1、Tractor Supply Company|Annual Report 2022Annual Report 2022Tractor Supply Company|1 Orscheln Stores81Distribution Centers9Petsense Stores186Tractor Supply Stores2,06662932317111677102510923322411879083529368303542504822921141724428231730107611533226789966252310232529104971016462211281622382898214216
2、222120191822212019182221201918222120191812.714.210.68.47.916.923.12.75.18.616.384.664.311,0385186964971,110Net Sales($in Billions)Net Income PerDiluted Share($)Comparable StoreSales Increase(%)Cash Returnedto Shareholders($in Millions)6.39.712022 Sales(by Category)Clothing&Footwear 7%Agriculture 3%L
3、ivestock&Pet 50%Seasonal,Gift&Toy 21%Hardware,Tools&Truck 19%Our PerformanceWe are the largest rural lifestyle retailer in the United States,and each day we strive to provide our customers with legendary customer service,in-store and online.On the cover:Pearl Trevino Store Manager,San Benito,TX Stor
4、e count as of December 31,2022.*Our ninth Distribution Center in Ohio opened January 18,2023.To Our Stakeholders,This year,Tractor Supply will celebrate an incredible 85 years in business.From our humble beginnings as a mail order catalog business launched in 1938 and a single store in Minot,North D
5、akota,to a company with more than 50,000 Team Members in over 2,100 communities in 49 states,I wonder what our founder C.E.Schmidt would think if he could see us today.What we have achieved together over the course of the past 85 years is pretty remarkable,and I think he would be very proud.Longevit
6、y like we have achieved at Tractor Supply is only possible when many things align and work together.That starts with our team.The Team Members featured within the next few pages are representative of every one of our Tractor Supply Team Members,each one bringing to life the“Power of the Red Vest.”My
7、 sincere thanks and appreciation go out to our more than 50,000 Tractor Supply Team Members who work diligently to serve our customers and who embrace our Mission and Values every day.Regardless of the operating challenges weve faced throughout the year and really over the past three years since we
8、entered the pandemic the team has charged ahead with passion and commitment,and delivered impressive results.2022:Another year of strong performanceTractor Supply achieved sales growth of 11.6 percent and diluted earnings per share growth of almost 13 percent in 2022,on top of record performance in
9、2021.We had solid market share gains across all our product categories,and these gains contributed materially to our sales growth.As a company,we hit several significant billion-dollar milestones in 2022.We grew our sales to a record$14.2 billion,increased net income to over$1 billion,achieved$1 bil
10、lion in private label credit card sales and returned more than$1 billion in capital to shareholders for the second consecutive year.These milestones contributed to diluted earnings per share of$9.71,an increase of 12.8 percent over the prior year.OUR MISSION To work hard,have fun and make money by p
11、roviding legendary service and great products at everyday low prices.OUR CUSTOMERWe are committed to being an integral part of our customers lives by being the most dependable Supplier of Out Here Lifestyle solutions.OUR TEAMWe value a safe,respectful and inclusive work environment.We are focused on
12、 investing in the Team Member experience and building a diverse and high-performing Team with the critical skills and capabilities to support our growth.OUR COMMUNITYWe support the communities in which we serve the Out Here Lifestyle through partnerships and sustainable practices.OUR STAKEHOLDERSWe
13、are a growth company that delivers a strong total return for our shareholders,as well as for our vendors and partners.OUR VALUES ETHICSDo the“right thing”and always encourage others to do the right,honest and ethical things.RESPECTTreat others with the same consideration we expect for ourselves.Be a
14、 champion for diversity and inclusion.BALANCEManage your time for both business and personal success.WINNING ATTITUDEHave a“can-do”attitude.Be positive,upbeat and focused.We are winners!COMMUNICATIONShare information,ask questions,listen effectively,speak thoughtfully and let ideas live.DEVELOPMENTL
15、earn from each other.Teach,coach and listen.Create an environment where everyone can be a“star.”TEAMWORKValue different viewpoints.Execute the agreed-upon plans.Together,everyone achieves more!CHANGEAccept it.Embrace it.Initiate it.Do everything better,faster and cheaper.INITIATIVESeek opportunities
16、.Use good judgement.Take intelligent risks.Drive speed to market.Champion ideas.ACCOUNTABILITYKnow your responsibilities.Live up to your commitments.“My sincere thanks and appreciation go out to our more than 50,000 Tractor Supply Team Members who work diligently to serve our customers and who embra
17、ce our Mission and Values every day.”Hal LawtonPresident and Chief Executive OfficerTractor Supply Company|1 With this years results,we have now posted three consecutive years of exceptional sales growth.The highlight of this phenomenal track record continues to be the consistency of our results and
18、 the broad-based strength of our performance.Including new stores and the 53rd week in 2022,our revenue on a three-year basis has increased about 70 percent with a three-year comparable store sales stack of 46.5 percent.Over this time,we have invested nearly$1.7 billion in our stores,distribution ce
19、nters,technology and other strategic initiatives as part of our Life Out Here strategy.We have also significantly improved our operating capabilities,including relaunching our Neighbors Club loyalty program,creating our Field Activity Support Team,expanding our mobile footprint and delivering on the
20、 increased volume of our Consumable,Usable and Edible products.We have remained focused on introducing new capabilities,improving the shopping journey and ensuring we have scalable platforms.We achieved all of this with the underlying goal of being the dependable supplier that our customers can coun
21、t on.Kathleen Martinez,Team Member“Go the Country Mile”Award Winner 2021Jose Rubio,Store Manager Store Manager of the Year 2021Other highlights of our strong performance in fiscal year 2022 include:We opened 63 new Tractor Supply stores and a net of eight new Petsense by Tractor Supply stores.In Oct
22、ober,we acquired 81 stores from Orscheln Farm and Home that will be rebranded to Tractor Supply by the end of 2023.We now have nearly 30 percent of our store base in our Project Fusion layout and our Garden Center build-out is active in over 300 locations.With nearly 1,800 Team Members,our Field Act
23、ivity Support Team has made powerful contributions to our in-stock performance and execution of our sales-driving initiatives.We continue to be pleased with the strategic benefits and financial returns of these store-level investments.Our Neighbors Club loyalty program exceeded 28 million members,re
24、presenting nearly 75 percent of our sales for the year.We maintain robust retention rates and engagement,especially with our highest-value tier members.Our digital sales reached nearly$1 billion,with nearly 4.4 million downloads of our mobile app since inception.The recent rebranding of Petsense to
25、Petsense by Tractor Supply,along with the expansion of our Neighbors Club program to Petsense by Tractor Supply,is resonating with our customers.This expansion is allowing us to deepen relationships with existing customers and help attract new pet customers to both banners.We exited 2022 with overal
26、l customer satisfaction scores at a new all-time high.We continue to invest in our team as we deliver on our promise of best-in-class customer service.Aaron Brown,FAST Manager Company Regional FAST Manager of the Year 20212|Tractor Supply CompanyLatoya Ball,District Manager Store Manager for 2,000th
27、 StoreWillie Harris,Team MemberThe first hire at our Macon Distribution Center maintenance department,Willie,helped install the original conveyors and racking when the facility opened in 2013.Charles Moon,Store Manager Two-Year District Operator of the Year,2021 and 2022 We advanced our supply chain
28、 capabilities,opening our ninth distribution center and breaking ground on our tenth.This remains a competitive advantage for us.Our scale and reach provide us with a cost to serve that is lower than our competition.We continued to move forward on our commitment to be Stewards of Life Out Here.This
29、includes making progress on our absolute carbon reduction goals to further reduce emissions from our operations by 20%by 2025 and by 50%by 2030 from a 2020 baseline.Our overarching goal is to achieve net zero emissions across all operations by 2040.Additionally,in April 2022,we announced an ambitiou
30、s three-year water conservation goal to conserve 25 million gallons of water by 2025.These commitments to the climate and society reinforce our vision that a healthy environment,properly managed resources and vibrant communities are keys to a secure and prosperous future.As a result,our efforts to e
31、nhance our sustainable business practices have been recognized by various third parties.Together with our customers,we donated over$15 million to the communities we call home through direct giving,sponsorships,fundraisers and more.Notably,the Tractor Supply Foundation established the FFA Future Lead
32、ers Scholarship Fund by Tractor Supply to support the next generation of farmers and rural lifestyle careers,including skilled trades.Each year for the next five years,the Foundation will commit$1 million to the fund,making it the largest agriculture scholarship of its kind.Naomi Imgrund,Store Manag
33、er Store Manager for 500th Fusion StoreLynn Craig,Regional Vice President30 Years of Service Milestone in 2022Tractor Supply Company|3 As a result of a number of strategic actions taken in 2022 in line with our multi-year strategy,we continue to broaden our customer reach and increase our market sha
34、re.As I travel the U.S.and visit our stores,I am always overwhelmed by how our team displays our Mission and Values in the communities we call home and within our teams.Ultimately,what truly defines us is our people and our relationship with our customers.The name Tractor Supply means something to o
35、ur customers.It means integrity,honesty and value,but it also means relationships,respect for each other and friendships.Our customers can buy what we sell in other places,but they continue to tell us through their shopping habits that Tractor Supply is their preferred place to shop.This comes down
36、to our Team Members living our Values.This is the“Power of the Red Vest”that our Team Members proudly wear each day.The coming year will be one of celebrationlooking back at a legendary 85 years and what we have achieved together.It will also be a time of excitement and anticipation as we continue b
37、uilding to our next 85 years.We will remain focused on our Mission to“work hard,have fun and make money by providing legendary service and great products at everyday low prices.”And we will continue to live our Values as we care for all our stakeholders:our customers,the communities we call home,our
38、 vendors,our supply chain partners,our shareholders and our greatest asset and biggest differentiator,our Team Members.I am grateful for the confidence you have shown in our business and for all who have worked so hard to make our company as strong as it is.Thank you for your support.Heres to a grea
39、t 2023 and beyond!Sincerely,Hal Lawton President and CEOJeremy Evans,FAST SupervisorCompany District FAST Supervisor of the Year 2021Kelli Padilla,District Manager District Manager of the Year 2021In 2022,we made significant progress on our multiyear Life Out Here Strategy,introduced in 2020.Deliver
40、 Legendary Customer Service Expand and deepen our customer base by providing personal,localized and memorable customer engagements.Advance our ONETractor Capabilities Evolve our anytime,anywhere,any way customer experiences by digitizing our business processes and furthering our omni-channel capabil
41、ities.Operate the Tractor Way Drive operational excellence and productivity through continuous improvement,increasing space utilization and implementing advanced supply chain capabilities.Go the Country Mile for our Team Connect,empower and grow our Team Members to enhance their lives and the commun
42、ities they live in,enabling them to provide legendary service to our customers.Generate Healthy Shareholder Return Allocate resources in a disciplined and efficient manner to drive profitable growth and build shareholder value.4|Tractor Supply Company2022 Form 10-KTHIS PAGE INTENTIONALLY LEFT BLANK?
