Tractor Supply reports improvement in pet sales trends, lowers full-year guidance

American rural retailer Tractor Supply reported a 2.3% year-over-year (YoY) increase in net sales to $4.5 billion (€4B) in the second quarter (Q2) of fiscal year (FY) 2026, ended 27 June. This was driven by new store openings.

In a call with investors, President and CEO Hal Lawton said pet sales trends improved sequentially but did not provide specific figures. “While pet performance remains below where we want it to be, trends improved sequentially from the first quarter, and we continue to hold share.”

The group performed a pet category reset during the period, which included introducing more localized assortments, expanding its presence in faster-growing premium nutrition segments and adding more exclusive brands to its portfolio. 

As part of the reset, the company expanded its cat wet food offering “significantly,” according to Lawton.

Pet category restructuring 

Lawton also highlighted the continued rollout of Freshpet refrigerated pet food, which is now available in approximately 250 Tractor Supply stores. “We remain on track to expand to at least 700 stores by year-end,” he says. 

According to the CEO, more than 40% of Freshpet purchasers are either new pet food customers or reactivated shoppers at Tractor Supply.

During the quarter, the company opened 28 new stores and 3 new Petsense by Tractor Supply locations. However, the Tennessee-based retailer announced plans to close about 75 underperforming Petsense stores. 

“The Petsense chain has north of a couple of hundred stores. The 75 we announced today that we’re shutting down are negative four-wall cash flow [spend more than generate],” Lawton told investors. 

The move contributed to higher selling, general and administrative (SG&A) expenses, including a $5.9 million (€5.2M) inventory write-down related to the planned store closures. The company also registered $9.5 million (€8.4M) in acquisition-related costs associated with its purchase of VIP Petcare.

Lawton says the restructuring is expected to make Petsense more profitable while strengthening the company’s broader pet ecosystem, alongside Allivet and VIP Petcare.

Slowing store expansion 

Tractor Supply plans to slow its pace of store expansion, expecting to open approximately 85 to 90 new stores in 2027, compared with its previous target of 100 stores.

According to President and CEO Hal Lawton, the company will redeploy capital toward higher-return initiatives, including Project Fusion remodels (the company’s store modernization and remodel initiative), existing store investments and last-mile delivery capabilities.

“We will continue to evolve the [Project Fusion] program by investing behind the elements delivering the strongest returns, including greater localization and expanded pet wash, both of which are contributing meaningfully to the performance of Fusion stores,” he says.

Overall results 

Revenue growth for the business was partially offset by a 1.5% YoY decline in comparable store sales, reflecting weaker performance in May due to softer demand in seasonal categories and lower spending on discretionary products.

Gross profit increased 2.6% YoY to $1.7 billion (€1.4B), while gross margin improved by 0.2 percentage points (pp) to 37.1%, compared with the same period a year earlier.

Net income fell 16.1% to $360.7 million (€317.4M), translating to a 14.9% decline in diluted earnings per share (EPS) to $0.69 (€0.61). 

Guidance

Tractor Supply lowered its FY2026 outlook to reflect its year-to-date performance. The retailer now expects net sales growth of 2.5% to 3.5%, down from its previous forecast of 4% to 6%.

Comparable store sales are projected to range from a 1% decline to flat, compared with its earlier expectation of 1% to 3% growth.

Net income is now expected to range between $930 million (€818.4M) and $990 million (€871.2M), down from the previous guidance of $1.1 billion (€976.8M) to $1.2 billion (€1B). Diluted EPS is forecast to be between $1.78 (€1.57) and $1.88 (€1.65).