Thank you all for joining us today. We're really thrilled to have the attendance that we have. Thank you. With everything going on, thank you for making the special effort to be here. I'd also like to thank those that are joined by webcast as well. My name's Mary Winn Pilkington. Our focus for our time today is to allow you to interact with our new CEO and President, Hal Lawton. We're really wanting to allow some time for that. We'll have prepared remarks followed by Q&A. We'll have some time afterwards where we'll have a reception afterwards. Thank you. We would appreciate your questions geared to a meet and greet and introduction of a new CEO.
As such, we will not be discussing the current quarter or any components related to our 2020 financial outlook, and I do appreciate your cooperation with that. We have mics on the side. When we get ready to get to Q&A, we'll ask you to state your name and your firm and be able to run through the Q&As that are one topic at a time. Before I get started, please take note of our safe harbor. Please note that any forward-looking statements that we make this afternoon are subject to risks and uncertainties, the most important of which are described in our SEC filings. Take note, and I'll turn it over to Hal. It's my pleasure. Thank you.
Good afternoon. I'll just reiterate Mary Winn's comments about everybody being here. Thank you. We appreciate you taking the time this afternoon. As I said again, I know with a lot going on in the markets and a lot of distractions that are out there, whether it's some of the oil-related or the coronavirus and whether that's impacting your companies, you individuals, I appreciate you all being here today and look forward to spending some time together. I'm excited just to spend a little bit of time today just talking about my thoughts and some insights from the company. As I said on the earnings call, really have long admired Tractor Supply. Great. It's a company that I got to know really well when I was at The Home Depot. For those who follow The Home Depot or cover The Home Depot, you know how competitive they are.
We spent a lot of time in the stores, particularly in 2007, 2008, 2009, as Tractor Supply was implementing its Q strategy. I'd say really from that time on, have really just learned to, from afar until the last nine weeks, be able to watch the company, the results it's putting up, and really just its unique positioning in the marketplace with its customer, with its incredibly tailored format, and with its kind of the essence of its mission and values. You could really see that whenever you were in the stores. I do think that really speaks to kind of this life out here. You do hear the company talk about that if you read the annual reports or you read the 10-K or look at some of the marketing. I tell you, in my first nine weeks, it's the real deal.
The way the company is really just deeply rooted in the lives of its team members, in the lives of its customers and its communities. There's a quote that's in one of our brand books that really resonated with me that said, "We equip a way of life we respect, love, and often live ourselves." You've probably heard us talk about hiring our customers, and I would just tell you, having in my first nine weeks there, just it's so true. When you're in our stores, you really do feel like you're in an ecosystem of really that life out here, regardless of where the store is from a geographic perspective, or a suburb, rural, ranch, farm, kind of wherever it may be inside of a geography.
I do truly believe that focus on the life out here is a very distinctive, differentiating element of our business and is the core foundation for our growth moving forward and the ultimate source of value creation for our shareholders. As I said again, it's great to meet everybody today and look forward to just kind of walking you through four or five slides here, and then we'll open it up to Q&A. A little bit about the executive team. Hopefully, everybody's had a chance to have either some exposure or read up on the team. I would tell you, I've been incredibly impressed with the team in my first nine weeks. Very experienced management team, a very talented management team. Today, we have two members of our team here. We've got John Ordus, who's our Chief of Stores, and we've got Kurt Barton, who's our CFO.
I just tell you, they are just representative of really the entire executive team. A wide range of experiences and backgrounds and really complement each other really across all facets. Know Tractor Supply well, and know the customer really well, and importantly, all are stewards of the mission and values and the servant leadership orientation of the company. From outside in, and then certainly reinforced in my first nine weeks of the company, I think it's one of the best management teams in retail. I know I'm proud to be a part of it, and I've really enjoyed working with everybody for my first nine weeks and really excited about working alongside them as we take our journey down towards the future. Maybe a little introduction of myself and some background. I'm a native of Tennessee. I actually grew up in Kingsport, Tennessee.
I went to school at North Carolina State and have a degree in chemical engineering. I'm kind of a math and science kid growing up. After undergrad, I went to work for a paper mill as an engineer for a few years. I really started to have a yearning to understand business more, and I went back to got my MBA at the University of Virginia. After MBA school, I worked at McKinsey for five years out of the Atlanta office and did mostly strategy work there, some digital and technology type things in the consumer packaged goods and manufacturing industries. I left as an associate principal, joined Home Depot and spent 10 years at Home Depot. I think Home Depot is really where I cut my teeth on retail and also kind of fell in love with retail.
