Tractor Supply Company lowered its earnings and sales guidance for the year after a pullback in discretionary spending led to results for the second quarter ended June 27 falling below expectations. The farm-and-ranch retailer also took an impairment charge to cover the closing of 75 Petsense stores. 

Second-Quarter Highlights 

  • Net sales increased 2.3 percent to $4.54 billion; comparable store sales decreased 1.5 percent. 
  • The company recorded charges related to a restructuring of the Petsense business and costs associated with the VIP Petcare acquisition. 
  • Diluted earnings per share (EPS) of 69 cents and adjusted diluted EPS of 81 cents .

Adjusted EPS of 81 cents came in below the analyst consensus of 85 cents. Revenue of $4.54 billion was below the $4.64 billion consensus analyst estimate. 

“The Tractor Supply business model demonstrated its strength and durability during the second quarter. Positive comparable store sales in April and June were more than offset by unusually adverse conditions in May, which drove second quarter results below our expectations. While we are not satisfied with our performance, we believe discrete headwinds are impacting the majority of our end markets. Our core customers remain highly engaged; our needs-based businesses continue to perform well, and our competitive position remains strong. Tractor Supply has successfully navigated many economic cycles throughout our 88-year history, and we remain confident that the long-term demand drivers supporting our business remain intact. I want to thank our Team Members for their continued dedication to serving our customers every day,” said Hal Lawton, president and chief executive officer of Tractor Supply. 

Lawton continued, “We are updating our fiscal 2026 outlook to reflect our year-to-date performance and expectations for the balance of the year. We are responding with urgency by strengthening our companion animal business, reinforcing our value position, and improving productivity across the business. At the same time, we are sharpening our strategic focus, evaluating where we allocate capital and resources and making disciplined choices that we believe will strengthen Tractor Supply and create long-term shareholder value. The actions we are taking are designed to improve performance over the balance of the year and further position the company for long-term success.” 

Second Quarter 2026 Results
Net sales increased 2.3 percent to $4.54 billion from $4.44 billion in the second quarter of 2025. The increase in net sales was driven by new store openings, partially offset by the decline in comparable store sales. Comparable store sales decreased 1.5 percent, as compared to an increase of 1.5 percent in the prior year’s second quarter, reflecting a comparable average transaction count decline of 1.7 percent and a comparable average ticket increase of 0.2 percent. Comparable store sales were positive in April and June, with underperformance in May driving the decline for the quarter. May results were pressured by softness in seasonal categories, including big-ticket items, as well as lower spending in discretionary categories. While the company’s consumable, usable and edible categories remained resilient overall, companion animal continued to perform below the company’s average, although trends improved through the quarter. Continued strength across the balance of the company’s consumable, usable and edible categories, along with growth in digital sales, partially offset these headwinds. 

Gross profit increased 2.6 percent to $1.68 billion from $1.64 billion in the prior year’s second quarter. Gross margin rate was 37.1 percent compared to 36.9 percent in the prior year’s second quarter. The second quarter of 2026 results include an inventory write-down of $5.9 million related to the planned closure of approximately 75 Petsense stores. On an adjusted basis, gross profit increased 3.0 percent to $1.69 billion, or 24 basis points to 37.2 percent as a percent of net sales for the quarter. This increase was primarily attributable to disciplined product cost management and tariff-related benefits that more than offset higher freight expenses and incremental investments to strengthen the company’s price-value position. 

Selling, general and administrative (SG&A) expenses, including depreciation, amortization and impairment, increased 14.4 percent to $1.22 billion from $1.06 billion in the prior year’s second quarter. As a percent of net sales, SG&A expenses increased to 26.8 percent from 23.9 percent in the second quarter of 2025. The second quarter of 2026 results include impairment and other charges for the Petsense business of $65.8 million due primarily to a restructuring of the business as well as acquisition costs of $9.5 million for the acquisition of VIP Petcare. On an adjusted basis, SG&A expenses increased 7.3 percent to $1.14 billion, or 118 basis points to 25.1 percent as a percent of net sales for the quarter. The increase in adjusted SG&A as a percent of net sales was primarily attributable to deleverage from lower comparable store sales, as well as higher medical claims and legal settlement expenses. 

Operating income decreased 19.2 percent to $467.1 million from $577.8 million in the second quarter of 2025. On an adjusted basis, operating income decreased 5.1 percent to $548.3 million. 

The effective income tax rate was 19.8 percent, compared to 23.2 percent in the second quarter of 2025, primarily reflecting the timing of certain tax-planning initiatives and one-time charges related to the restructuring of the Petsense business and the acquisition costs for VIP Petcare. 

Net income decreased 16.1 percent to $360.7 million from $430.0 million in the second quarter of 2025. Diluted EPS decreased 14.9 percent to $0.69 compared to $0.81 in the second quarter of 2025. On an adjusted basis, net income was $423.5 million, or $0.81 per diluted share. 

The company repurchased approximately 3.9 million shares of its common stock for $135.3 million and paid quarterly cash dividends totaling $125.6 million, returning a total of $260.9 million of capital to shareholders in the second quarter of 2026. 

The company opened 28 new Tractor Supply stores and three new Petsense by Tractor Supply stores in the second quarter of 2026. 

Financial Outlook
Based on year-to-date performance and the company’s outlook, Tractor Supply is updating its financial guidance for fiscal year 2026. Adjusted operating margin, adjusted net income, and adjusted diluted EPS are non-GAAP financial measures that exclude the Petsense impairment and VIP Petcare acquisition costs. The company does not provide a reconciliation for non-GAAP estimates on a forward-looking basis where it is unable to provide a meaningful or accurate calculation or estimation of reconciling items without unreasonable effort. 

Updated guidance calls for: 

  • Net sales: +2.5 percent to +3.5 percent (+4 percent to +6 percent previously) 
  • Comparable store sales: (1 percent) to flat (+1 percent to +3 percent previously)
  • Operating margin rate: 8.0 percent to 8.3 percent (9.3 percent to 9.6 percent previously)
  • Adjusted operating margin rate: 8.5 percent to 8.8 percent
  • Net income: $930 million to $990 million
  • Adjusted net income:  $990 million to $1.05 billion ($1.11 billion to $1.17 billion previously)
  • Earnings per diluted share: $1.78 to $1.88
  • Adjusted earnings per diluted share: $1.90 to $2.00 ($2.13 to $2.23 previously)

As of June 27, the company operated 2,463 Tractor Supply stores in 49 states and 209 Petsense by Tractor Supply stores in 23 states.

Image courtesy Tractor Supply