Tractor Supply Q2 Earnings & Sales Miss Estimates, Comps Drop 1.5%

Comps were positive in April and June, with underperformance in May contributing to the decrease in the quarter. May results were affected by weaker demand in seasonal merchandise, particularly big-ticket products, along with softer consumer spending across discretionary categories. 

Although the company's consumable, usable and edible categories remained relatively resilient, the companion animal business continued to underperform the overall company, despite showing improved trends through the quarter. Strength across the balance of the company's consumable, usable and edible categories, along with an increase in digital sales, somewhat offset these headwinds.

This Zacks Rank #4 (Sell) company’s shares have lost 20.1% over the past three months compared with the industry’s 12.6% decline.

TSCO’s Margins & Costs

Adjusted gross profit rose 3% year over year to $1.7 billion, while the adjusted gross margin improved 24 basis points (bps) to 37.2%. Disciplined product cost management and tariff-related benefits more than offset increased freight expenses and incremental price investments. Our model had anticipated gross profit to rise 6.5% and gross margin to expand 60 bps in the reported quarter.

Selling, general and administrative (SG&A) expenses, including depreciation, amortization and impairment, jumped 14.4% year over year to $1.2 billion. As a percentage of net sales, SG&A expenses increased 290 bps to 26.8%. On an adjusted basis, SG&A expenses increased 7.3% to $1.1 billion, or 118 bps to 25.1% as a percentage of net sales for the quarter, mainly owing to deleverage from weak comps and higher claims and legal settlement expenses. We had expected SG&A costs to increase 7.6% year over year and to rise 50 bps, as a percentage of net sales, to 21.7%.

Operating income decreased 19.2% year over year to $467.1 million. On an adjusted basis, operating income dipped 5.1% year over year to $548.3 million, translating into an adjusted margin of 12.1%. We had expected operating income to increase 5% year over year.

TSCO’s Financial Health

Tractor Supply ended the quarter with cash and cash equivalents of $231.6 million, long-term debt of $2.2 billion and total stockholders’ equity of $2.6 billion. In first-half 2026, net cash provided by operating activities was $653.1 million. In the same period, the company incurred capital expenditures of $435.7 million.

During second-quarter 2026, Tractor Supply returned $260.9 million to shareholders. This included the repurchase of 3.9 million shares of its common stock for $135.3 million and the payment of $125.6 million in quarterly cash dividends.

It opened 28 Tractor Supply stores and three new Petsense by Tractor Supply stores in the reported quarter.

Tractor Supply Updates 2026 Outlook

Management now expects 2026 net sales growth of 2.5-3.5%, with comps ranging from a 1% decline to flat. The reported operating margin is projected between 8% and 8.3%, while the adjusted rate is expected at 8.5-8.8%. It had earlier projected net sales growth of 4-6% and comps growth of 1-3% for 2026.

Adjusted net income is forecast between $990 million and $1.1 billion, with adjusted earnings anticipated at $1.90-$2.00 per share. Tractor Supply also withdrew the long-term financial framework presented at its December 2024 Investor Day and plans to issue an updated framework with its fourth-quarter results. Management had earlier guided operating margin between 9.3% and 9.6% and net income of $1.1-$1.2 billion, with earnings per share anticipated to be $2.13-$2.23.

3 Retail Picks You Can’t Miss

We have highlighted three better-ranked stocks, namely Genesco Inc. GCO, Designer Brands Inc. DBI and Levi Strauss & Co. LEVI.

Genesco, a footwear and accessories dealer, currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. 

The Zacks Consensus Estimate for Genesco’s current financial-year EPS indicates growth of 55.2% from the year-ago figure. GCO delivered an average earnings surprise of 3.8% in the trailing four quarters.

Designer Brands, designer and producer of footwear and accessories, currently carries a Zacks Rank #2 (Buy). The company delivered a trailing four-quarter earnings surprise of 112.8%, on average. 

The Zacks Consensus Estimate for Designer Brands’ current financial-year sales indicates growth of 0.5% from the year-ago figure.

Levi Strauss, designer and marketer of jeans, casual wear and related accessories, currently has a Zacks Rank of 2. LEVI delivered an average earnings surprise of 11.3% in the trailing four quarters.

The consensus estimate for Levi Strauss’ current financial-year sales indicates growth of 6.4% from the year-ago figure.

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