Key takeaways:
- Comparable store sales fell 1.5% in the second quarter as fuel price spikes and drought conditions weighed heavily on May results, the quarter’s most critical month.
- Tractor Supply announced the planned closure of approximately 75 underperforming Petsense stores after recording $65.8 million in impairment and restructuring charges.
- The company withdrew its long-term financial framework introduced at its December 2024 Investor Day and updated its fiscal 2026 guidance, now projecting a comparable store sales range of down 1% to flat.
Tractor Supply Company reported second-quarter 2026 results that fell short of expectations, as an unusually difficult May dragged down what had otherwise been a mixed-but-manageable quarter, according to executives on the company’s earnings call Thursday.
The rural lifestyle retailer posted a 1.5% decline in comparable store sales, even as total net sales rose 2.3% to $4.54 billion, up from $4.44 billion in the year-ago period. New store openings drove that top-line growth, but it wasn’t enough to offset the pressures that hit hardest during the spring selling season.
“Fuel prices peaked during the height of our spring selling season, putting meaningful pressure on our customers’ discretionary spending at the most important time of the quarter,” CEO Hal Lawton said on the call. “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 costs. 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.”
Net income declined 16.1% to $360.7 million from $430 million in the second quarter, which ended June 27. Diluted earnings per share fell 14.9% to $0.69 from $0.81 in the prior-year period.
The impact of May’s results was striking.
“To put that in perspective, performance in our big-ticket categories and hard lines spring goods during May alone reduced our Q2 comp sales by approximately two percentage points, highlighting how concentrated the softness was within the quarter,” Lawton said. “These conditions disproportionately affected discretionary and project-oriented categories, while our needs-based businesses remained resilient.”
Comparable store sales were positive in both April and June. The company said it carried spring seasonal inventory into July and has seen continued demand for those goods.
Tractor Supply withdrew the financial framework it introduced at its December 2024 Investor Day and updated its fiscal 2026 guidance, now projecting comparable store sales of down 1% to flat.
The company now plans to open between 85 and 90 new Tractor Supply stores in 2027, down from its previous expectation of 100, and will redirect capital toward remodels, store technology and Final Mile delivery expansion. As of June 27, Tractor Supply operated 2,463 stores.
Petsense Closures and Pet Health Expansion
Tractor Supply has been expanding its pet care business and acquired the VIP Petcare mobile business in May.
The second quarter included an inventory write-down of $5.9 million related to the planned closure of approximately 75 underperforming Petsense stores that were generating negative four-wall cash flow, according to CFO Kurt Barton. Tractor Supply operates 209 Petsense stores in 23 states, a chain it acquired in 2016.
“We will be able to use that negative four-wall cash flow once we shut those stores down and reinvest that back into the core of our business,” Lawton said. After that, Lawton said the Petsense business will be strong and profitable.
“It will work well with the broader pet ecosystem that we’re building with Allivet as well as with VIP Petcare,” he said. “I will reiterate that while those two businesses, VIP Petcare and Allivet, do integrate and we fully expect them to be core parts of our integration with Tractor Supply. The Petsense business is not directly connected to the core Tractor Supply business. We feel that this doesn’t do anything in terms of impacting our pet re-acceleration in the core Tractor Supply business.”
Despite the broader pet headwinds, Freshpet, a refrigerated, fresh pet food product line, stood out as a bright spot. EVP and Chief Merchant Seth Estep said the program was in approximately 250 stores at the end of the second quarter and remains on track to expand to at least 700 stores by year-end.
“We’re seeing over 40% of those buyers in Freshpet be either new pet food buyers at Tractor Supply or reactivated buyers at Tractor Supply,” Estep said.
Ecommerce vs. In-Store
Digital sales continued to outpace the broader business. Lawton said digital sales grew at a double-digit rate during the quarter, driven by strong deliver-from-store performance, higher traffic and improved conversion. Final Mile delivery, the company’s home delivery initiative, has already completed as many deliveries in the first half of 2026 as it did during all of 2025. As a result, Tractor Supply said it plans to accelerate the rollout ahead of its original timeline.
In-store comparable transaction counts declined 1.7% for the quarter, the primary driver of the comparable sales decline. Comparable average ticket rose just 0.2%.
Pricing and Tariff Benefits
Tractor Supply used tariff refunds, which Barton described as “lumpy” and “choppy,” to fund value investments for customers rather than pass along cost increases. The company launched what it calls an “Unbeatable Price” campaign during the quarter, targeting core consumable items.
Estep said price perception among customers improved 180 basis points year over year based on internal survey data, and that improvement accelerated sequentially from June into July.
On tariffs, Barton was direct about the timing dynamics heading into the second half.
“The benefits may not exactly land at the same timeframe as some of the pricing initiatives that we’re placing throughout this year,” Barton said. He said tariff refunds were a stronger benefit in the second quarter than they’ll be in the second half, with gross margin expected to be below prior-year levels in the third and fourth quarters, with greater pressure in the third quarter.
Updated Outlook
Tractor Supply trimmed its fiscal 2026 guidance across key metrics. The company now expects net sales growth of 2.5% to 3.5%, comparable store sales in the range of down 1% to flat and adjusted diluted earnings per share of $1.90 to $2.
