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Dive card:

• Tractor Supply on Thursday said it has a definitive agreement on acquire online pet pharmacy Allivet for an unspecified amount. The all-cash deal will expand the retailer’s total addressable market by $15 billion and is expected to close in the first quarter.

• The announcement was made as a retailer of farm and garden products released the results for the third quarter. Net sales increased 1.6% year-over-year to $3.5 billion, with a slight decrease.

• Gross margin increased 56 points to 37.2% and net income fell 5.3% to $241.5 million, according to a company press release.

Dive Insight:

As well as the ongoing expansion and renovation of stores, Tractor Supply’s acquisition of Allivet, a longtime partner, is expected to spur growth. The move broadens the retailer’s appeal to pet owners, who already account for about three-quarters of its 37 million loyalty members. It also further benefits from higher rates of pet ownership since the pandemic, according to Telesey Advisory Group analysts led by Joseph Feldman.

These analysts expect Tractor Supply to continue to make profits, helped by what they see as a “rural revitalization” also driven by the pandemic.

“We expect Tractor Supply to continue to gain market share and dominate rural America,” they said.

The company said it opened 16 new Tractor Supply stores in the third quarter, and as of Sept. 28 operated 2,270 Tractor Supply stores in 49 states and 205 Petsense by Tractor Supply stores in 23 states. Almost half of its fleet has undergone its “Project Fusion” refurbishment and the company now operates more than 550 garden centres, according to the release.

Sales at the start of the fourth quarter benefited from emergency needs triggered by two major hurricanes during the period, CEO Hal Lawton told analysts. Otherwise, the company expects that consumers will “remain cautious with their spending as is typical in an election year.”

Historically, however, presidential elections hasn’t made much of a difference to retail, according to Meghann Martindale, who leads retail market intelligence for commercial real estate services firm Avison Young.

Executives did not provide an update on whether the controversy over their decision to release the company’s diversity and climate goals has affected sales. Some observers have warned that Tractor Supply’s expansion is dependent on joining the consumers who value diversity and sustainability. Earlier, Lawton said the company “certainly heard a range of feedback” about its decision but that it had “no evidence that it had a measurable effect on our business.”