43、(Mark One)?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended December 31,2022or?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from?to?.Commission file number 000-23314?(Exact
44、 name of registrant as specified in its charter)Delaware13-3139732(State or Other Jurisdiction ofIncorporation or Organization)(I.R.S.Employer Identification No.)5401 Virginia Way,Brentwood,Tennessee37027(Address of Principal Executive Offices)(?ip Code)Registrants Telephone Number,Including Area Co
45、de:(615)440-4000Securities Registered Pursuant to Section 12(b)of the Act:Title of each classTrading Symbol(s)Name of each exchange on which registeredCommon Stock,$.008 par valueTSCONASDAQ Global Select MarketSecurities Registered Pursuant to Section 12(g)of the Act:NoneIndicate by check mark if th
46、e registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes?No?Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d)of the Act.Yes?No?Indicate by check mark whether the registrant(1)has filed all reports req
47、uired to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 duringthe preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requirements forthe past 90 days.Yes?No?Indicate by check mark whether
48、the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(?232.405 of this chapter)during the preceding 12 months(or for such shorter period that the registrant was required to submit such files).Yes?No?Indicate by check ma
49、rk whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”“smaller reporting company”and“emerging growth company”in Rule 12b-2 of the
50、 Exchange Act:Large accelerated filer?Accelerated filer?Non-accelerated filer?Smaller reporting company?Emerging growth company?If an emerging growth company,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new orrevised financial
51、accounting standards provided pursuant to Section 13(a)of the Exchange Act.?Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of effectiveness of its internal control overfinancial reporting under section 404(b)of Sarbanes-Oxley Act(15
52、U.S.C.7262(b)by the registered public accounting firm that prepared or issued its auditreport.?If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark whether the financial statements of the registrant included in the filingreflect the correction of an error to previo
53、usly issued financial statements.?Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received byany of the registrants executive officers during the relevant recovery period pursuant to?240.10D-1(b).?Indica
54、te by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act.)Yes?No?The aggregate market value of the Common Stock held by non-affiliates of the registrant,based on the closing price of the Common Stock on The NASDAQGlobal Select Market on June 25,2022,the last bus
55、iness day of the registrants most recently completed second fiscal quarter,was approximately$18.6 billion.For purposes of this response,the registrant has assumed that its directors,executive officers,and beneficial owners of 5%or more of itsCommon Stock are affiliates of the registrant.Indicate the
56、 number of shares outstanding of each of the registrants classes of common stock as of the latest practicable date.ClassOutstanding at January 28,2023Common Stock,$.008 par value110,072,658?Item No.Form 10-KReport PageForward-Looking StatementsiiPART I11.Business11A.Risk Factors121B.Unresolved Staff
57、 Comments242.Properties253.Legal Proceedings264.Mine Safety Disclosures26PART II27276.Reserved297.Managements Discussion and Analysis of Financial Condition and Results of Operations307A.Quantitative and Qualitative Disclosures About Market Risk428.Financial Statements and Supplementary Data439.Chan
58、ges in and Disagreements with Accountants on Accounting and Financial Disclosure769A.Controls and Procedures769B.Other Information779C.Disclosure Regarding Foreign Jurisdictions that Prevent Inspections77PART III7710.Directors,Executive Officers,and Corporate Governance7711.Executive Compensation771
59、2.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters7713.Certain Relationships and Related Transactions,and Director Independence7814.Principal Accountant Fees and Services78PART IV7815.Exhibits and Financial Statement Schedules7816.Form 10-K Summary78i5.M
60、arket for Registrants Common Equity,Related Stockholder Matters,and Issuer Purchases of Equity SecuritiesFORWARD-LOOKING STATEMENTS OR INFORMATIONThis Annual Report on Form 10-K and statements included or incorporated by reference in this Annual Report on Form 10-Kinclude certain forward-looking sta
61、tements,which are made pursuant to the safe harbor provisions of the Private SecuritiesLitigation Reform Act of 1995(the“Act”).All statements,other than statements of historical facts,which address activities,events,or developments that we expect or anticipate will or may occur in the future,includi
62、ng such things as sales and earningsgrowth,new store growth,estimated results of operations in future periods(including,but not limited to,net sales,comparablestore sales,operating margins or operating margin rates,net income,and earnings per diluted share),the declaration andpayment of dividends,th
63、e timing and amount of share repurchases,future capital expenditures(including their amount andnature)and acquisitions,business strategy,expansion and growth of our business operations,and other such matters areforward-looking statements.Forward-looking statements are usually identified by or are as
64、sociated with such words as“will,”“intend,”“expect,”“believe,”“anticipate,”“optimistic,”“forecasted,”and similar terminology.To take advantage of the safeharbor provided by the Act,we have identified certain factors,in Item 1A.“Risk Factors”in this Annual Report on Form 10-Kwhich may cause actual re
65、sults to differ materially from those expressed in any forward-looking statements.These“RiskFactors”may be updated from time to time in our quarterly reports on Form 10-Q or other subsequent filings with the SEC.Forward-looking statements made by or on behalf of the Company are based on our knowledg
66、e of our business and theenvironments in which we operate and currently available information and are based on our current expectations andprojections about future events.We undertake no obligation to release publicly any revisions to these forward-lookingstatements to reflect events or circumstance
67、s after the date hereof or to reflect the occurrence of unanticipated events,except asrequired by law.PART IItem 1.BusinessOverviewTractor Supply Company(the“Company”or“Tractor Supply”or“we”or“our”or“us”)is the largest rural lifestyle retailer inthe United States(“U.S.”).The Company is focused on su
68、pplying the needs of recreational farmers,ranchers,and all thosewho enjoy living the rural lifestyle(which we refer to as the“Out Here”lifestyle).We operate retail stores under the namesTractor Supply Company,Petsense by Tractor Supply,and Orscheln Farm and Home.Our stores are located primarily into
69、wns outlying major metropolitan markets and in rural communities.We also offer an expanded assortment of productsthrough the Tractor Supply mobile application and online at TractorS and P.The Company has one reportable industry segment which is the retail sale of products that support the rural life
70、style.AtDecember 31,2022,we operated 2,333 retail stores in 49 states(2,066 Tractor Supply retail stores,186 Petsense by TractorSupply retail stores,and 81 Orscheln Farm and Home retail stores).Our Tractor Supply stores typically range in size from15,000 to 20,000 square feet of inside selling space
71、,along with additional outside selling space(“Side Lot”),and our Petsenseby Tractor Supply stores have approximately 5,500 square feet of inside selling space.For Tractor Supply retail locations,weuse a standard design for most new built-to-suit locations that includes approximately 15,500 square fe
72、et of inside selling space.Our online selling websites and our mobile application offer an extended assortment of products beyond those offered in-storeand drive traffic into our stores through our buy online and pickup in-store and ship to store programs.Our retail storelocations and digital capabi
73、lities provide the convenience to allow our customers to engage with us anytime,anywhere and inany way they choose.On October 12,2022,the Company completed its acquisition of Orscheln Farm and Home,LLC(“Orscheln”or“OrschelnFarm and Home”).The Company acquired 166 Orscheln stores for approximately$39
74、7.7 million,exclusive of cash acquired.Consistent with the remedy reached with the Federal Trade Commission(“FTC”),the Company divested 85 store locations totwo buyers,Bomgaars Supply,Inc.(73 stores)and Buchheit Enterprises,Inc.(12 stores),concurrently with the closing of theacquisition.Net proceeds
75、 from the store divestitures were approximately$69.4 million.In addition,Tractor Supply has agreedto sell the Orscheln corporate headquarters and distribution center to Bomgaars Supply,Inc.for approximately$10 millionwithin 15 months after the closing of the acquisition.The acquisition was financed
76、with cash-on-hand and borrowings under the2022 Senior Credit Facility(as defined below).The Company plans to rebrand all Orscheln stores to Tractor Supply stores bythe end of fiscal 2023.Therefore,disclosure of the Companys non-financial,normal course business activities are presentedwithout Orschel
77、n unless otherwise noted.Business Strategy for Tractor Supply CompanyWe believe our sales and earnings growth is the result of executing our multi-year strategy,which includes the following keycomponents:Market NicheWe have identified a specialized market niche:supplying the lifestyle needs of recre
78、ational farmers,ranchers,and all those whoenjoy living the rural lifestyle.By focusing our product assortment on these core customers,we believe we are differentiatedfrom general merchandise,home center,and other specialty retailers.We cater to the rural lifestyle and often serve a market bybeing a
79、trip consolidator for many basic maintenance needs for farm,ranch,and rural customers through convenient shoppingoptions both in-store and online.CustomersOur target customers are home,land,pet,and livestock owners who generally have above average income and below averagecost of living.We seek to se
80、rve a customer base that primarily lives in towns outlying major metropolitan markets and in ruralcommunities.This customer base includes recreational farmers,ranchers,and all those who enjoy living the rural lifestyle.Wehave seen a trend of consumers migrating to more rural areas and a continuation
81、 of shifting consumer behavior trends due to theCOVID-19 pandemic as customers focused on the care of their homes,land,and animals,which resulted in a growing demandin everyday merchandise,including consumable,usable,and edible(“C.U.E.”)products and seasonal categories.1Customer ServiceWe are commit
82、ted to providing our customers reliable product availability and a convenient,customer-centric experience acrossshopping channels.In our stores,we believe the ability of our motivated,well-trained team members to provide friendly,responsive and seasoned advice helps our customers find the right prod
83、ucts to satisfy their everyday needs,as well as thespecialty items needed to complete their rural lifestyle projects.We also engage with our customers through our e-commercewebsites and mobile application,which provide the opportunity to allow customers to shop anytime,anywhere,and in any waythey ch
84、oose,while delivering enhanced product information,research,and decision tools that support product selection andinformational needs in specific subject areas.Additionally,we maintain a Customer Solutions Center at our Store SupportCenter located in Brentwood,Tennessee,to support our in-store and on
85、line customers,as well as our store team members.Webelieve this commitment to customer service promotes strong customer loyalty through personalized experiences and providesconvenience that our customers expect,which drives repeat shopping experiences.We use a third-party provider to survey and meas
86、ure our level of customer service.This process allows customers to providefeedback on their shopping experience.Based on the third-party providers data,we believe our customer satisfaction scoresare among the best-in-class.We carefully evaluate the feedback we receive from our customers and implemen