Absolutely, I think of myself as very much a retailer now. When I was there at Depot, my first four or five years, I worked in the strategy team and also worked in finance. Notably during my finance time there, I ran the merchandising finance organization. I had a chance to work really closely with Craig Menear when he was the Chief Merchant, just taking on that role in 2007, and then was his kind of finance person for two or three years as really he started to roll out the merchandising transformation. That's one of the core backbones of Home Depot's turnaround. After doing that for a few years, I then moved and ran the online business at Home Depot.
I ran online at The Home Depot from 2009 to 2013, and that's really when Frank Blake, for those who follow, cover The Home Depot, was still the CEO. That's when really coming out of the Great Recession, when The Home Depot really started to pivot and invest heavily in online. I was fortunate enough to be in the role as we led that effort. My last two years, I ran hardlines merchandising. Continued reporting to Craig, but moved from running online to running hardlines merchandising, and I had responsibility for the tools categories and the tools business, the hardware and the hardware business, as well as what they call outdoor garden, so live goods, chemicals, soils, and mulches, and then indoor garden, which includes everything from patio to grills to chemicals and cleaning and other things.
As you can tell, a lot of overlap with some of the categories that we sell at Tractor Supply. After a 10-year career at The Home Depot, I then moved out to the West Coast and ran the North America business for eBay. A great opportunity to kind of see e-commerce at scale. Their U.S. platform, as an example, is $32 billion. A great opportunity to see e-commerce at scale, see all the facets of software at work and kind of automated AI and kind of machine learning with the 30 points of margin that eBay has. You really learned how to really do things with software instead of with people. It was just a great opportunity for me to kind of live in the epicenter of technology globally for a few years and kind of see that up close.
I spent the better part of the last three years at Macy's, where I was President of the business and of the iconic retailer that they are. Now kind of nine weeks into my time at Tractor. I'd say the last thing that really I would just talk about in terms of me, what I just gave you is kind of a longitudinal narrative of my career and some of the key touch points. I would say kind of collectively throughout it, I talked a bit about it on the Earnings Call as kind of my passion for servant leadership. It really started at McKinsey a bit, grew significantly at The Home Depot with Bernie and Arthur, as well as Frank's focus and Craig's, and then really continued on both at eBay and at Macy's.
It's certainly a core component of, or the component of Tractor Supply's culture, all the way down to its Store Support Center being named Store Support Center, exactly like it was at The Home Depot. Thrilled to be at Tractor, thrilled that it has a commonality in the core mission and values that I hold in high regard. I really do think all my previous experiences and kind of philosophies around business have really led up to this point to really almost like it was meant to be in terms of joining Tractor and kind of taking on the role of CEO. Kind of why Tractor? I talked a little bit about this earlier, and I think many of you, as I've read your write-ups, a lot of this is very consistent with your views on the company, but I just think it's worth reinforcing.
Tractor Supply is absolutely a very unique and differentiated retailer with a clear purpose. I'd start by just talking about the mission and values of the company. The company's been around for 83 years this year, and those mission and values have been the core of the company the entire time. It's something I see us talk about and reference throughout the entirety of the company, and it's very much the essence of who we are, not just in the way we conduct our business, but also the way we engage with our customers and our fellow team members. The second thing I'd say is Tractor Supply is purposefully built. There's not a ton of retailers that you can say that about. We serve a specific customer and a specific lifestyle.
We talk about it being kind of life out here, I would tell you whether it's the marketing that we do, whether it's the store setup, whether it's the team members in our stores, whether it's our online site, it is very purposefully built to serve the life out here lifestyle. I would tell you, that was my impression as I was kind of all the way back from 2007 and 2008. Certainly my three months leading up to me starting as I was trying to get a fast ramp-up on the business, all my outside perspectives, and absolutely even been more reinforced in my first nine weeks at the company. The other thing I'd talk about is the brand and the business model.
