RETAIL

Work Horses

4 Retail Chains Who Know How to Make it Work.

On a Thursday afternoon in early December, the aisles of a Tractor Supply Co. store are bustling. Inside the space, a metal-like structure with concrete floors, country Christmas classics are blaring over the sound system as customers walk through an eclectic mix of merchandise. Various couples are buying dog food for Rover, asking questions about the features of a home power generator and trying on Muck boots and assorted rainwear. On the right-hand side inside the front door, the retailer’s soft goods department features cowboy hats, work boots, flannel shirts, gloves and socks. The Carhartt brand figures huge among all the merchandised clothing.

This store isn’t located near the dairy farms of the Upper Midwest, but in a suburb of Boston. Its popularity among locals – suburbanites in the densely populated Northeastern – speaks to the rising popularity of the rural lifestyle and the burgeoning appeal of workwear. And retailers such as Tractor Supply Co. and others across the U.S. such as Blain’s Farm & Fleet, Boot Barn and Work ‘n Gear, are catering to these consumers very successfully.

The four retailers highlighted here, in aggregate, control more than 2000 brick-and-mortar locations and have nascent e-commerce businesses. Two are publicly traded and two are regional players. All are aiming to cater to the working set, whether they are a Nebraskan rancher, a Texas oil and gas worker or an electric company lineman near Boston, a Michigan soybean farmer or someone who purely enjoys the rural lifestyle.

Boot Barn

The Back Story: Founded in 1978, public on NYSE (BOOT) since October 2014, and based in Irvine, CA. Revenues grew at 24 percent between FY13 ($233 million) and FY17 ($678 million) as annual operating income grew to $46 million in FY18 from $9 million in FY13. Has had positive comparable store sales for six consecutive quarters, including a 11.3-percent increase in the recent Q2.CEO: James G. Conroy, a former Claire’s Stores and Kurt Salmon Associates executive, has served as president, CEO and a director of the chain since 2012.

Stores: 230 freestanding or strip center-based doors, averaging 11,400-square feet, across 31 states. Boot Barn says it has the potential to double its U.S. store base, partially through acquisitions of small regional chains. Over the last seven years, the chain has added 85 doors through expansion or tuck-in acquisition. A push into the Texas market has included purchases of Baskins, a 30-door chain across the Lone Star State and Louisiana, in May 2013; Sheplers, 25 stores in key Texas markets and Denver; and Country Outfitter and Wood’s Boots (family-owned, four store chain in Midland and Odessa, TX) in 2017. An estimated 85 percent of merchandise at Boot Barn is sold at full price. The assortment is divided between Western boots and apparel (70 percent) and Work/Other (30 percent), approximately $203.4 million in FY18. The retailer generates 83 percent of topline from stores, 17 percent from e-commerce where it presently operates six sites — bootbarn.com, sheplers.com, countryoutfitters.com, Idlyllwind.com, WonderwestStyle.com, Shyanne.com.

Key Footwear Brands: Carhartt, Danner, Chippewa, UGG, Wolverine, Timberland Pro, Dr. Martens, Magnum, Georgia Boot, Rocky, John Deere and Carolina. During the fall, Boot Barn launched its own Hawx work brand for footwear and apparel that is projected to generate 1000 basis points of merchandise margin above vendor brands and snatch sales away from them as well.  

Uniqueness: Considered a “niche player” in the work segment by two branded vendors we spoke with, but a solid regional account. Steadily opening larger stores in Texas, where it thinks work wear growth will benefit greatly from the number of blue-collar employees, the oil and gas recovery segment, construction spending, commercial accounts and ongoing work safety regulations.

Tractor Supply Co.

The Back Story: Based in Brentwood, TN, the chain is the largest operator of rural lifestyle and retail stores in the U.S. Founded in 1938 as a mail order tractor parts business. Became a public company on NASDAQ (TSCO) in 1994. CEO: Gregory Sandford has been working in a variety of capacities for the 1748-door (Tractor Supply Co. and Del’s Feed & Farm Supply) retailer, which also owns the 168-location Petsense chain, since 2007.

Stores: Locations average 15,000-20,000-square feet. Merch mix ranges from wood stoves, chain saws, gun safes and dog food to apparel and footwear. TSC does not sell tractors. The chain’s biggest presence is in Texas followed by North Carolina, Pennsylvania, Tennessee and Ohio.

Key Brands: Soft goods department features denim, rancher shirts and outerwear, accessories and footwear from brands such as Ariat, Wolverine, Realtree, Muck Boot Co., Columbia, and Browning. Carhartt dominates apparel and accessories. The chain’s own C.E. Schmidt brand is also part of the footwear and apparel assortment. Soft goods account for eight percent of annual revenue.

Uniqueness: Aiming to reach 10 million loyalty club members and “Stockyard kiosks” in one-third of its doors by the end of FY18.

Blain’s Farm & Fleet

The Back Story: Based in Janesville, WI. Private and family-owned since founding in 1955. The chain prides itself on the trust it has earned with Midwest families “since they understand that their customers deserve to be treated honestly and fairly.”CEO: Jane Blain Gilbertson since 2014. She has worked for 30 years at Blain’s and is the daughter of co-founder Bert Blain.

Stores: The regional chain has 40 stores across four states— WI, IL, IA and MI. Most are around 100,000-square feet. Opened first Michigan store, 128,000-square feet, in a former Kmart in Jackson, MI. Fourth and fifth Michigan stores to open in 2019 in Holland and Traverse City.

Key Footwear Brands: Ariat, Columbia, Keen, Kamik, Muck Boot, Harley Davidson, Skechers, Timberland, Eastland, Muck Luks, Carhartt, Lugz, Puma, New Balance, Asics, Reebok.

Merchandise Categories Beyond Apparel and Footwear: Hardware, paint and supply, automotive, sporting goods, pet supplies, lawn and garden.

Uniqueness: The company makes giving back to the community a priority with charitable contributions to scholarships in its founders’ names, 4H sponsorships, Kids Helping Kids and the American Heart Association.

Work ’n Gear

The Back Story: Privately held, regional operator in the Northeast and Midwest that serves the outdoor work and healthcare professionals with both apparel and footwear with approximately 40 locations and e-commerce.

CEO: Tony DiPaolo, 60, is a shoe industry veteran. The one-time Shoe Visions exec acquired Herman Survivors from Stride Rite Corp. in 1990 and sold the brand 11 years later to Walmart. He purchased Work ’n Gear from bankrupt Casual Male in 2002 after raising $40 million in capital.

Stores: Largely in strip centers, doors average less than 5000-square feet and are divided almost evenly between outdoor work and healthcare wear. According to sources, the chain is re-evaluating brick-and-mortar locations in certain markets, which could mean some door closures in 2019.

Footwear Brands: Sells approximately 17 work footwear brands, ranging from 5.11 Tactical and BOGS to Timberland, Carolina, Skechers, Bates, Keen, Helly Hansen, Danner and Magnum. Assortment is largely focused on steel toe product.

Uniqueness: Generates an estimated 20 percent of topline from online sales. Is reportedly beefing up digital marketing in 2019 after eliminating all paper advertising in 2017. Is expected to launch a YouTube marketing campaign this year to better connect emotionally with its customer base.

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