87、t improvementsat both the Company and the individual store level based on that feedback.Store EnvironmentOur stores are designed and managed to make shopping an enjoyable experience and to maximize sales and operatingefficiencies.Stores are strategically arranged to provide an open environment for o
88、ptimal product placement and visual display.In addition,these layouts allow for departmental space to be easily reallocated and visual displays to be changed for seasonalproducts and promotions.Display and product placement information is routinely sent to stores to ensure quality and uniformityamon
89、g the stores,and our Field Activity Support Teams(“FAST”)are dedicated to support the stores in creating an enhancedin-store experience for our customers through best-in-class merchandising execution.Our store layouts and visual displays aredesigned to provide our customers a feeling of familiarity
90、and convenience to enhance the shopping experience.Informativesigns are located in key product categories to conveniently assist customers with purchasing decisions and merchandiselocation.These signs provide customers with a comparison of product qualities,clear pricing,useful information regarding
91、product benefits,and suggestions for appropriate accessories.Also,our store team members wear highly visible red vests oraprons with name tags,and our customer service and checkout counters are conveniently located near the front of the store.Ourstores have been equipped with tools such as team memb
92、er communication devices,wireless internet,and mobile point-of-saledevices that enable our team members to provide an enhanced shopping experience to our customers.In addition,our buyonline and pickup in-store and ship to store programs,including curbside pickup,provide convenient access for custome
93、rs topick up merchandise from our store locations.We also offer delivery in all of our stores,as well as rentable trailers and storedelivery in the portion of our stores with delivery trucks and trailers,all to meet our customers needs.We are in the midst of a multi-year project that began in 2020 t
94、o remodel our existing store base,bringing programs to life withnew fixtures,layouts and products that truly enhance the customer shopping experience.The site level space is analyzedcategory by category and reallocated as needed to align with current merchandising strategies and to drive space produ
95、ctivity.Another space productivity initiative is to transform our Side Lot with an expanded product offering and an enhanced shoppingexperience.With this investment,the Side Lot space is leveraged to offer a wider product offering in the lawn and gardencategories and our new categories within the ga
96、rden center,and offer greater convenience through the expansion of our buyonline and pickup in-store and ship to store capabilities for drive-thru pickup.Merchandising and PurchasingWe offer an extensive assortment of products for all those seeking to enjoy the“Out Here”lifestyle.Our product assortm
97、ent istailored to meet the needs of our customers in various geographic markets.Our full line of product offerings includes a broadselection of high quality,reputable brand name and exclusive brand products with approximately 17,000 to 23,000 products perstore as well as over 250,000 products online
98、.No single product accounted for more than 10%of our sales during fiscal 2022.Our comprehensive selection of merchandise is comprised of the following major product categories:Equine,livestock,pet,and small animal products,including items necessary for their health,care,growth,andcontainment(i.e.,fe
99、ncing);Hardware,truck,towing,and tool products;Seasonal products,including heating,lawn and garden items,power equipment,gifts,and toys;Work/recreational clothing and footwear;andMaintenance products for agricultural and rural use.2The following table indicates the percentage of net sales represente
100、d by each of our major product categories during fiscal 2022,2021,and 2020:Percent of Net SalesFiscal YearProduct Category:202220212020Livestock and Pet50%47%47%Seasonal,Gift and Toy Products212121Hardware,Tools and Truck192121Clothing and Footwear787Agriculture334Total100%100%100%Our buying team co
101、ntinuously reviews and updates our product assortment as necessary to respond to customer needs and tooffer new,relevant products.We are focused on providing key products that our customers use on a regular basis for theirlifestyle and maintenance needs with emphasis on C.U.E.products.Examples of C.
102、U.E.product categories include,but are notlimited to,livestock feed and bedding,pet food,bird seed,lubricants,propane,and various seasonal products,such as fertilizer,weed control,mulch,pest control,and twine.Our products are sourced through both domestic and international vendors,each of whom are e
103、xpected to adhere to a code ofconduct that guides our relationship.Our business is not dependent upon any single vendor or particular group of vendors.Wepurchase our products from a group of approximately 1,000 vendors,with no one vendor representing more than 10%of ourpurchases during fiscal 2022.A
104、pproximately 400 core vendors accounted for 90%of our merchandise purchases during fiscal2022.We have not experienced any significant difficulty in obtaining satisfactory alternative sources of supply for our productsto meet customer demands despite the global supply chain disruptions and delays.We
105、believe that adequate sources of supplyexist,but they may cost more or require us to incur higher transportation costs.Our buying teams focus on merchandise procurement,vendor line reviews,and testing of new products and programs.We alsoemploy a dedicated inventory management team that focuses exclu
106、sively on forecasting and inventory replenishment,acommitted merchandise planning team that concentrates on assortment planning,and a specialized pricing team that seeks tooptimize market-specific pricing for our products.Through the combined efforts of these teams,we continue to focus onimproving o
107、ur overall inventory productivity and in-stock inventory position.Intellectual PropertyOur subsidiary,Tractor Supply Co.of Texas,LP(“TSCT”),owns registrations with the U.S.Patent and Trademark Office(“USPTO”)for various service marks including TSC,Tractor Supply Co.,TSC Tractor Supply Co.,and the tr
108、apeziumdesign for retail services.We consider these service marks,and the accompanying goodwill and name recognition,to bevaluable assets of our business.TSCT also owns several other service marks for retail services,some of which have beenregistered with the USPTO and some of which are the subject
109、of applications for registration pending before the USPTO.In addition to selling products that bear nationally-known manufacturer brands,we also sell products manufactured for us undera number of exclusive brands that we consider to be important to our business.These exclusive brands are manufacture
110、d for usby a number of vendors and provide an alternative to the national brands,which helps provide value for our customers andpositions us as a destination retailer.3Excluding Orscheln Farm and Home,our exclusive brands represented approximately 30%of our total sales in fiscal 2022,and29%of our to
111、tal sales in each of fiscal 2021 and fiscal 2020.Our exclusive brands include:4health(pet foods and supplies)Producers Pride(livestock and horse feed and supplies)American Farmworks(livestock,farm and ranchRed Shed(gifts,collectibles,and outdoor furniture)equipment)Bit&Bridle(apparel and footwear)Re
112、dstone(heating products)Blue Mountain(apparel)Retriever(pet foods and supplies)C.E.Schmidt(apparel and footwear)Ridgecut(apparel)Countyline(livestock,farm and ranch equipment)Royal Wing(bird feed and supplies)Dumor(livestock and horse feed and supplies)Strive(pet foods)Groundwork(lawn and garden sup
113、plies)Traveller(truck and automotive products)Huskee(outdoor power equipment)Treeline(hunting gear and accessories)JobSmart(tools)TSC Tractor Supply Co(trailers,truck tool boxes,and animalbedding)Paws&Claws(pet foods and supplies)Untamed(pet foods)The exclusive brands identified above have been regi
114、stered as trademarks with the USPTO for certain products and some arethe subject of additional applications for registration pending before the USPTO for other products.Our trademark and service mark registrations have various expiration dates;however,provided that we continue to use themarks and fi
115、le appropriate maintenance and renewal documentation with the USPTO in a timely manner,the registrations arepotentially perpetual in duration.Our patents(both United States and foreign)have expiration dates ranging from April 2027 toMay 2037 and protect various elements,designs or functions of farm
116、and ranch equipment,as well as light systems for trucksand other vehicles.We believe our intellectual property,which includes the trademarks and service marks identified above,together with certaintrade names,domain names,patents,and copyrights,has significant value and is an important component of
117、our merchandisingand marketing strategies.DistributionWe currently operate a distribution facility network for supplying stores with merchandise and delivering product orderedthrough our websites and mobile application.In fiscal 2022,our Tractor Supply stores received approximately 78%ofmerchandise
118、through this network while the remaining merchandise shipped directly from our vendors to our stores orcustomers.We believe this flow facilitates the prompt and efficient distribution of merchandise that allows us to be adependable supplier to our customers for their“Out Here”lifestyle solutions by
119、enhancing in-stock inventory positions,whileminimizing freight expense and improving the inventory turn rate.Our distribution facilities,located in Arizona,Georgia,Indiana,Kentucky,Maryland,Nebraska,New York,and Texas represent a total distribution center capacity of 6.0 millionsquare feet.This excl
120、udes the distribution center in Missouri acquired through the acquisition of Orscheln Farm and Home thatis anticipated to be sold within 15 months of the closing of the acquisition.We also use third-party operated import centers,mixing centers and pop-up distribution facilities which provide additio
121、nal distribution capacity.On January 18,2023,theCompany opened its ninth distribution center located in Navarre,Ohio,which expanded the distribution center capacity byapproximately 900,000 square feet.In addition,the Company is building a new distribution center in Maumelle,Arkansas.Thisnew facility
122、 will expand the Companys distribution center capacity by 1,200,000 square feet and is anticipated to beginoperations in the first quarter of 2024.We select the locations of our distribution facilities in an effort to minimize logistics costs and optimize the distance fromdistribution facilities to
123、our stores.Our distribution centers utilize warehouse and labor management tools that support theplanning,control,and processing of inventory.We manage our inbound and outbound transportation activity in-house throughthe use of a transportation management system.We utilize multiple common carriers f
124、or store and direct to customerdeliveries.We manage our transportation costs through carrier negotiations,monitoring of transportation routes,andscheduling of deliveries.4MarketingLeveraging our value-driving offerings from our Neighbors Club loyalty program,we utilize an“everyday low price”philosop
125、hy to consistently offer our products at competitive prices complemented by limited and strategically plannedpromotions throughout the year.To drive store traffic,build brand consideration,and position ourselves as a destinationretailer,we promote a broad selection of merchandise and our“Life Out He
126、re”brand messaging through digital and socialmedia initiatives,targeted digital video(connected TV and streaming programming),e-mail and direct mail.In addition,ourrapidly growing Neighbors Club loyalty program enhances our ability to engage with our customers,recognize and reward ourbest customers,
127、drive desired behaviors,and create brand advocacy.Vendors frequently support these specific programs byoffering temporary cost reductions,additional funding,and honoring coupons.Our vendors also provide assistance withproduct presentation and fixture design,brochures,support for in-store events,poin