It's a company that's had consistently strong comps, continues to be able to expand and grow not only our market share in our existing markets, but grow market share through new stores. It's one that has just a really strong business model and strong brand, and it's a brand that resonates with customers. When we move into markets that we don't serve, you see an immediate shift in share just because of the strength that our brand has, even in markets that we aren't yet in. Certainly in markets where we're expanding our presence, you see significant propensity towards the brand. A strong foundation for growth. The other thing I'd talk about is we're committed to that growth and investing in the growth, and we're committed to continuing to invest in the business. Yeah, I think it's a great time to be at Tractor Supply.
I'm very excited about it. Everything that you all know about the business, I've certainly seen and observed in my first nine weeks here. Can't tell you how thrilled I am to be at the company. All right, talk first eight weeks, and then the big slide will be kind of early thoughts on the business. First eight weeks, I'd say, have been really focused on listening, learning. As any of you all can imagine, when you've started a new job, it's an incredibly busy time, but have been focused a lot dominantly on listening and learning, kind of ramping up and getting to know the team, getting to know our customers, getting to know our team members, getting to know the challenges and opportunities that we face, and also our strengths. Spent a lot of time with our executive team.
It was a very scripted first eight weeks, and a lot of time with Greg. Greg's last day was two Fridays ago. The first seven weeks of my time at the company were very scripted. He and I kind of sat down and literally wrote out the first seven weeks calendar, obviously with the support of the board, but it was a very coordinated transition, and one that went incredibly well, and I spent a lot of time soaking up his knowledge as well as from the rest of the executive team. Lots of town halls and meet and greets, both at the Store Support Center, at our distribution centers, at our contact center, et cetera. I've had a chance to walk stores in a number of states now.
I've visited stores in Georgia and Tennessee, Kentucky, North Carolina, New York, New Jersey, Connecticut, and also walked a distribution center. I tell you, all those experiences really do solidify everything I talked about in the last couple of slides in terms of the strength of the business model, in terms of the strength of the brand, the uniqueness of the value proposition of the company, and the really tailored, purposeful-built lifestyle that we serve. Just some early thoughts. On the earnings call four or five weeks ago, I think we were appropriately absent in our commentary much on kind of my early thoughts on the business, as I'd only been in the role two and a half weeks.
What we thought today was kind of bring you along a little bit in terms of some early thoughts that I and the rest of the executive team have on the business as we continue to evolve. Again, this is all recognizing kind of eight, nine weeks in, but the first is huge opportunity to leverage our Neighbor's Club foundation and really put the customer at the center of everything we do. What I'd say is, I don't mean that in kind of maybe the generic way that sometimes you hear retailers talk about in terms of just personalization and maybe an email or two look personalized or your website or mobile app look personalized.
There's a big opportunity for us to leverage the robustness of our Neighbor's Club data in areas like our stores and how do we look at the clustering of our stores, which ones serve equine more, which ones serve pet more, which ones are more of a tools, hardware, truck store, and start to over-index our square footage a little more in those directions and start to really tailor our store assortment based on our local customer, our specific customer needs. Up until now, the prototypes that we've rolled out across the company have been dominantly the same across all stores. There's a large variation in the types of customers we serve by store, and we didn't really have the dataset at a customer level prior to rolling out the Neighbor's Club.
A big opportunity there for us is to really start to leverage that Neighbor's Club data and bring it to life in a ton of meaningful ways for our customers and drive growth in that way. Also this year, we'll be rolling out a mobile app, that'll just be great to get a mobile app out. We're certainly a little late to the party on that one, but it also gives us an opportunity, the Neighbor's Club Foundation, to really make that a robust experience early on. The second thing I'd talk about is the digitization of the business. We've been pursuing the One Tractor strategy for three years now, and it's been an excellent strategy for us. We've made a lot of headway and progress over the last few years.
If I look at the work we've done on things like buy online, pick up in store, buy online, ship to store, localized pricing, what I would say is we've executed while we were behind the curve on those, we've executed all those faster than my experiences of rolling those out either at Macy's or at The Home Depot. I've been very pleased with the pace of execution the team has executed over the last three years. There's definitely more digitization that needs to be done on the things that we've been working on, as I mentioned, as an example, rolling out a mobile app. Also opportunities to do digitization in areas that we haven't spent a lot of time on, like our stores.
