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Dive Brief:
Tractor Supply Thursday blamed weather in part for a disappointing Q2 and lowered its outlook for the year. Net sales rose over 2% year on year to $4.5 billion, but comps fell 1.5%. Gross profit expanded by 20 basis points to 37.1%, and net income fell over 16% to $360.7 million.
The retailer previously said 2026 net sales could rise up to 6% and comps up to 3%, and net income could reach $1.17 billion. Now net sales are expected to grow 2.5% to 3.5%, comps to be flat or decline as much as 1%, and net income to reach $990 million at most.
The company will close about 75 underperforming Petsense stores and open 10 to 15 fewer Tractor Supply stores in 2027, down from the 100 that were planned. The savings will go toward last-mile delivery and store remodels.
Dive Insight:
Tractor Supply is having a rough year so far, and it’s not just about adverse weather in May, which had a large part in wiping out the comparable store sales growth it saw in April and June. Speaking to analysts Thursday, CEO Hal Lawton said that “persistent drought conditions across several key Southeastern markets limited normal seasonal activity and reduced demand for lawn care and other outdoor-related purchases.”
The retailer’s outlook downgrade comes after it reined in expectations in January, and as its expanding pet business falls short. Meanwhile, the company is contending with uncertainty around tariff refunds and the economy. While customers are spending on their pets, animals and farms, they’re pulling back on discretionary items and consolidating their trips, Lawton said. The company is reinforcing its value proposition, and customers have responded, he said.
But the comp decline is notable, and the quarter as a whole was “one of the weakest sales performances Tractor Supply has produced in a while,” according to GlobalData Managing Director Neil Saunders.
“At headline level, it suggests that the business is running out of steam,” he said in emailed comments.
Tractor Supply has benefitted from its focus on rural America, but Amazon and Walmart are both encroaching on that territory, Saunders said. Last year Amazon announced it would spend more than $4 billion to expand its network into sparsely populated areas, which several analysts have noted takes aim at Tractor Supply’s market.
“Admittedly, this is mostly for commodity products rather than specialist farm and ranch supplies – where Tractor Supply still has an advantage – but it is still an unhelpful trend that takes the edge off growth,” Saunders said. “Again, sharper execution – particularly on range and pricing is needed.”
Rising gas and diesel prices are especially hard on the farmers and other rural residents who make up much of Tractor Supply’s customer base because they have to drive longer distances to get anywhere and depend on fuel to run their equipment.
Despite the challenges, Lawton insisted that growth is on the horizon, both at new and existing stores.
“We continue to believe we are a growth company,” he said.