128、t-of-purchase materials for customereducation,and product knowledge for our team members.Omni-ChannelEnsuring that our customers can engage with us in the most convenient manner for them whether in our stores,on our website,on our mobile application,or via our Customer Solutions Center,is a high pri
129、ority for us.Our goal is to be available anytime,anywhere,and in any way our customers choose to engage with our brand.We provide our customers the opportunity to shopin a manner that fits their lifestyle and is most convenient for them.Our focus is on delivering a comprehensive,seamlessshopping exp
130、erience offering the conveniences our customers want and expect.We offer buy online,pickup in-store,andcurbside pickup,which provide convenient access for customers to pick up merchandise from our store locations.Additionally,our online experience offers an expansive product assortment including a d
131、irect to consumer assortment.This allows us toextend our aisles beyond our store locations and provides convenient and useful content that is relevant to our customerslifestyle.We provide our customers the ability to have products shipped directly to our retail store locations or delivered to theirh
132、omes or offices.For select products,we offer same day delivery.We use our distribution facility network as well as our storesto support our e-commerce activities.Our digital capabilities have further enhanced our in-store shopping experience,allowingus to engage with our customers more effectively,a
133、nd expanded our target markets outside of our current retail store locations.Continuous ImprovementWe are committed to a continuous improvement program to drive change throughout our organization.Using data analyticsand team member engagement,we examine business processes and identify opportunities
134、to reduce costs,drive innovation,andimprove effectiveness.We establish annual goals for productivity and cost improvement.We have implemented severalcontinuous improvement projects,with team members across our business,to evaluate key operations and implement processchanges.Team members are empowere
135、d and expected to challenge current paradigms and improve processes.Managementencourages the participation of all team members in the decision-making process,regularly solicits input and suggestions fromour team members,and incorporates suggestions into our improvement activities.Management Informat
136、ion and Control SystemsWe have invested resources in management information and control systems to provide legendary customer service and todeliver the right products in the right place at the right time.This investment includes use of digital technologies that supportthe“Out Here”lifestyle and inte
137、grate the customer experience in-store,online,and through our Customer Solutions Center,which offers customers the ability to shop anytime,anywhere,and in any way they choose.Our key platforms include:Point-of-sale system;In-store mobility;E-commerce platform;Consumer mobile app;Replenishment and al
138、location systems;Merchandising presentation and inventory management tools;Warehouse and transportation management systems;Labor management tools for stores and supply chain;Price optimization system;Vendor purchase order control system;Human resource information systems;Business intelligence and an
139、alytics tools;andCustomer loyalty and campaign management system.5These systems are integrated through an enterprise resource planning(“ERP”)system.This ERP system tracks merchandisefrom initial order through ultimate sale and interfaces with our financial systems.We continue to invest in technology
140、 to support store,online,and distribution facility expansion and our long-term strategicgrowth initiatives focused heavily on improving the customer experience across all channels.We also continue to evaluate andimprove the functionality of our systems to maximize their effectiveness.Such efforts in
141、clude ongoing hardware and softwareevaluations,refreshes,and upgrades to support optimal software configurations,and application performance.We plan tocontinue to invest in information technology and implement efficiency-driving system enhancements such as in-store mobility,labor and task management
142、 tools,and back-office support systems.We will continue to evaluate the use of technologies toimprove productivity such as artificial intelligence,automation software,quantum computing,edge computing,and othertechnologies.We also maintain and continue to strengthen the security of our information sy
143、stems to help protect and preventunauthorized access to personal information of our customers,team members,vendors,and other confidential Company data.We are endeavoring to adhere to quickly evolving industry privacy laws and standards.Critical areas of focus include cloud,end point protection and p
144、rivacy.Collectively,these efforts are directed toward improving business processes,maintainingsecure,efficient,and stable systems,and enabling the continued growth and success of our business.Petsense by Tractor SupplyPetsense by Tractor Supply is a small-box pet specialty supply retailer focused on
145、 meeting the needs of pet owners,primarily insmall and mid-sized communities,and offering a variety of pet products and services.At December 31,2022,we operated atotal of 186 Petsense by Tractor Supply stores in 23 states,with approximately 700 full-time and 900 part-time team members,and an e-comme
146、rce website(P).The Petsense name is registered with the USPTO.Human CapitalWe believe that our team members are the foundation of our business and that their hard work,passion,commitment,andexperience drive our success.As a result of our commitment to our team members,for the third consecutive year,
147、we wererecognized by the Great Place to Work Institute as a“Great Place to Work-Certified”company.Additionally,we earned a spoton both the Nashville Business Journals 2022 Best Places to Work and the Tennesseans 2022 Top Workplaces in MiddleTennessee lists.Below are further descriptions of our Compa
148、ny and our focus on the development and support of our teammembers:Management and Team MembersAs of December 31,2022,we employed approximately 24,000 full-time and 25,000 part-time Tractor Supply team members.We typically employ additional part-time team members throughout the year during high sales
149、 volume periods.We are notparty to any collective bargaining agreements.Eligible team members can participate in one of our various bonus incentive programs,which provide the opportunity toreceive additional compensation based upon individual,team,and/or Company performance.In addition to bonus ince
150、ntiveprograms,we provide our eligible team members the opportunity to participate in an employee stock purchase plan and a401(k)retirement savings plan and health insurance for which we share a significant portion of the cost of premiums.Weadditionally provide our eligible team members with paid tim
151、e off and a six-week parental leave policy for new parents.Ourteam members also receive a discount on merchandise purchased from the Company.We encourage a promote-from-within environment when internal resources permit.We also provide internal leadershipdevelopment programs designed to prepare our h
152、igh-potential team members for greater responsibility.Our current team ofdistrict managers and store managers has an average tenure of approximately nine and six years,respectively.We believeinternal promotions,coupled with the hiring of individuals with previous retail experience,provide the manage
153、ment structurenecessary to support our long-term strategic growth initiatives.6Store Personnel and TrainingWe seek to hire store team members who live and appreciate the“Out Here”lifestyle,including those with farming andranching backgrounds,with particular emphasis on general maintenance,equine,and
154、 welding.We endeavor to staff our storeswith courteous,highly motivated team members and devote considerable resources to training store team members,often incooperation with our vendors.Our training programs include:A thorough on-boarding process to prepare new team members for their new role;Produ
155、ctive workplace environment training that is intended to educate team members on Company policies andprocedures covering topics such as harassment,discrimination,and retaliation;Diversity,equity,and inclusion training which is intended to advance a diverse and inclusive culture built on one ofour co
156、re values of respect,in order to foster different perspectives,ideas and innovative thinking;New store opening training that prepares our store managers to open new stores to Company standards;A management training program which covers all aspects of our store operations,including delivering superio
157、r serviceand managing the team member experience;Structured training on customer service and selling skills;Online product knowledge training produced in conjunction with key vendors;Leadership development programs that prepare leaders to expand their current contributions;Quarterly all store team m
158、ember meetings;andAn annual store manager meeting with vendor product presentations.Workplace Health and SafetyWe strive to provide a safe and healthy workplace for all team members and drive a culture of safe practices and continuousimprovement.We provide role-based safety training during the onboa
159、rding process and through other specific safety programs.Diversity,Equity,and InclusionTractor Supply is committed to the principles of diversity,equity,and inclusion(“DE&I”).We have built a strong and diverseteam by purposefully seeking highly qualified diverse candidates with different backgrounds
160、,experience,perspectives,ideasand skill sets.As we move forward,we are working to implement new DE&I initiatives that will result in an even more diverseteam across the entire company.We are committed to providing a diverse and inclusive culture supported by our Mission&Values where we welcome diver
161、sebackgrounds and experiences and respectfully foster different perspectives,ideas and innovative thinking.We are strongertogether,and we believe in the authenticity our team members bring to work every day.By focusing on our team members,weknow that our customers,communities and suppliers will be w
162、ell served.Diversity and inclusion play a key role in moving ourbusiness forward.Our workforce is approximately 51%male and 49%female.Minorities comprise approximately 18%of ourworkforce.Women serve in key leadership roles within the Company,including as Executive Vice President,Chief HumanResources
163、 Officer,Senior Vice President,General Counsel and Corporate Secretary,Senior Vice President of InvestorRelations and Public Relations,Senior Vice President,Chief Marketing Officer and Senior Vice President of E-Commerce.Wehave taken several steps over the past twelve months to further enhance our d
164、iversity,equity,and inclusion strategy includingpublishing external DE&I goals aligned with our environmental,social,and governance(“ESG”)efforts,enhancing our DE&IStrategy to include supplier diversity efforts,and continuing activation of our various team member engagement groupssupporting developm
165、ent,community involvement,and allyship within our Company.We will continue to build on theseinitiatives to enhance our culture of respect and teamwork across our organization.Growth StrategyTractor Supply believes we can grow our business by being an integral part of our customers lives as the depen
166、dable supplierof“Out Here”lifestyle solutions,creating customer loyalty through personalized experiences,our Neighbors Club loyaltyprogram and providing convenience that our customers expect at anytime,anywhere,and in any way they choose.Our long-term growth strategy is to:(1)expand and deepen our c
167、ustomer base by providing personal,localized,and memorable customerengagements by leveraging content,social media,and digital shopping experiences,attracting new customers and drivingloyalty,(2)evolve customer experiences by digitizing our business processes and furthering our omni-channel capabilit
168、ies,(3)offer relevant assortments and services across all channels through exclusive and national brands and continue to grow our totaladdressable market by introducing new products and services through our test and learn strategy,(4)drive operationalexcellence and productivity through continuous im
169、provement,increasing space utilization,and implementing advanced supply7chain capabilities to support growth,scale and agility,and(5)expand through selective acquisitions,as such opportunities arise,to add complementary businesses and to enhance penetration into new and existing markets to supplemen