While we have our stores all planogrammed, there's a big opportunity to take this to the next level from a digitization perspective and then begin to leverage that across the fullness of our business, whether that's in John's team in terms of the way we execute our operations, whether that's customer wayfinding, like you might see, as I mentioned earlier, I'd worked at The Home Depot. One of the big things that we did when I was there was roll out what aisle, what bay, and what exact location in a bay an item is, and you can kind of Google Maps almost like your way to an item in a store.
There's a lot of opportunities for us to do those sorts of things at Tractor and really drive growth with it, from customer wayfinding, productivity for John's organization as they're taking something from receiving to the stores to the doors and ultimately all the way to the aisle and then the bay and then into the location. Whether it's with our merchants in terms of driving the right assortment and the right planograms at an individual store as well. There's a ton of different ways that we can leverage that data, and that's just one example on the store side. Product data, a variety of other ways for us to continue to grow and invest and drive results inside the business. Again, this is a pretty common path that you've seen a few other retailers go down.
The third thing I talk about is maximizing the productivity of our core with a clear focus on things like space productivity and investing in our stores to keep them fresh. We're now at 1,800-plus stores inside the company and have plans, as we've talked about, to build 80 more this year. We now have a large, sizable scale base of stores. There's an opportunity to continue to maximize those productivity of the stores through things like unique store planogramming, as I talked about earlier, around space productivity efforts. Also John's team is rolling out a number of things like Tractor Away, which are driving improved productivity inside of our stores. We've talked a bit about that, but I think there's a lot more we can talk about that with you.
A lot of opportunities to maximize the core and maximize the 1,800 stores we have there, get more sales out of them, but also productivity out of them. It's an opportunity you've seen a lot of other retailers go down, and I think we're excited about that path as well. The fourth thing I talk about is investing in our team members. We have over 32,000 team members. Our team members are absolutely kind of a key competitive advantage for us. We're a relationship retailer. When customers come into our stores, they want us to help solve problems. They've got some issue, whether it's with their pet, their animal, their land, their farm. They need help. They need a solution. As you've heard us say many times, we're needs-based, we're demand-driven, and it's very much a relationship sell.
If there's one thing I've observed, it's not only do our team members in our stores know our customers' names, they know their animals' names and their pets' names, there's a strong relationship there. Investing in our teammates, but doing it in ways that are smart. I think the big thing for us, and we talked about the Tractor Away a minute ago, is how do we do less tasking in the stores and take that inefficiency out of the store and then shift those hours over to selling and making our team members more customer-focused and investing in ways to make them as productive as possible. Last thing I'll talk about is around our robust cash flows and kind of healthy balance sheet.
It certainly provides us with flexibility, and it's a competitive strength for us for our future growth, but we also recognize the need for responsible allocation. I want to talk about we've got strong cash flows, we have a healthy balance sheet, but we're certainly mindful of being efficient in our resource allocation and also mindful in our capital allocation. Those are themes you'll start to hear more from us. Those are kind of some big early insights I thought I'd just share with you. Look, as we think about the future, we're absolutely going to continue investing in the business and growing. We see significant opportunity to broaden our customer reach and increase our market share.
As we think about change, I think some words that probably are appropriate to use, we see the change at Tractor Supply being evolutionary, not revolutionary. There's certainly going to be refinements. There's going to be pivots that we make in our strategy. They'll be refinements, and they'll be evolutions, not kind of revolutions, so to speak. Our core essence of being that dependable supplier of relevant products and services for life out here absolutely will continue to still be our focus, and it'll be the core epicenter of what we build and grow on. You're going to see our strategic focus of continuing to meet the evolving customers' needs out there, and with a focus on growing the business and generating long-term customer value.
Those are just some few early thoughts that I've got on the business and we have on the business. Just thank you all for being here today. I think we're going to open it up. Kurt's going to join me up on stage. We're going to just take some questions. I think Mary Winn's going to help coordinate that.
Yeah. Actually, because of the way this works, we're actually just going to have you all line up and come through the queue on the microphones here, if you would, please. I think it's the best way on the microphones and handling the microphones in the current environment. Thank you, Hal. That was great. With that, we'll just bounce back and forth from one side of the room to the other on the Q&A. If I could again ask you to please state your name and your firm, that would be great. Scott, I'll start over here on your side.
