I don’t want to get overly aggressive or ahead of ourselves but I would say somewhere in that range we can achieve leverage. Depending on the quarter. First quarter will always be very difficult for us to leverage since it’s such a light sales quarter.

Peter Benedict - Wachovia Capital Markets

Analyst

You said that you do expect to leverage SG&A in the fourth quarter, is that right?

James F. Wright

Management

Yes slightly.

Operator

Operator

Your next question comes from Dan Wewer with Raymond James.

Dan Wewer - Raymond James

Analyst · Raymond James.

Jim, did you not get the memo we’re in a recession?

James F. Wright

Management

Were you at the manager’s meeting when I told them we would not participate? They believed me, and they’re doing a terrific job. I think frankly we anticipated early, we reacted early, laid our plans. We’re also fortunate in that I really believe and we have data to support this that our customers have lived in their houses for a long time, they are truly smaller houses, their mortgages are smaller and more mature and our customers’ credit are debt-conservative. We are well-positioned.

Dan Wewer - Raymond James

Analyst · Raymond James.

Question I had, maybe as far as Greg, question relating to the clearance activity. I was a bit surprised given you entered the third quarter with lean inventories. Obviously sales were strong during the period as well. If you could just give a little clarification as to why the clearance would have increased year-over-year.

Anthony F. Crudele

Management

Well a couple of reasons. The main is, and what Jim referred to in the My Garage category. We made a decision that we had learned enough from the test. It was time to move on problem merchandise, so that’s the primary reason, that is the primary driver. We also to be honest put in some new tracking and planning tools to ensure that we would sell clean through the third and fourth quarter on seasonal and we’ve identified early on some things that weren’t working to our satisfaction so we acted on those as well. It’s quite simple actually, it’s a combination of several things, but it’s just really us addressing an issue and also staying on top of the business.

Dan Wewer - Raymond James

Analyst · Raymond James.

Is that a... the idea of taking the markdowns earlier, is that something we would likely see for the next two or three quarters?

James F. Wright

Management

That’s part of our forward planning, yes. In the seasonal categories, absolutely. We want to sell cleaner. We believe that there’s an opportunity for us to transition a little faster than we have been but again it’s part of what we already projected and forecasted for.

Dan Wewer - Raymond James

Analyst · Raymond James.

Tony, you had alluded to diesel price still higher year-over-year as one of the reasons why margin could be lowered in 4Q but is that still true given what’s happened in the last 7 to 10 days or are you expecting a bit of a rebound with the idea of that diesel cost will be higher?

Anthony F. Crudele

Management

We did our projection within the last week and we used the current diesel price at that point in time. Generally not forecasting up or down, just using the current trend.

Dan Wewer - Raymond James

Analyst · Raymond James.

Just two other real quick questions. One, what is the rate of inflation in pet food and then the other also related to merchandising, apparel. Most other soft line retailers are struggling. I know this is a category you’ve added space in the last couple of years. How would you evaluate your performance in soft lines?

James F. Wright

Management

We won’t speak specifically to inflation in pet food. We do believe it’s going to moderate as inputs come down and with regard to apparel side of the business, we never claimed that we sold anything that was fashionable and I’m really glad we are not. We sell basic functional work wear and frankly quarter by quarter are getting better at planning an allocation by size, by climatic zone, and I think we’re really extremely well positioned right now.

Operator

Operator

Your next question comes from [Shawn DeSoro] from Black Rock. [Shawn DeSoro] – Black Rock: Just a couple quick questions and I apologize if I missed it. Did you quantify the basis point drag from the clearance activity in the quarter?

James F. Wright

Management

No we did not. When we look at that activity, a lot of it either blended into the initial margin, some of it identified up front as a longer term potential markdown so we did not quantify it. [Shawn DeSoro] – Black Rock: And then in terms of inventory per store, where can we go over time, over a couple year period. Is it possible that this gets into the low eights or maybe even 800 a store is that probably something too much to ask for?

James F. Wright

Management

I think we’ll continue for another probably 3 or 4 quarters to see some incremental gain over time. We’ll see turnover, inventory efficiency continue to increase but frankly we’re excited about the fact that we have some successful test programs that we’ll begin investing in to further drive top line. So when we look at absolute dollars per store I would think that we are near the bottom of that curve. Again, continue to see some gain for a while but then we will begin to re-invest and drive the top line as our tests gains traction. [Shawn DeSoro] – Black Rock: So we’ll see probably more in the turn column going forward.