170、t organic growth.Achieving this strategy will require a foundational focus on:(1)connecting,empowering and growing our team to enhance ourteam members lives and the communities in which they live,enabling them to provide legendary service to our customers,and(2)allocating resources in a disciplined
171、and efficient manner to drive profitable growth and build stockholder value,includingleveraging technology and automation to align our cost structure to support new business capabilities for margin improvementand cost reductions.Over the past five years,we have experienced considerable sales growth,
172、resulting in a compounded annual growth rate ofapproximately 14.4%.We plan to open approximately 70 new Tractor Supply and 10 to 15 new Petsense by Tractor Supplystores in fiscal 2023,a selling square footage increase of approximately 3%.In addition,we plan to rebrand all 81 Orschelnstores to Tracto
173、r Supply stores in fiscal 2023.In fiscal 2022,we opened 63 new Tractor Supply stores and nine new Petsense byTractor Supply stores,and acquired 81 Orscheln Farm and Home stores.In fiscal 2021,we opened 80 new Tractor Supplystores and seven new Petsense by Tractor Supply stores.This represents a sell
174、ing square footage increase of approximately 11%during fiscal 2022 and 4%during fiscal 2021.At December 31,2022,we operated 2,333 retail stores in 49 states(2,066 Tractor Supply retail stores,186 Petsense by TractorSupply retail stores,and 81 Orscheln Farm and Home retail stores set to be rebranded
175、to Tractor Supply retail stores by the endof 2023).Given the size of the communities that we target,we believe there is ample opportunity for new store growth in manyexisting and new markets.We believe we have developed a proven method for selecting store sites and have significantadditional opportu
176、nities for new Tractor Supply stores.We also believe that there is opportunity for continued growth forPetsense by Tractor Supply stores.Approximately 59%of our stores are in freestanding buildings and 41%are located in shopping centers.We leaseapproximately 95%of our stores and own the remaining 5%
177、.In addition to new store expansion,we will continue to support our strategic growth through expansion of our distributionnetwork and initiatives including,among others,space productivity and Side Lot improvements in certain existing stores aswell as continued improvements in technology and infrastr
178、ucture at our existing stores,and ongoing investments to enhance ourdigital and omni-channel capabilities to better serve our customers.CompetitionWe operate in a competitive retail industry.We believe the principal competitive factors include location of stores,fulfillmentoptions,price,quality of m
179、erchandise,in-stock inventory consistency,merchandise assortment and presentation,productknowledge,and customer service.We compete with general merchandise retailers,home center retailers,pet retailers,specialtyand discount retailers,independently owned retail farm and ranch stores,numerous privatel
180、y-held regional farm store chainsand farm cooperatives,as well as internet-based retailers.However,we believe we successfully differentiate ourselves frommany of these retailers by focusing on our specialized market niche for customers living the rural lifestyle.See furtherdiscussion of competition
181、in 1A.“Risk Factors”of this Annual Report on Form 10-K.Seasonality and WeatherOur business is seasonal.Historically,our sales and profits are the highest in the second and fourth fiscal quarters due to thesale of seasonal products.We usually experience our highest inventory and accounts payable bala
182、nces during our first fiscalquarter for purchases of seasonal products to support the higher sales volume of the spring selling season,and again during ourthird fiscal quarter to support the higher sales volume of the cold-weather selling season.We believe that our business can bemore accurately ass
183、essed by focusing on the performance of the halves,not the quarters,due to the fact that different weatherpatterns from year-to-year can shift the timing of sales and profits between quarters,particularly between the first and secondfiscal quarters and the third and fourth fiscal quarters.Historical
184、ly,weather conditions,including unseasonably warm weather in the fall and winter months and unseasonably coolweather in the spring and summer months,have unfavorably affected the timing and volume of our sales and results ofoperations.In addition,extreme weather conditions,including snow and ice sto
185、rms,flood and wind damage,hurricanes,tornadoes,extreme rain,and droughts have impacted operating results both negatively and positively,depending on the severityand duration of these conditions.Our strategy is to manage product flow and adjust merchandise assortments and depth ofinventory to capital
186、ize on seasonal demand trends.8Stewardship and Compliance with Environmental MattersOur operations are subject to numerous federal,state,and local laws and regulations,enacted or adopted,regulating thedischarge of materials into the environment or otherwise relating to the protection of the environm
187、ent.We are committed tocomplying with all applicable environmental laws and regulations.We are also committed to becoming a moreenvironmentally sustainable company.This commitment is demonstrated through our Stewardship Program,which is ourenvironmental sustainability program.Through this program,th
188、e Company has implemented a number of initiatives designedto reduce our impact on the environment.These initiatives include the installation of energy management systems,LEDlighting,high efficiency heating/air conditioning systems,and recycling programs in our stores,distribution facilities,and Stor
189、eSupport Center.Our Store Support Center and our distribution centers in Casa Grande,Arizona,and Frankfort,New York areLEED(Leadership in Energy and Environmental Design)Silver certified for environmentally sustainable design,construction,and operation.We also installed solar arrays at the Store Sup
190、port Center in Brentwood,Tennessee,and our Tractor Supplystore in Hendersonville,Tennessee.The Company also opened its ninth distribution center in Navarre,Ohio on January 18,2023.The distribution center is the first Tractor Supply facility built to LEED Gold standards.The facility features a roofto
191、psolar array system consisting of more than 10,000 solar panels that will produce five megawatts of electricity per year,whichwill satisfy the electricity needs,and will utilize electric fork trucks powered by lithium-ion batteries to pick and moveinventory.The Company has been a SmartWay Transport
192、partner since 2013.SmartWay Transport is a public-private initiative betweenthe U.S.Environmental Protection Agency,large and small trucking companies,retailers,and other federal and state agencies.Its purpose is to improve fuel efficiency and the environmental performance(reduction of both greenhou
193、se gas emissions andair pollution)of supply chains.In December 2018,we announced a goal to reduce carbon emissions from our facilities by 25%by 2025 from our 2015 baselineas part of the Companys Stewardship Program.In December 2020,we announced that we had reached this goal five yearsearly.On Decemb
194、er 15,2022,we released our 2021 Task Force on Climate-Related Financial Disclosures Report,following theannouncement of our goal in September 2021 to reduce our carbon footprint by 20%by 2025 and 50%by 2030 and achieve netzero missions across all operations by 2040.In the report,we discussed our app
195、roach to evaluating and managing climatechange risks and identifying opportunities.We also detailed the next phase of our sustainability journey,including increasingefforts to procure renewable energy,continuing investments in energy efficiency and cleaner technologies,avoiding futureemissions throu
196、gh better design of both stores and distribution centers,and refining our Scope 3 emissions through our newsupplier engagement program with the intent to reduce value chain emissions.Additional information can be found in our ESG Tear Sheet and on our website(TractorS).The information providedon our
197、 website is not part of this report,and is therefore not incorporated by reference unless such information is otherwisespecifically referenced elsewhere in this report.Information about our Executive OfficersPursuant to General Instruction G(3)of Form 10-K,the following list is included in Part I of
198、 this Report in lieu of beingincluded in the Proxy Statement for the Annual Meeting of Stockholders to be held on May 11,2023.9The following is a list of the names and ages of all executive officers of the registrant,indicating all positions and offices withthe registrant held by each such person an
199、d each persons principal occupations and employment during at least the past fiveyears:NamePositionAgeHarry A.Lawton,IIIPresident and Chief Executive Officer48Kurt D.BartonExecutive Vice President Chief Financial Officer and Treasurer51Robert D.MillsExecutive Vice President Chief Technology,Digital
200、Commerce and Strategy50John P.OrdusExecutive Vice President Chief Stores Officer47Jonathan S.EstepExecutive Vice President Chief Merchandising Officer43Melissa D.KerseyExecutive Vice President Chief Human Resources Officer48Colin W.YankeeExecutive Vice President Chief Supply Chain Officer45Noni L.El
201、lisonSenior Vice President General Counsel and Corporate Secretary51Kimberley S.GardinerSenior Vice President Chief Marketing Officer54Matthew L.RubinSenior Vice President and General Manager of Petsense by Tractor Supply43Harry A.Lawton,III was appointed as President and Chief Executive Officer in
202、January,2020.Mr.Lawton served as Presidentof Macys,Inc.from September 2017 to December 2019.Prior to that time,Mr.Lawton served as Senior Vice President,NorthAmerica at eBay,Inc.since May 2015.Mr.Lawton previously held a number of leadership positions at Home Depot,Inc.from2005 to 2015,including Sen
203、ior Vice President of Merchandising and head of Home Depots online business.Since January2019,Mr.Lawton has served as a director of Sealed Air Corporation and previously served as a director of Buffalo WildWings,Inc.from October 2016 to February 2018.Kurt D.Barton was promoted to Executive Vice Pres
204、ident Chief Financial Officer and Treasurer in February 2019,afterhaving served as Senior Vice President Chief Financial Officer and Treasurer since March 2017.Prior to that time,Mr.Barton served as Senior Vice President Controller of the Company since February 2016.Mr.Barton previously served asVic
205、e President Controller of the Company from February 2009,after having served as the Companys Director,Internal Auditfrom July 2002 to February 2009.Mr.Barton has served in various other leadership roles in accounting since he joined theCompany in 1999.Mr.Barton,a Certified Public Accountant,began hi
206、s career in public accounting in 1993,spending sixyears at Ernst&Young,LLP.Robert D.Mills has served as Executive Vice President Chief Technology,Digital Commerce and Strategy Officer sinceAugust 2018,prior to which he served as the Companys Senior Vice President Chief Information Officer since Febr
207、uary2014.Mr.Mills previously served as Chief Information Officer for Ulta Beauty,Inc.from October 2011 until he joined theCompany.From 2005 to 2011,Mr.Mills was Vice President,Chief Information Officer for the online business unit at SearsHoldings Corporation where he began as an Information Technol
208、ogy Customer Relationship Leader in 2001.Prior to 2001,Mr.Mills held roles at The Allstate Corporation,Rockwell International,Telecommunications Division,and HouseholdFinance Corporation.Since March 2018,Mr.Mills has served as a director of B&G Foods,Inc.John P.Ordus was promoted to Executive Vice P
209、resident Chief Stores Officer in February 2020,after having served as theCompanys Senior Vice President-Store Operations since August 2015.Prior to that time,Mr.Ordus served as Regional VicePresident for the Company from June 2010 and as a Regional Director for the Company since September 2008.Mr.Or
210、dusjoined the Company as a District Manager in February 2002 after the acquisition of Quality Farm&Fleet,Inc.with which Mr.Ordus held roles since January 1998.Jonathan S.Estep was promoted to Executive Vice President Chief Merchandising Officer in February 2020,after havingserved as the Companys Sen