Wow. Poor verse. Okay. Scot Ciccarelli, RBC. Hal, you're newer to the business, one of the questions I think people have had for a long period of time is, as Amazon has built up their own delivery capabilities, you certainly dealt with this at Macy's in terms of some of the things that Amazon's done to the department store sector. How do you battle that? When you kind of think about the evolution, especially as you're kind of training your own customers to get more used to e-commerce digitization, because that's one of your big goals. How do you think that plays through?
Yeah, I, in general, think that what has made retailers great for the last 50 years is what will continue to be the bar that retailers set today, which is fantastic customer service and have all the products and needs, solutions that they're looking for, and you have to do it in a way that's convenient for them. I think that's the bar that people have always had for retail, and it's an evolving bar and changing, whether it's because of technology or other means of delivery, et cetera. I think Tractor Supply has a real compelling differentiated value proposition in the marketplace, and we're committed to continuing investing in that and making it highly relevant and indispensable to our customers. One of the early words that we've started to talk about is how do we become more integral to our customers' lives.
We talk a lot about in our mission statement around how we want to be a dependable supplier. A bit of a riff we talked about internally is how do you become that indispensable supplier and how do you become more integral in our customers' lives. I think there's a lot of opportunity for us to extend and expand on many of the categories we're destinations for and do that. I think that will continue to build on the competitive advantage that we have now.
Okay. Thank you.
All right. We'll bounce over here.
Thanks. Christopher, J.P. Morgan. Hal, my question for you is the big picture message that we should take in terms of the board's decision to bring you in. Greg was a chief merchant at Michaels, comes in and does a fantastic job. You had Steve here, who was a great merchant, did a great job, obviously, they decided to go in another direction. Your resume is tech-savvy, e-commerce in addition to retail. What's the interpretation we should have in terms of what the board's message is? Is the competitive dynamic around Amazon and e-commerce changing faster now, therefore they felt like they needed to bring somebody else into the job? Do you think you need to roll out things like click and collect, look into things like delivery?
Just how are you thinking about that competitive dynamic, and is the board telling us that it's now changing at a faster rate?
Yeah. I'll do my best to speak on behalf of the board. What I would say is, I'm on a different public company board, and I would say anytime you're going and have gone through a CSO session before, and anytime you do that, I think it's your fiduciary responsibility to step back and say, "Do we have the right person leading the company?" Our job as the board is to select that right person. I can't speak to the decision around Steve. I've not ever met Steve. What I can say is, my understanding from the board was that they stepped back and said, "We want to take a full view of the options," inclusive of Steve, but also external options. Many of the things you articulated are exactly the narrative and the dialogue that I have with the board.
There was a strong set of experiences that strongly correlated with Tractor. My hardlines experience at The Home Depot, as well as my orientation around servant leadership. There's some good connectivity there, a bit of the apparel at Macy's. There was some strong category connectivity as well as the servant leadership mission and values pieces that the board was very concerned about and focused on. Also, I think an orientation around change and digital and technology that I think the board was also focused on. From my perspective, those are many of the reasons that I was excited about Tractor in terms of my ability to be able to come in and contribute and add value to the company.
I do think the board also, we recently named three promotions, John and Seth and Colin, and also added Christi to our executive team along with Colin. I think those are indicative of the board and myself also being extremely excited to continue and with the executive team that we already have in place and just representative of the strength of them, and also just how committed we are to that group for the future. Nice combination there.
Just to add follow-up there. Do you think something like click and collect or delivery, do you see that as a potential need in terms of the Tractor Supply offering to the customer?
We offer a robust omnichannel portfolio. I think we will always continue to add to it. We have buy online pick up in store. We have buy online ship to store. We also have the ability to ship from store to a customer's home same day. As we talked about, it's what, Kurt, 70.
70%.
70% of our online orders are picked up in store. I think that's just indicative of our customer and indicative of the features that we've added. Also, I think we'll continue to grow those and add to those and they'll continue to be just more robust set of competencies that we have for our customers.
Thank you.
Thank you. All right, Steve.
Steve Forbes, Guggenheim. Hal, I wanted to focus on systems and IT capabilities, especially as it pertains to Tractor Supply's localization and personalization initiatives, if you think about leveraging that customer data. Maybe just if you can, eight weeks in, provide your initial review of the company systems, some of the main ones, what you've been impressed with and where you see opportunity as you start evolutionizing your ability on mining data.
