National Home Center News

MUSKEGON, MICH. - Consolidation continues in farm and fleet retailing, as that sector's second-and third-largest dealers are merging to improve their position against a broad swatch of retail competitors nationwide.

Des Moines, Iowa-based Central Tractor (CT) Farm & Country, with 232 stores and $600 million in 1998 sales, is joining forces with Quality Stores, based here, which has 112 units and annual sales of $525 million. The combination will be paid for with an undisclosed amount of cash and stock.

Expected to close in the second quarter, this deal creates a company with outlets in 30 states that would eclipse Nashville-based Tractor Supply, formerly the largest farm and fleet dealer with 1998 sales of $600.7 million and 250 stores.

CT's spokesman Jeff Stanton told NHCN that his company and Quality Stores are profitable, and that the merger maneuvers the new entity into a better competitive position "quicker" than they would have been able to do separately.

The combined company will be called Quality Stores and be located in Muskegon, but will continue to operate its stores under their current names. A distribution center and tractor parts facility that employs about 200 will remain in Des Moines.

This is CT's second merger, in as many years, integrating ConAgra's Country General chain in 1997.

Jim McKitrick — the former Builders Emporium president who has led CT since the early 1990s and will be president and CEO of the new entity — said in a statement that the merger "will enable us to compete more effectively with mass merchants, home center stores, and other independent and smaller-chain specialty farm stores."

Farm and fleet stores have spruced up appearances and product assortments to compete for what has become a customer base that has changed dramatically, as more city dwellers move farther into exurbs and rural areas, but expect the same products and services they got in more populated markets.

The influence McKitrick and other home center executives transplanted into the farm and fleet industry has been one of the catalysts behind these store upgrades, to go up against attractive store formats like America's Country Store, a joint venture development of Do it Best and Purina Mills.

J.W. Childs Associates, CT's majority shareholder, will own 39 percent of the combined company; investment firm Fenway Partners, will own 20 percent. CT's shareholders will own 10 percent of the combined company, Quality Stores' shareholders 81 percent.

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