211、ior Vice President,General Merchandising since April 2017.Prior to that time,Mr.Estep servedthe Company as a Vice President,Divisional Merchandise Manager from February 2014.Mr.Estep also previously served invarious other leadership roles in merchandising since he re-joined the Company in January 20
212、08.Melissa D.Kersey was appointed as Executive Vice President Chief Human Resources Officer in July,2020.Ms.Kerseywas previously Senior Vice President and Chief People Officer for McDonalds USA,LLC from 2017 until July 2020.Ms.Kersey also previously held a number of executive level roles with Walmar
213、t Inc.(previously Wal-Mart Stores,Inc.)from 2008to 2017,including Senior Vice President of Global Human Resource Transformation and People Services,Senior VicePresident and Chief Human Resources Officer for U.S.Stores,and Senior Vice President of Learning and Human ResourcesStrategy.Prior to that ti
214、me,Ms.Kersey spent eight years with Alltel Wireless and four years with the Target Corporation inOperations,Distribution,Human Resources and Technology roles.10Colin W.Yankee was promoted to Executive Vice President-Chief Supply Chain Officer in February 2020,after havingserved as the Companys Senio
215、r Vice President,Supply Chain since November 2015 when he joined the Company.Mr.Yankee was previously Vice President of Logistics for Neiman Marcus Group LLC from 2013 to 2015.Prior to that time,Mr.Yankee held various leadership roles in logistics and supply chain with the Target Corporation since 2
216、004.He began his careeras a Cavalry Officer,Captain in the United States Army.Noni L.Ellison was appointed as Senior Vice President General Counsel and Corporate Secretary in January,2021.Ms.Ellison was previously General Counsel,Chief Compliance Officer and Corporate Secretary for Carestream Dental
217、 LLC fromAugust 2017 until January 2021.Ms.Ellison also previously served as Associate General Counsel and Assistant CorporateSecretary at W.W.Grainger,Inc.from February 2015 until July 2017.Prior to that time,Ms.Ellison held roles of increasingresponsibility at Turner Broadcasting System,Inc.and Sc
218、ripps Networks Interactive,Inc.and practiced law with two nationallaw firms as a corporate finance and securities associate.Kimberley S.Gardiner was appointed as Senior Vice President-Chief Marketing Officer in July 2022.Ms.Gardiner waspreviously Chief Marketing Officer and Senior Vice President at
219、Volkswagen Group of America from November 2020 untilJuly 2022.Prior to that time,Ms.Gardiner served as the Chief Marketing Officer for Mitsubishi Motors North America fromJanuary 2019 to November 2020 and as Director of Marketing for Kia Motors America from March 2016 to January 2019.Prior to 2019,M
220、s.Gardiner held various marketing and strategy roles with increasing responsibility at 5th Kind and ToyotaNorth America.Matthew L.Rubin was appointed as Senior Vice President and General Manager of Petsense by Tractor Supply in February,2021.Mr.Rubin previously served as Senior Vice President of Bus
221、iness Development&Growth at The Michaels Stores,Inc.from October 2018 until January 2021.Mr.Rubin was previously an executive in Accenture plcs North America RetailPractice from April 2015 to October 2018.Before April 2015,Mr.Rubin was a Partner at Consolidated Venture Partners&Consolidated Marketin
222、g and a Co-Founder&Finance Partner at OnTrend Products.Mr.Rubin also previously served as VicePresident of Specialty Business Operations at BJs Wholesale Club Holding,Inc.Mr.Rubin began his career at Office Depot,Inc.where he had multiple merchandising and strategic project leadership roles of incre
223、asing responsibility.Additional InformationWe file reports with the Securities and Exchange Commission(“SEC”),including Annual Reports on Form 10-K,quarterlyreports on Form 10-Q,current reports on Form 8-K and other reports as required.We are an electronic filer and the SECmaintains an Internet webs
224、ite at sec.gov that contains the reports,proxy and information statements,and other information wefile.We make available,free of charge through our Internet website,TractorS,our Annual Report on Form 10-K,quarterly reports on Form 10-Q,current reports on Form 8-K,and all amendments to those reports
225、as soon as reasonablypracticable after such material is electronically filed with or furnished to the SEC.The information provided on our website isnot part of this report,and is therefore not incorporated by reference unless such information is otherwise specificallyreferenced elsewhere in this rep
226、ort.11Item 1A.Risk FactorsOur business faces many risks.Certain risks of which we are currently aware and deem to be material are described below.Ifany of the events or circumstances described in the following risk factors occur,our business,financial condition or results ofoperations may significan
227、tly suffer,and the trading price of our common stock could decline.These risk factors should be readin conjunction with the other information in this Annual Report on Form 10-K.Strategic and Competitive RisksFailure to protect our reputation could have a material adverse effect on our brand name or
228、any of our exclusive brands.Our success depends in part on the value and strength of the Tractor Supply name,including our exclusive brands.The TractorSupply name is integral to our business,as well as to the implementation of our strategies for expanding our business.Maintaining,promoting,and posit
229、ioning our brand will depend largely on the success of our marketing and merchandisingefforts and our ability to provide high quality merchandise and a consistent,high quality customer experience.Our brand couldbe adversely affected if we fail to achieve these objectives or if our public image or re
230、putation were to be tarnished by negativepublicity,whether or not based on fact.Any failure to comply or accusation of our failure to comply with ethical,social,product,labor,data privacy,and environmental standards could also jeopardize our reputation and potentially lead to variousadverse consumer
231、 actions.Customers are also increasingly using social media to provide feedback and information about ourCompany,including our products and services,in a manner that can be quickly and broadly disseminated.Further,adversepublicity about our merchandise products,whether valid or not,may discourage co
232、nsumers from buying the products we offer.Additionally,our proprietary rights in our trademarks,trade names,service marks,domain names,copyrights,patents,tradesecrets and other intellectual property rights are valuable assets of our business.We may not be able to prevent or even discoverevery instan
233、ce of unauthorized third party uses of our intellectual property or dilution of our brand names,such as when a thirdparty uses trademarks that are identical or similar to our own.Any of these events could result in decreased revenue orotherwise adversely affect our business.We may be unable to incre
234、ase sales at our existing stores.We experience fluctuations in our comparable store sales at our existing stores,defined as sales in stores which have been openfor at least twelve months.See Item 7.“Managements Discussion and Analysis of Financial Condition and Results ofOperations”for a further dis
235、cussion of comparable store sales.Various factors affect the comparable store sales at our existingstores,including,among others,the general retail sales environment,our ability to efficiently source and distribute products,global supply chain disruptions,changes in our merchandise assortment,compet
236、ition,proximity of our locations to one anotheror to the locations of other competing retailers,increased presence of online retailers,current economic conditions,customersatisfaction with our products,retail pricing,the timing of promotional events,the release of new merchandise,the success ofmarke
237、ting programs,weather conditions,and our ability to attract and retain qualified team members.These factors may causethe comparable store sales results at our existing stores to differ materially from prior periods and from expectations.Pastcomparable store sales are not an indication of future resu
238、lts,and there can be no assurance that our comparable store sales willnot decrease in the future.Furthermore,the considerable positive impact of the COVID-19 pandemic on the demand for our products in fiscal 2021 and2020 resulted in a significant increase in new or reacquired customers and in compar
239、able store sales growth.Our salesperformance in fiscal 2021 and 2020 may present a greater risk to our ability to increase comparable store sales in the followingyear(s)and in our ability to maintain our new or reacquired customers gained in those years.Therefore,we may not be able tosustain or incr
240、ease our comparable store sales in fiscal 2023 and beyond.Failure to open and manage new stores in the number and manner currently contemplated could adversely affect our financialperformance.An integral part of our business strategy includes the expansion of our store base through new store opening
241、s.This expansionstrategy is dependent on our ability to find suitable locations,and we face competition from many retailers and other businessesfor such sites.If we are unable to implement this strategy,our ability to increase our sales,profitability,and cash flow could beimpaired.To the extent that
242、 we are unable to open new stores in the manner we anticipate(due to,among other reasons,siteapproval or unforeseen delays in construction),our sales growth may be impeded.Although we have a rigorous real estate site selection and approval process,there can be no assurance that our new storeopenings
243、 will be successful or result in incremental sales and profitability for the Company.New stores build their salesvolumes and refine their merchandise selection over time and,as a result,generally have lower gross margins and higher12operating expenses as a percentage of net sales than our more matur
244、e stores.As we continue to open new stores,there may be anegative impact on our results from a lower contribution margin of these new stores until their sales levels ramp to chainaverage,if at all,as well as from the impact of related pre-opening costs.Additionally,new stores can also impact the sal
245、es andcontribution margins of existing stores located in close proximity.As we execute this expansion strategy,we may also experience managerial or operational challenges which may prevent anyexpected increase in sales,profitability,or cash flow.Our ability to manage our planned expansion depends on
246、 the adequacy ofour existing information systems,the efficiency and expansion of our distribution systems,the adequacy of the hiring andtraining process for new personnel(especially store managers),the effectiveness of our controls and procedures,and the abilityto identify customer demand and build
247、market awareness in different geographic areas.There can be no assurance that we willbe able to achieve our planned expansion,that the new stores will be effectively integrated into our existing operations or thatsuch stores will be profitable.Our merchandising and marketing initiatives may not prov
248、ide expected results.We believe our past performance has been based upon,and future success will depend in part upon,the ability to develop andexecute merchandising initiatives with effective marketing programs.These merchandising initiatives and marketing programsmay not deliver expected results,an
249、d there is no assurance that we will correctly identify and respond in a timely manner toevolving trends and consumer preferences and expectations.If we misjudge the market or our marketing programs are notsuccessful,we may overstock unpopular products and be forced to take inventory impairment or r
250、etail price reductions thathave a material adverse effect on our profitability.Failure to execute and promote such initiatives in a timely manner couldharm our ability to grow the business and could have a material adverse effect on our results of operations and financialcondition.Shortages of key m
251、erchandise could also have a material adverse effect on our financial condition and results ofoperations.We may not timely identify or effectively respond to consumer needs,expectations,or trends,which could adversely affect ourrelationship with customers,the demand for our products and services,and