Yeah. I'll start with, I think the team has made excellent progress over the last few years, on the technology front. Rob Mills, he joined the team three years ago, four, five years ago now.
Five, yeah.
Has done just an outstanding job. Excellent set of experiences that he brought to Tractor, and I've seen him really leverage that inside the company now. I'd say if you go through the different technology stacks on the enterprise side, I feel really good about our enterprise systems. I think, as it relates to, say, our financial systems, our HR systems, all very strong with robust sets of analytics and tools. Then also the team's made excellent progress on migration of data to cloud. We're one of the only retailers, as example, that I'm aware of that is not mainframe-dependent, as an example. Then if you look at digital capabilities, I spoke to that earlier. I think we've made a lot of progress over the last three years rolling out many of the features that I talked about.
I think we're still early innings with a lot of opportunity ahead of us. I'm confident that the team will continue to make significant progress on that and do it in a way where we're catching up and getting ahead. Then I'd say as it relates to other elements of digitization, I think we have opportunities on our stores and digitizing our stores, opportunity on product and further digitizing product data. Then on the customer, I think the team has made excellent progress in the last, call it, 12, 18 months as Neighbor's Club has gotten to scale, moving that data set to the cloud, being able to start to overlay better analytical tools on top of it, and really right now to start mining it to bring to life that personalization and localization that we have a big opportunity around.
Maybe just a quick follow-up on that, because if you think about the second point, digitization of the business and the stores and so forth, what's the right timeframe as we think about how you view the speed of the initiative?
Yeah. The way I would characterize it is kind of nine weeks in, dropping some breadcrumbs, so to speak, here about early thoughts. I think at our earnings call here in another handful of weeks, we'll do a bit of an update again. I think you can just expect to continue to hear more and more from us on these. As it relates to the continued digitization specifically, I think the team's made a lot of good progress in the last three years, and they've got a roadmap for the balance of this year and into next year, and we're in the process of saying, do we need to add some things to that? Anyway, more to come on that.
Thank you.
We'll bounce over here to the side.
Thanks. Peter Benedict at Baird. Hal, just curious, you've talked about opportunities or additional opportunities for Tractor and growth. Obviously, a lot more data today in this business than there was three, four years ago. Maybe talk about what areas you really see the most growth. Maybe extending with your existing customer or other opportunities with adjacent customers in your market that you may not be serving right now.
I'd start with, we've got a track record of driving comp sales growth, and we will continue to leverage what we've done really well over the last numerous years to continue to do that with great operational capabilities in our stores and our supply chain and merchandising prowess. At the same time, we'll continue to build new stores. Those two components of our business model and playbook will continue to be executed, and I think that's a really strong foundation and source of growth for us. I do think there's opportunities to overlay on top of that and continue to drive more outsized comps.
Some of those things are, as we talked about earlier, are we actually clustering and tailoring our store's assortment, footprints, and layouts based on the data sets that we have from our customers in that actual store or that geography? Then once we've updated the layouts and the assortments and the space we have, then how are we thinking about things like planograms and others and really optimizing even at the micro level down there with our customers? Also on the e-commerce side, how do we continue to accelerate that business? The growth in that business is very compelling and starting to scale, and how do we keep driving that? Then I think from a product perspective, there's many categories that we are strong in and destinations in that we can extend and expand our services and our opportunities on top of.
I think we've got to really work through a prioritization effort on that. There's a lot of opportunity to extend and expand with services on top of products that we're already really strong on.
Just a quick follow-up. How does ROI fit into your thought process there? There's growth, but then there's high return growth. Just expand on that a little bit.
Yeah. I'll let Kurt just speak a little bit to our ROIC over the last handful of years and our focus there, and then I'll take it back from him.
Yeah. As you know, Tractor Supply has had a good, consistent, strong return on invested capital. As we calculated, high, consistent, 18%, 19% return on invested capital. As Hal and I work together, we've shared our thoughts and emphasis, and we're very much aligned on the fact that with a company that produces a tremendous amount of cash from operations, we've got a great value opportunity here to take the level investment. The next chapter is really about how do we make sure that we're returning the best on that? How do we add the disciplines?
