Inflation, provide chain delays is probably not momentary

Honoree Hal Lawton accepts the award on stage during the 2019 Fashion Scholarship Fund Awards Gala on January 10, 2019 in New York City.

Cindy Ord | Getty Images

The Tractor Supply Company has raised some prices amid inflation and supply chain constraints, a headwind that the retailer’s CEO said will be here for the foreseeable future.

“We have had some moderate price increases across our business. To date, our customers have shown no resilience or concern there,” said Hal Lawton, CEO of Tractor Supply on Friday during an interview at the National Retail Federation’s online conference.

“It is our duty to try to keep prices as low as possible for them, even while we are in this inflationary environment that we find ourselves in, which I suspect, despite some other rhetoric, is more structural than is temporary, ”Lawton said.

The company is faced with price increases across the board, including the cost of raw materials and transportation of goods.

“There is inflation in almost every facet of the market,” Lawton said. “A large raw material component for us is corn, and we have seen corn prices rise dramatically over the past three months. Another major raw material component for us is steel. We have seen significant increases there – not to mention increases in freight costs and the costs of imports. “

Lawton also said he doesn’t expect the supply chain delays to go away anytime soon.

“There is significant disruption in the supply chain,” Lawton said. “I think we will see it that way for some time when we wander through the second half of the year. That will be an issue for us for the foreseeable future.”

Despite significant delays in its supply chain and increased demand, the company’s relationship with its suppliers has allowed the company to maintain sufficient inventory in its stores, Lawton said.

As with other retailers, the company’s delays occur at all stages of the supply chain, so it can take some time to get them back up to speed.

“It’s really obvious in all facets of the supply chain, whether it’s the ports in China, whether it’s the ports here in the United States, access to containers and those in the right places, ships, truckers,” he said Workers that need to be operated. ” Your distribution centers, you could go on forever, “Lawton said.

“Our manufacturers are struggling to keep up with bringing their assembled goods to the US or sourcing raw materials, [and] You also have a work pressure, “he said.

Tractor Supply’s stock is up more than 28% this year and has a market cap of nearly $ 21 billion. The Company has increased its sales significantly with over 14 million new customers in the last five quarters.

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