252、 our market share.The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics;consumer preferences,expectations and needs;and unexpected weather conditions,public health issues(including pandemicsand quarantines and related shut-down
253、s,re-openings,or other actions by the government)or natural disasters,while alsomanaging appropriate inventory levels in our stores and distribution or fulfillment centers and managing an excellent customerexperience.It is difficult to successfully predict the products and services our customer will
254、 demand.As our customers begin toexpect a more personalized experience,our ability to collect,use,and protect relevant customer data is important to our abilityto effectively meet their expectations.Our ability to collect and use that data,however,is subject to a number of externalfactors,including
255、the impact of legislation or regulations governing data privacy and security.In addition,each of our primarycustomer groups has different needs and expectations,many of which evolve as the demographics in a particular customergroup change.We also need to offer more localized assortments of our merch
256、andise to appeal to local cultural and demographictastes within each customer group.If we do not successfully differentiate the shopping experience to meet the individual needsand expectations of or within a customer group,we may lose market share with respect to those customers.Customer expectation
257、s about the methods by which they purchase and receive products or services are also becoming moredemanding.Customers routinely use technology and a variety of electronic devices and digital platforms to rapidly compareproducts and prices,read product reviews,determine real-time product availability
258、,and purchase products.Once products arepurchased,customers are seeking alternate options for delivery of those products,and they often expect quick,timely,and low-price or free delivery and/or convenient pickup options.We must continually anticipate and adapt to these changes in thepurchasing proce
259、ss.In addition,a greater concentration of online sales with direct fulfillment or curbside pickup could result in a reduction in theamount of traffic in our stores,which would,in turn,reduce the opportunities for cross-selling of merchandise that such trafficcreates and could reduce our overall sale
260、s and adversely affect our financial performance.Failure to provide a compelling online presence;to timely identify or respond to changing consumer preferences,expectationsand home improvement needs;to maintain appropriate inventory;to provide quick and low-price or free delivery alternativesand con
261、venient pickup options;to differentiate the customer experience for our primary customer groups;and to effectivelyimplement an increasingly localized merchandising assortment could adversely affect our relationship with customers,thedemand for our products and services,and our market share.13Competi
262、tion may hinder our ability to execute our business strategy and adversely affect our operations.We operate in the highly competitive retail merchandise sector with numerous competitors.These competitors include generalmerchandise retailers,home center retailers,pet retailers,specialty and discount
263、retailers,independently-owned retail farm andranch stores,numerous privately-held regional farm store chains,and farm cooperatives,as well as internet-based retailers.Wecompete for customers,merchandise,real estate locations,and team members.This competitive environment subjects us tovarious other r
264、isks,including the inability to continue our store and sales growth and to provide attractive merchandise to ourcustomers at competitive prices that allow us to maintain our profitability.Our failure to compete effectively in thisenvironment could adversely impact our financial performance.We may pu
265、rsue strategic acquisitions and the failure of an acquisition to produce the anticipated results or the inability to fullyintegrate the acquired companies could have an adverse impact on our business.We may,from time to time,acquire businesses we believe to be complementary to our business,for examp
266、le,the acquisition ofOrscheln Farm and Home.The success of an acquisition is based on our ability to make accurate assumptions regarding thevaluation,operations,growth potential,integration,and other factors relating to the target business.Acquisitions may result indifficulties in assimilating acqui
267、red companies and may result in the diversion of our capital and our managements attentionfrom other business issues and opportunities.We may not be able to successfully integrate an organization that we acquire,including their personnel,financial systems,distribution,operations,and general operatin
268、g procedures.If we fail tosuccessfully integrate acquisitions,we could experience increased costs associated with operating inefficiencies which couldhave an adverse effect on our financial results.Also,while we employ several different methodologies to assess potentialbusiness opportunities,acquire
269、d businesses may not achieve desired profitability objectives or other expectations,causing lowerthan expected earnings and cash flows which could adversely affect our financial performance and subsequently requireimpairment of long-lived assets,goodwill and other intangible assets.Weather and Clima
270、te RisksUnseasonal and extreme weather conditions,natural disasters,and climate change may have a significant impact on ourfinancial results.Weather conditions affect the demand for,and in some cases the supply of,products,which in turn has an impact on prices.Historically,weather conditions,includi
271、ng unseasonably warm weather in the fall and winter months and unseasonably coolweather in the spring and summer months,have affected the timing and volume of our sales and results of operations.Inaddition,extreme weather conditions,such as more frequent or intense hurricanes and tropical storms,thu
272、nderstorms,tornadoes,flood,fires,droughts,earthquakes,and snow or ice storms,as well as rising sea levels,have impacted operatingresults both positively and negatively and may positively or negatively impact our business in the future.While extremeweather conditions can positively impact our operati
273、ng results by increasing demand in affected locations for products neededto cope with the weather condition and its effects,they can also negatively affect our business depending on the severity andlength of these conditions,as a result of store closings,damage to our stores or merchandise,or the in
274、ability of customers toshop at our stores due to weather conditions.Our strategy is to manage product flow and adjust merchandise assortments anddepth of inventory to capitalize on seasonal demand trends.Should such a strategy not be effective,the weather may have amaterial adverse effect on our fin
275、ancial condition and results of operations.Furthermore,the long-term impacts of climate change,whether involving physical risks(such as extreme weather conditions orrising sea levels)or transition risks(such as regulatory or technology changes)are expected to be widespread andunpredictable.These cha
276、nges over time could affect,for example,the availability and cost of certain consumer products andcommodities,and energy(including utilities),which,in turn,may impact our ability to procure certain goods or servicesrequired for the operation of our business at the quantities and levels we require.As
277、 a consequence of these or other catastrophic or uncharacteristic events,we may experience interruption to our operations,increased costs,or losses of property,equipment or inventory,which would adversely affect our revenue and profitability.Weather conditions may cause a disruption in our distribut
278、ion and transportation network that would adversely affect ourability to conduct our operations.We rely on our distribution and transportation network,including third-party logistics providers,to provide goods to our storesand to our customers in a timely and cost-effective manner through deliveries
279、 to our distribution facilities from vendors and14then from the distribution facilities or direct ship vendors to our stores or customers by various means of transportation,including shipments by sea,air,rail,and truck.Although we believe that our operations are efficient,disruptions due to extremew
280、eather conditions,including snow and ice storms,flood and wind damage,hurricanes,tornadoes,extreme rain,fires anddroughts may result in delays in the transportation and delivery of merchandise to our distribution centers,our stores,or ourcustomers.Significant disruptions or delays in our distributio
281、n and transportation network could adversely affect sales and thesatisfaction of our customers which could have a material adverse impact on our financial condition and results of operations.We may be adversely affected by legal,regulatory or market responses to global climate change.Growing concern
282、 over climate change has led policy makers in the U.S.to consider the enactment of legislative and regulatoryproposals that would impose mandatory requirements on greenhouse gas emissions.Such laws,if enacted,are likely to impactour business in a number of ways.For example,we use natural gas,diesel
283、fuel,gasoline and electricity in conducting ouroperations.Increased government regulations to limit carbon dioxide and other greenhouse gas emissions may result inincreased compliance costs and legislation or regulation affecting energy inputs,which could materially affect our profitability.Complian
284、ce with any new or more stringent laws or requirements,or stricter interpretations of existing laws,could requireadditional expenditures by us or our suppliers.Our inability to appropriately respond to such changes could adversely impactour business,financial condition,results of operations or cash
285、flows.We may be unable to meet our ESG goals,particularly with respect to the reduction of carbon emissions,or otherwise meet theexpectations of our stakeholders with respect to ESG and/or DE&I matters.We have announced certain aspirations and goals related to ESG matters,such as plans to reduce our
286、 carbon footprint by 20%by 2025,by 50%by 2030,and achieve net zero emissions across all operations by 2040.Additionally,we have published DE&Igoals aligned with our ESG efforts and enhanced our DE&I Strategy to include supplier diversity efforts and established ourDE&I Customer Promise.Achievement o
287、f these aspirations,targets,plans and goals is subject to numerous risks anduncertainties,many of which are outside of our control.These risks and uncertainties include,but are not limited to:our abilityto successfully identify and implement relevant strategies on a timely and cost-effective basis;o
288、ur ability to achieve theanticipated benefits and cost savings of such strategies and actions;and the availability and cost of existing and futuretechnologies,such as alternative fuel vehicles,off-site renewable energy,and other materials and components.It is possible thatwe may be unsuccessful in t
289、he achievement of our ESG and/or DE&I goals on a timely basis or at all.Furthermore,ourstakeholders may not be satisfied with our efforts or the speed at which we are progressing towards any such aspirations andgoals.A delay,failure or perceived failure or delay to meet our goals and aspirations cou
290、ld adversely affect public perception ofour business,employee morale,customer or stockholder support as well as business and/or financial performance.Certainchallenges we face in the achievement of our ESG objectives are also captured within our ESG reporting,which is notincorporated by reference in
291、to and does not form any part of this Annual Report on Form 10-K or our other filings with theSEC.Macroeconomic RisksGeneral economic conditions may adversely affect our financial performance.Our results of operations may be sensitive to changes in overall economic conditions that impact consumer sp
292、ending,includingdiscretionary spending.A weakening of economic conditions affecting disposable consumer income such as lower employmentlevels,uncertainty or changes in business or political conditions,social and political causes and movements,higher interestrates,higher tax rates,higher fuel and ene