In the last couple of years, I've talked a lot about more science than art, and I will say, as we've had a lot of dialogue, I can't be more thrilled as we finish each other's sentences, or there's a lot of that about adding the disciplines, the science to the system, how to drive, as Hal mentioned earlier, productivity in there. Peter, we feel like while there's pressure in retail today on returns and EBIT growth, we believe we've got a lot of opportunity in our investments, direction of the business while driving productivity to have that level of offset to it. We're very focused on, together, return on invested capital, and we think we've got great opportunities in the long term to be able to maintain, potentially even grow, return on invested capital.
Yeah. Well said. Thank you.
All right. Thank you. Go. Matt?
Hi. Matt McClintock, Raymond James. There's been a lot of discussion over the years about Tractor's specific, unique positioning in the marketplace, right? Yet we still get questions from investors every year, every day, questioning that and whether or not that's real, that segmentation. I was wondering, just given that you formerly worked at a competitor, maybe can you give us a little bit of context of some of your experiences trying to go after Tractor Supply's market share, and maybe elaborate that into the e-com space as well? Thanks.
For me, we were talking about this yesterday. John and I and Kurt were in five stores yesterday. Almost in every one of the stores, our team members would say, "What's your early impressions of Tractor Supply?" Much of what I talked about today is exactly what I talk about with our team members as well, is I start with the culture and talk about the servant leadership orientation, the culture, the connectivity with the customer, and how impactful that is to the business. The second thing I talk about is how purposeful-built the business is around the customer. If you're a customer that lives the rural farm, ranch lifestyle or pursues that kind of out-here lifestyle, we really are soup to nuts, everything that you're looking for.
I think when I was at Depot, as you mentioned, and we spent a lot of time in Tractor Supply stores, it was the thing that we always just acknowledged is, we might be able to compete with Tractor on the one-off tool purchase or the one-off hardware purchase. When you're coming in to basically do a project, whatever that project may be, to feed your animals or to work on your yard or your farm or your ranch, we have everything that you're looking for, from the set T-post to the gates, to all the bolts, to things you need for your truck or to get them home. I just think that's the thing I've been most impressed with so far. I really do think it's a competitive advantage. It's very distinctive.
There's not a lot of retailers out there that literally serve a purpose in people's lives. I think online's the exact same way. Online, there are retailers out there that I think have built an online experience that's very complementary to the stores. I think there's other retailers that have struggled with that, and I'm very confident that what we are doing and what we will do from a digital perspective will be very complementary to our stores and create one plus one equals three for our customers.
Okay, then just as a follow-up, in the context of what we just discussed, how do you view suburban stores versus your rural stores? Is there more competition or less in those? Again, I'm asking this because we get this question often. Is that something that data can maybe help you more as your stores or neighborhoods kind of grow out to your stores?
Yeah. I'd start with, we really do think about our customers' shop kind of in the life out here. So they may live in a suburb and then have a chicken coop in their backyard and may think that's life out here. If you have 50 acres and a farm, chickens are not life out here. That's just the beginnings of life out here. I really do think it's a lifestyle. It's a mental way of life, and that's really who Tractor Supply appeals to. You can be, like I said, living in a suburb, or you can be living on a 50-acre farm. That said, to your point exactly, what I think we can do more and more of now that we have all the customer data is really start to vary the prototype.
If the area is much more of a suburb and there's not as many horses in the varying area, I think we can, over time, maybe shrink the equine and start to bring up some of the pet and start to become more destination reflective of our customers in certain categories. We don't do a lot of flexing of space across our categories. Conversely, if it's a big animal store, we can, I think, spend more space on that. Same thing as it relates to the planograms inside of the categories as well. I think customer data, with the Neighbor's Club now getting the scale that it has and really the robust data set being built out now, being able to really mine that, and then be able to start to tailor our experience at a store level is a big opportunity for us.
Thank you.
All right. Come back over to the other side.
Hi, it's Mike Baker from Nomura. How are you?
Good.
One question in two parts that really have nothing to do with each other. Take that as you will. One thing you haven't talked about yet today, but did come up quite a bit on the last call was some of the brands that you're putting in. If you could talk about that. Maybe as you build scale, are you showing up more on some national brands' radar screen? That's part one or part A. The second part, completely related. Oil prices, and I'm not talking about this year or guidance or anything like that, but in general, when oil prices fall, how does that impact your business? There's got to be a point where maybe do you have contingency plans or something like that when we get to where oil went to yesterday? Thanks.
