Tractor Supply trims expansion; will close 75 Petsense stores
Tractor Supply Co. reported a tough second quarter and reduced its outlook for the year.
The nation’s largest rural lifestyle retailer cited “unusually adverse” conditions in May, which drove results below its expectations. On the earnings call, CEO Hal Lawton said fuel prices peaked during the height of its spring selling season, putting “meaningful” pressure on its customers' discretionary spending at the most important time of the quarter.
“Our customers often drive longer distances to shop, frequently in pickup trucks, many of which are diesel-powered, making them especially sensitive to higher fuel cost,” he said. “At the same time, persistent drought conditions across several key Southeastern markets limited normal seasonal activity and reduced demand for lawn care and other outdoor-related purchases.”
Lawton also told analysts that the company has decided to close approximately 75 underperforming Petsense stores following a review of the business. It also is scaling back a bit on its expansion and will open approximately 85 to 90 new stores in 2027, compared with its previous expectation of 100.
“We will redeploy that capital toward initiatives such as Project Fusion remodels, store locations, and Final Mile delivery,” he said.
Second Quarter
Tractor Supply's net income fell 16.1% to $360.7 million in the quarter ended June 27, from $430.0 million in the year-ago period. Earnings per share decreased 14.9% to $0.69. On an adjusted basis, net income was $423.5 million, or $0.81 per share.
Net sales increased 2.3% to $4.54 billion. The increase was driven by new store openings, partially offset by a decline in comparable store sales.
Comparable store sales decreased 1.5%. The comparable average transaction count declined 1.7%. The comparable average ticket increased 0.2%.
“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," Lawton said in the earnings statement. "While we are not satisfied with our performance, we believe there are discrete headwinds impacting the majority of our end markets. 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."
Tractor Supply lowered its full-year outlook and said it expects sales to rise 2.5% to 3.5% this year, down from its prior outlook of up 4% to 6%. Same-store sales are now expected to be down 1% to flat.
"We are updating our fiscal 2026 outlook to reflect our year-to-date performance and expectations for the balance of the year," Lawton stated. "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."
As of June 27, Tractor Supply operated 2,463 namesake stores in 49 states and 209 Petsense by Tractor Supply stores in 23 states.