Operator

Operator

Your next question comes from Stephen Chick of FBR. Stephen Chick - Friedman, Billings, Ramsey & Co.: I guess first off maybe for Tony, the aggressive expense management program, can you.. Is there a way you could maybe assign some type of number on how much that’s saving SG&A dollars, and I know you gave the example of the lower attendance, I think you said at a meeting in one less day, is it really just a lot of little things like that, or is there other things you can point to that’s helping with expenses?

Anthony F. Crudele

Management

Generally it is a lot of little things. I would say the largest function is really at the store level in our payroll management and we just had much tighter control in that area and obviously it’s one of the larger expense line items outside of the occupancy in SG&A so a good portion of the expense control I would attribute to that, however, on sort of more the traditional G&A side of the SG&A. It’s been really just a lot of little things. Stephen Chick - Friedman, Billings, Ramsey & Co.: So if you leveraged SG&A I think you said 70 basis points in the quarter, is there a way to assign kind of a basis point benefit to these little things in total, like what part of 70 basis points would you say came from this aggressive push on expenses?

Anthony F. Crudele

Management

It would be difficult to quantify but I would identify that relative to our original forecast at the beginning of the year, it makes up a substantial portion of the benefit that we derived as we moved across the year. Stephen Chick - Friedman, Billings, Ramsey & Co.: And can you remind me, I apologize, did the initiative to that start at the beginning of the second quarter, is that correct?

Anthony F. Crudele

Management

Basically in the middle to last month of the first quarter. Stephen Chick - Friedman, Billings, Ramsey & Co.: And then second, if I could, really just to clarify on your comp store sales guidance that the flat to positive 2% for the year, what does that kind of imply what you’re looking for for the fourth quarter? I’m coming up with that mathematically implies something that would be I think like flattish as a reported number in the fourth quarter. I don’t know if my math is correct or not.

James F. Wright

Management

Generally when we looked at it, it is a fairly wide range. What we’re implying is that we believe that if you looked at the entire year, we’re tracking relatively consistent with the initial guidance and would expect to continue to track at slightly lower than what we’ve seen over the past two quarters.

Operator

Operator

Your next question comes from Mitch Kaiser from Piper Jaffray.

Mitch Kaiser - Piper Jaffray

Analyst

Two quick questions for you, I guess both for Tony. Just as it relates to the LIFO charge that we’ve seen pop up here in the last two quarters, so it’s a 42 basis point drag in Q2 and then 24 in Q3. Did you quantify what your expectations might be as of today? How might it impact Q4?

Anthony F. Crudele

Management

We did not identify that in the forecast. Obviously it’s blended into my guidance when it comes to margin and again the freight component and the LIFO are the two largest. As far as the drag on gross margin in the fourth quarter did not specify the percentage on either one of those components. We do expect that LIFO will moderate slightly over what we’ve seen during the past two quarters.

Mitch Kaiser - Piper Jaffray

Analyst

I think in past quarters you were using a full year share count of 38.5 million which was excluding new share repurchases. Is that still the full year share count that you’re using in your guidance?

Anthony F. Crudele

Management

No, we update that share guidance as to what the actual was at the end of a particular quarter. Obviously at the end of this third quarter. We do not assume any share repurchases go forward in our estimate.

Mitch Kaiser - Piper Jaffray

Analyst

So you’re at 37.1 basically going forward through the rest of the year?

Anthony F. Crudele

Management

Correct.

Operator

Operator

Your next question comes from Joan Storms from Wedbush.

Joan Storms - Wedbush Morgan

Analyst

This is a question probably for Greg. Now that I think you first started probably halfway through the fourth quarter last year and what your take is on Jim had a very good discussion on the holiday inventory assortment and how you’ve planned that as far as seasonal goods since that [inaudible] to be weak and what are maybe some inputs that you had on the thought process there?