I'll handle the first part and then let Kurt handle the second part. We're really fortunate to carry a wide range of brands, both private label brands as well as national brands. Our expansion, our rollout of Toro this year is one example of that. We've got lots of examples across the business where we continue to either add brands or grow our business with certain brands. I think all with national brands. I think all brands out there right now are looking for growth. In the environment that we're in, even pre-Corona and pre-oil, in the kind of 2%-3% GDP environment, people are looking for growth, and you've got a big shakeup inside of retail right now, and I think we're one of the retailers that brands and manufacturers can look to and look to growth for.
We see brands investing with us and see brands opening up their distribution to us to the extent we haven't carried them in the past. Very excited about the future of that, the potential of that, and our merchants spend a lot of time thinking about it. I'll turn it over to Kurt to talk a little about oil.
Yeah. In regards to the oil question, let me give you two points as to how we look at it. Yes, generally, over the years, as oil prices increase, we've seen a bit of a tailwind on the top line, whether that be from inflationary impact on some of the commodities or whether it just be stores within the general oil market having some level of additional volume activity. The two points that I'd say to look at during this volatile time is, first thing is, when you look back on history, comparison of today's environment versus the last time we had some volatility is an important thing to reflect back on. A few data points on that.
There's a distinct difference as we look back on 2014 and 2015, where you had a pretty volatile spike up in the level of oil drills, the price of oil, et cetera, and then a very quick drop in that price. Caused for a couple of years to have significant tailwind in the business offsetting that. To that point today, we look at it, in the last couple of years, it's been rather stable at $50, $60. Where you see if this drop were to sustain, it's not as severe as maybe the most volatile time back in 2014, 2015, and 2016. The other point on that too is that back then, it was a higher percentage of our stores. As we've grown stores in Northeast, Northwest, we've been able to have more diversification.
What was once high teens percent of our business, now close to about 10% exposed to the oil markets. Comparison to the prior times is a good reflection back, but things are different as we continue to grow our business. The second point to make on the oil industry is that while there's a top-line pressure in situations like this, we also see cost reduction. As a freight-intensive business, we also see reduction in some of the cost of goods sold. While there might be pressures at the top line, you'll see some reduction in some of the cost in our business as well. We generally see there to be some of the puts and takes on both top line and bottom line. At this point, 10% of our business, we'll watch this, we'll manage it very carefully, but we think it's manageable.
Thank you. Appreciate that.
Great. Now we have hit the top of the hour. Maybe we'll go for one more question, and then we'll wrap up, and we'll have the reception afterwards. How does that sound? Thank you. All right, Kate.
Thank you.
I'm getting a signal that our webcast is scheduled to end, and so I need to stick on that time.
Kate McShane, Goldman Sachs. I was more curious about what the feedback you're getting from the numerous town halls you've been sitting in. Has there been a consistent question or consistent level of feedback that you've been receiving?
Yeah, I'd say from a town hall perspective, the first word that really pops that I would say is pride. There's just a real strong sense of pride inside the company, whether it's at our Store Support Center or in our stores or our distribution center, to be a part of Tractor Supply. The second thing is, I talked a bit about life out here today, I think that there's a strong resonance of it's not just our brand, but it's the lifestyle that many of our team members live. I'd say more often than not when you're talking with a team member in the stores, they all have animals or they have pets. The way of life that Tractor serves is the way of life that many of them live. The other thing I talk about is growth.
With the business growing the way it has, both on the comp sales side, but also on the addition of new stores, there's a strong orientation around career growth and career development inside of our stores that allows team members to join, become a team lead, move into an ASM role, and then move into a store manager role. When you're adding 4% or 5% new stores every single year to your fleet, it really does allow for that continued career growth and development inside of our business and with our teams. I think that John and I and all of us, we just had our annual sales meeting in Nashville a few weeks ago, I would say those themes of pride, those themes of execution, those themes of really understanding our lifestyle that we serve and that career growth all were very apparent inside the meeting.
It's also a team, though, that really yearns for success and results, and that was a big part of our annual sales meeting as well, is recognition of achievement, and then really setting the bar and the set priorities for 2020, and you could really feel the team embrace that.
Okay, great. Thank you, Kate, for bringing us home here. That will conclude our prepared remarks and our Q&A session. Thank you all.