From 80 to 700 stores: Tractor Supply to expand fresh pet food offering

Tennessee-based rural retailer Tractor Supply’s net sales increased 3.6% year-over-year (YoY) to $3.6 billion (€3B) in the first quarter of fiscal year (FY) 2026, ending 28 March. The result was driven by an increase in the number of stores in the network, as the chain opened 40 new Tractor Supply stores during the period.

On the other hand, comparable store sales increased more modestly, at 0.5% YoY. The metric was negatively impacted by the companion animal division, which reduced comparable sales by 100 basis points (1 percentage point).

During the earnings call, President and CEO Hal Lawton said that pet performance was below the company’s expectations for the period and attributed the result to structural headwinds and a more cautious consumer. Additionally, one Petsense by Tractor Supply store was closed during this period.

Essential spending

Lawton told investors that a significant share of consumer spending is being directed toward essentials, savings and debt reduction rather than discretionary purchases, reflecting the broader economic environment.

He also cites increased competition from grocery stores and online retailers as weighing on sales. “The category overall right now is kind of flat to negative in total growth. Certainly, that’s the case when you exclude the services piece of it – grooming and the vet element – of the pet category,” he notes.

Recently, veterinary and other services have helped pet specialty sellers, such as the British retailer Pets at Home, sustain growth as the retail side of the business slows.

Imbalanced mix

The retailer also cites pressure on the category, given the imbalance between dog and cat ownership in the US and the representation of these categories in its portfolio. “Our mix remains heavily weighted towards dogs, where we over-index by roughly 20 points. Cat ownership is growing and gaining share, and that’s where we under-index,” the CEO explained.

The company’s portfolio is divided into 80% products for dogs and 20% for cats. Among its customers, about 75% own a dog, and over 50% own a cat, according to Lawton. Keeping an eye on this base, the company has been increasing its cat product offering over the last 6-8 months. “We are seeing performance improvement in the stores that we expand our cat in,” he explained.

For context, the American Pet Products Association (APPA) released new data on pet ownership earlier this month, projecting that around 71 million households in the US have dogs and 53 million have cats.

Investment in fresh food

The growing demand for fresh food in the US is not yet reflected in Tractor Supply’s offerings, which has further contributed to the pet category’s slowdown in market share growth.

As a response, the firm is scaling its fresh and frozen pet food offering from roughly 80 stores to more than 250 by the end of May, and plans to expand it to 700 locations by the end of the year.

The decision is anchored in the fact that 1 in 3 customers already purchase fresh food from stores that offer it. “As we roll out more fresh, and kind of air-dried and heavy nutritional products on the dog side, we’re seeing improved performance in that,” Lawton explains.

Leadership focus

According to Chief Marketing Officer Seth Estep, the company is investing in leadership talent across the pet category, aiming to improve results. “All these actions in companion animal are designed to accelerate performance and position the pet business for improved growth and share gains,” he says.

Among the changes, it has named Brandon Jacobson as its new Vice President, Divisional Merchandise Manager (VP, DMM) for the companion animal division and a Director at Sam’s Club.

In March, 2 subsidiaries of the company, Petsense by Tractor Supply and Allivet by Tractor Supply, formed a Pet Expert Advisory Council, described as a “cross species veterinary advisory group designed to help set a new standard for total pet wellness across retail and digital pharmacy.”

Guidance

Although Tractor Supply is increasing its supply of fresh food and cat food, which will help boost sales in the category, it does not foresee an immediate recovery in the segment.

Chief Financial Officer Kurt Barton says they anticipate the companion animal segment will face modest pressure and remain flat or slightly negative in comparable sales throughout the year. “That’s embedded in our expectation for the rest of this year and part of our consideration when we say that we still believe we can run the future quarters within our guidance range of 1%-3%.”

Tractor Supply expects to grow net sales between 4% and 6% this year, running with an operating margin rate of 9.3% to 9.6% and net income between $1.11 billion (€940M) to $1.17 billion (€990M).