293、rgy costs,higher labor and healthcare costs,the impact of natural disasters or acts ofterrorism,general health epidemics(such as COVID-19),and other matters could reduce consumer spending or causeconsumers to shift their spending to competitors.A general reduction in the level of discretionary spend
294、ing,shifts in consumerdiscretionary spending to our competitors or shifts in discretionary spending to less profitable products sold by us could resultin lower net sales,slower inventory turnover,greater markdowns on inventory,and a reduction in profitability due to lowermargins.15Purchase price vol
295、atility,including inflationary and deflationary pressures,may adversely affect our financial performance.Although we cannot determine the full effect of inflation and deflation on our operations,we believe our sales and results ofoperations are affected by both.We are subject to market risk with res
296、pect to the pricing of certain products and services,which include,among other items,grain,corn,steel,petroleum,cotton,and other commodities,as well as duties,tariffs,dieselfuel,and transportation services.Therefore,we may experience both inflationary and deflationary pressure on product cost,which
297、may impact consumer demand and,as a result,sales and gross margin.Our strategy is to reduce or mitigate the effectsof purchase price volatility principally by taking advantage of vendor incentive programs,economies of scale from increasedvolume of purchases,adjusting retail prices,and selectively bu
298、ying from the most competitive vendors while maintainingproduct quality.Should our strategy to mitigate purchase price volatility be ineffective,our financial performance could beadversely impacted.Team Member RisksOur failure to attract and retain qualified team members,increases in wage,and labor
299、costs,and changes in laws and otherlabor issues could adversely affect our financial performance.Our ability to maintain and continue expanding operations depends on our ability to attract and retain a large and growingnumber of qualified team members.Our ability to meet labor needs while controllin
300、g wage and related labor costs is subject tonumerous external factors,including the availability of a sufficient number of qualified persons in the work force,unemployment levels,prevailing wage rates,increases in legally required minimum wage rates,changing demographics,healthand other insurance co
301、sts,changes in employment legislation and the potential for changes in local labor practices or unionactivities.If we are unable to locate,attract or retain qualified personnel,or if costs of labor or related costs increasesignificantly,our financial performance could be adversely affected.We are su
302、bject to federal,state,and local laws governing employment practices and working conditions.These laws coverwage and hour practices,labor relations,paid and family leave,workplace safety and immigration,among others.The laws andregulations being passed at the state and local level create unique chal
303、lenges for a multi-state employer.We must continue tomonitor and adapt our employment practices to comply with these various laws and regulations.If our costs of labor or relatedcosts increase significantly as new or revised labor laws,rules or regulations or healthcare laws are adopted or implement
304、ed,our financial performance could be adversely affected.The loss of current members of our senior management team and other key team members or the failure to successfully managean executive officer transition may adversely affect our operating results.Our success depends in large part on the conti
305、nued availability and service of our executive officers,senior management,andother key team members.Competition for senior management and key team members in our industry is strong and we may notbe able to retain our key team members or attract new qualified team members.We must continue to recruit,
306、retain,andmotivate management and other team members sufficiently,both to maintain our current business and to execute our long-termstrategic growth initiatives.The loss of any of our executive officers or other key senior management without sufficientadvance notice could prevent or delay the implem
307、entation and completion of our strategic initiatives or divert managementsattention to seeking qualified replacements.Additionally,any failure by us to manage a successful leadership transition of anexecutive officer and to timely identify a qualified permanent replacement could harm our business an
308、d have a material adverseeffect on our results of operations.Supply Chain and Third-Party Vendor RisksWe face risks associated with vendors from whom our products are sourced.The products we sell are sourced from a variety of domestic and international vendors.We have agreements with our vendorsin w
309、hich the vendors agree to comply with applicable laws,including labor and environmental laws,and to indemnify usagainst certain liabilities and costs.Our ability to recover liabilities and costs under these vendor agreements is dependent uponthe financial condition and integrity of the vendors.We re
310、ly on long-term relationships with our suppliers but have nosignificant long-term contracts with such suppliers.Our future success will depend in large measure upon our ability tomaintain our existing supplier relationships or to develop new ones.This reliance exposes us to the risk of inadequate an
311、duntimely supplies of various products due to political,economic,social,health(including,but not limited to,the COVID-19coronavirus),or environmental conditions,transportation delays,or changes in laws and regulations affecting distribution.Ourvendors may be forced to reduce their production,shut do
312、wn their operations or file for bankruptcy protection,which couldmake it difficult for us to serve the markets needs and could have a material adverse effect on our business.16While the Company selects these third-party vendors carefully,it does not control their actions or the components ormanufact
313、ure of their products.Any problems caused by these third-parties,or issues associated with their products orworkforce,including customer or governmental complaints,breakdowns or other disruptions in communication servicesprovided by a vendor,failure of a vendor to handle current or higher volumes,an
314、d cyber attacks or security breaches at avendor could subject the Company to litigation and adversely affect the Companys ability to deliver products and services toits customers and have a material adverse effect on our results of operations and financial condition.We rely on foreign manufacturers
315、for various products that we sell.In addition,many of our domestic suppliers purchase aportion of their products from foreign sources.As an importer,our business is subject to the risks generally associated withdoing business internationally,such as domestic and foreign governmental regulations,econ
316、omic disruptions,global or regionalhealth epidemics,delays in shipments,transportation capacity and costs,currency exchange rates,and changes in political oreconomic conditions in countries from which we purchase products.If any such factors were to render the conduct of businessin particular countr
317、ies undesirable or impractical or if additional U.S.quotas,duties,tariffs,taxes,or other charges orrestrictions were imposed upon the importation of our products in the future,our financial condition and results of operationscould be materially adversely affected.The political landscape in the U.S.c
318、ontains uncertainty with respect to tax and trade policies,tariffs and regulations affectingtrade between the U.S.and other countries.We source a portion of our merchandise from manufacturers located outside theU.S.,primarily in Asia and Central America.Major developments in tax policy or trade rela
319、tions,such as the disallowance oftax deductions for imported merchandise or the imposition of tariffs on imported products,could have a material adverse effecton our business,results of operations,and financial condition.We rely on manufacturers located in foreign countries,including China,for merch
320、andise.Additionally,a portion of ourdomestically purchased merchandise is manufactured abroad.Our business may be materially adversely affected by risksassociated with international trade,including the impact of current or potential tariffs by the U.S.with respect to certainconsumer goods imported f
321、rom China.We source a portion of our merchandise from manufacturers located outside the U.S.,primarily in Asia and Central America,and many of our domestic vendors have a global supply chain.The U.S.has imposed tariffs on certain products imported intothe U.S.from China and could propose additional
322、tariffs.The imposition of tariffs on imported products has increased our costsand could result in reduced sales and profits.The changes in certain tax and trade policies,tariffs and other regulationsaffecting trade between the U.S.and other countries enacted under the prior U.S.administration increa
323、sed the cost of ourmerchandise sourced from outside of the U.S.,which represents a large percentage of our overall merchandise.It remainsunclear how tax or trade policies,tariffs or trade relations may change under the current U.S.administration,which couldadversely affect our business,results of op
324、erations,effective income tax rate,liquidity and net income.In addition,the imposition of tariffs by the U.S.has resulted in the adoption of tariffs by China on U.S.exports and could resultin the adoption of tariffs by other countries as well.A resulting trade war could have a significant adverse ef
325、fect on world tradeand the world economy.Further,the imposition of tariffs or other changes in world trade could have an impact on certain U.S.industries and consumers and could negatively impact the consumer demand for products that we sell.We continue to evaluate the impact of the effective and po
326、tential tariffs on our supply chain,costs,sales,and profitability aswell as our strategies to mitigate any negative impact,including negotiating with our vendors,seeking alternative sourcingoptions,and adjusting retail selling prices.Given the uncertainty regarding the scope and duration of the curr
327、ent and potentialtariffs,as well as the potential for additional trade actions by the U.S.or other countries,the impact on our business,results ofoperations,and financial condition is uncertain but could be significant.Thus,we can provide no assurance that any strategieswe implement to mitigate the
328、impact of such tariffs or other trade actions will be successful in whole or in part.To the extentthat our supply chain,costs,sales,or profitability are negatively affected by the tariffs or other trade actions,our business,financial condition,and results of operations may be materially adversely af
329、fected.A significant disruption to our distribution network or to the timely receipt of inventory could adversely impact sales orincrease our transportation costs,which would decrease our profits.We rely on our distribution and transportation network,including third-party logistics providers,to prov
330、ide goods to our storesin a timely and cost-effective manner through deliveries to our distribution facilities from vendors and then from thedistribution facilities or direct ship vendors to our stores or customers by various means of transportation,including shipmentsby sea,air,rail,and truck.Any d
331、isruption,unanticipated expense,or operational failure related to this process could negativelyaffect our operations.For example,unexpected delivery delays(including delays due to weather,fuel shortages,work17stoppages,global or regional health epidemics,product shortages from vendors,or other reaso
332、ns)or increases in transportationcosts(including increased fuel costs or a decrease in transportation capacity for overseas shipments)could significantlydecrease our ability to provide adequate products to meet increased customer demand for certain products,or products at adesired price,resulting in
333、 lower sales and profitability.In addition,labor shortages or work stoppages in the transportationindustry or long-term disruptions to the national and international transportation infrastructure that lead to delays orinterruptions of deliveries could negatively affect our business.Also,a fire,tornado,or other disaster at one of our distributionfacilities could disrupt our timely receiving,process
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