Tractor Supply (TSCO) investor relations material

Executive summary

• Net sales increased 2.3% year-over-year to $4.543 billion in Q2 2026, driven by new store growth, but comparable store sales declined 1.5% due to lower transactions and softer discretionary demand, with needs-based categories remaining resilient.

• Digital sales saw double-digit growth, and expense management helped mitigate sales pressure.

• Adjusted net income declined 1.5% to $423.5 million, with adjusted diluted EPS flat at $0.81, reflecting restructuring and acquisition charges.

• Strategic actions include strengthening the pet business, closing 75 underperforming Petsense stores, and integrating the VIP Petcare acquisition to expand veterinary services.

• Performance was impacted by adverse conditions in May, including high fuel prices and drought, affecting discretionary and big ticket sales.

Financial highlights

• Gross profit increased 2.6% to $1.68 billion; adjusted gross profit up 3% to $1.69 billion, with gross margin expanding 24 bps to 37.2%.

• Adjusted SG&A increased 7.3%, deleveraging 118 bps as a % of sales, impacted by Petsense closure and VIP Petcare acquisition costs.

• Adjusted operating income was $548.3 million; adjusted diluted EPS was $0.81.

• Adjusted net income was $423.5 million (down 1.5% year-over-year).

• Inventory per store up 6.5% year-over-year, mainly due to inflation and seasonal goods.

Outlook and guidance

• Fiscal 2026 outlook: net sales growth of 2.5%-3.5%, comparable store sales -1% to flat, adjusted operating margin 8.5%-8.8%, adjusted diluted EPS $1.90-$2.00, and adjusted net income $990 million to $1.05 billion.

• H2 expected to show modest sequential improvement in comps; Q3 and Q4 to remain within guidance range.

• Gross margin forecasted below prior year for H2, with Q3 more pressured due to tariff timing and new distribution center costs.

• Long-term financial framework withdrawn; update expected with Q4 2026 results.