Gregory A. Sandfort

Analyst

Joan, I started last year the first of November so I was here a little bit more than halfway through the fourth and let me give you a little quick recap on what I think we’ve done. First of all from a planning standpoint and from a delivery standpoint we’ve done a far better job this year flowing product through the stores. We’ve still got room for improvement but I felt much more comfortable this year than last year with the flow. The second thing is on our allocation side of the business which is critical and in any seasonal business. The read and react strategy in seasonal is where you win. You lose when you allocate too much of that product up front so we have been reeling that backward a little bit and saying, “Listen, how much of this can we hold and not allocate it till we start seeing some forward sales?” We’ve done a number of things to assist ourselves this year with that process and that makes us also feel very strong about what we think our sell through rates will be and how we’ll come out of the fourth quarter. So the biggest risk for us is always the heavyweight outerwear and whether or not we’ll get that ferocious winter that we need from say the upper midwest through the northeast. Everything that we’ve seen so far from [Aplatalytics] who we’ve used to forecast some of this tells just what weather will continue so we’re feeling very good about it. The last thing would be the gift assortment. Jim touched on earlier but we really mind our own current basic assortment products and said one of the things that our consumers will buy, we know that the economy is tightening, so how can we take those products and highlight those in the stores the fourth quarter, pass on some advantageous pricing and really drive those as gifts, and if you’ll be in our stores in the fourth quarter, you’ll see that, you’ll note that, we have those called out, and we feel very, very good now given the economic conditions where we’re positioned.

Operator

Operator

Your next question comes from Andrew Wolf with BB&T Capital Markets. Andrew Wolf - BB&T Capital Markets: Kind of a follow up to that answer. Can you give us the relative sales mix in the fourth quarter that is apparel and seasonal? I now you gave us on an annual basis but could you give us a sense of the index to the annual number or the actual number for apparel and seasonal?

Anthony F. Crudele

Management

We don’t’ have that number for you right now and we can have Randy circle back with you on that. Obviously overall for the year is 9%, I would estimate that it’s probably in the 12% range but I would rather wait until Randy gives you an exact number. Andrew Wolf - BB&T Capital Markets: Does seasonal index higher too because of gift giving or is that just really... It’s so high in the second quarter that we shouldn’t think of it that way?

James F. Wright

Management

Seasonal is definitely highest in second quarter followed by fourth but fourth is only marginally higher than third. Andrew Wolf - BB&T Capital Markets: Also in reference to the last answer, my follow up is Jim, in the press release you talked about specific steps you’re taking and maybe I didn’t listen well but it sounded like in your discussion up until this last answer we didn’t quite hear that, but should we look at it as essentially you got a windfall if you will from the hurricanes in that business, yet you didn’t raise your guidance, and as we look at your plan, not your relative conservatism and obviously that’s prudent in this economy, just as we look at your plan, did you basically look at what’s going on and say, “We have to get a little more promotional vis a vi our customers in various ways”, is that essentially the plan side of it?

James F. Wright

Management

I would say that on a year-over-year basis, we will be more promotional but we are not going to be what I would classify as promotional as I suspect some other retailers might become. We have principally benefited over the years as we’ve evolved into an every day competitive price value price strategy with occasional sales. We have 15 print events a year and print plus the direct mail we’re doing now are the only ways that we communicate an off price. So we are not increasing the frequency of print. We are marginally increasing the promotional flavor to our ads, but that has as much to do with the type of products, the consumables and lower price point products than it does with dropping the price of those products, if that answers your question. Andrew Wolf - BB&T Capital Markets: Yes it does.

Operator

Operator

We have reached the allotted time for questions. I would now like to turn the call back over to management for closing remarks.

James F. Wright

Management

Thank you all very much. I’m glad you’re with us on this trip. I’m extremely proud of every member of the 1400 team here at Tractor Supply. We asked them to do different things starting in mid Q1. We asked them to do things differently and they at every level have done that. I would remind you that the performance this quarter, I guess the last two quarters, and frankly year-to-date are a testament to the fact that we have a unique customer. We serve a unique and I think more viable somewhat economic isolated market, and we have a model of resilience in the cycle that we are going through. Again, thank you for being along on the trip and we remain a growth company. Thank you very much.

Operator

Operator

Ladies and gentlemen, that does conclude our conference call for today. You may all disconnect and thank you for participating.