Tractor Supply third-quarter earnings per share fall 11.6% as sales rise 5.1%
Net income fell 13.3% to $224.7 million, while the company reaffirmed its fiscal 2026 outlook.
Key takeaways
- Tractor Supply Company (TSCO) reported third-quarter 2026 net sales of $3.91 billion, up 5.1% from $3.72 billion a year earlier, and diluted earnings per share of $0.43, down 11.6% from $0.49. The company reaffirmed its fiscal 2026 guidance in a filing on Oct. 22.
Tractor Supply Company (TSCO) said Thursday that third-quarter net sales rose 5.1% to $3.91 billion, while diluted earnings per share fell 11.6% to $0.43 and operating income declined 10.2%.
The results for the quarter ended Sept. 26 were reported in a press release furnished with a regulatory filing. In the same filing, the company reaffirmed its guidance for the fiscal year ending Dec. 26, 2026.
Here's how the company did:
- Net sales: $3.91 billion vs. $3.72 billion a year earlier
- Diluted earnings per share: $0.43 vs. $0.49 a year earlier
- Net income: $224.7 million vs. $259.3 million a year earlier
- Operating income: $307.7 million vs. $342.7 million a year earlier
- Comparable store sales: up 0.4% vs. up 3.9% a year earlier
Net sales growth came from new store openings, the acquisition of VIP Petcare and growth in comparable store sales. Comparable store sales rose 0.4%, compared with a 3.9% increase in the prior year's third quarter, reflecting a 0.7% increase in comparable average ticket and a 0.3% decline in comparable average transaction count.
Comparable store sales improved through the quarter. They were negative in July, modestly positive in August and strengthened further in September, the company said.
Seasonal categories, including wildlife supplies, equine and livestock, and truck, tool and hardware, were solid. The consumable, usable and edible categories performed above the company average, and double-digit growth in digital sales also contributed.
Big-ticket and companion animal categories remained soft. Companion animal continued to perform below the company average, although trends have improved steadily since the first quarter.
Gross profit rose 2.6% to $1.42 billion from $1.39 billion. Gross margin was 36.4%, compared with 37.4% a year earlier.
The company said the margin decline was primarily attributable to higher transportation and fuel costs and incremental investments to strengthen its price-value position.
Selling, general and administrative expenses, including depreciation and amortization, rose 6.8% to $1.12 billion from $1.05 billion. As a percent of net sales, those expenses increased to 28.6% from 28.1%.
The company said the increase was driven by deleverage from lower comparable store sales and startup costs tied to the opening of a new distribution center, partly offset by disciplined expense control across the business.
Operating income fell 10.2% to $307.7 million from $342.7 million. The effective income tax rate was 22.1%, compared with 21.0%, reflecting the lapping of certain tax planning initiatives in the prior year.
Net income decreased 13.3% to $224.7 million from $259.3 million. Diluted earnings per share decreased 11.6% to $0.43 from $0.49, on diluted weighted average shares of 521.5 million, down from 532.1 million.
For the first nine months, net sales were $12.04 billion, compared with $11.63 billion a year earlier. Net income was $749.9 million, down from $868.7 million, and diluted earnings per share were $1.43, compared with $1.63.
Those nine-month results include impairment and acquisition costs recorded in the second quarter. The company said the adjustment to operating income was $81.2 million, made up of $5.9 million in inventory impairment charges, $33.2 million in goodwill and intangible asset impairment charges, $32.6 million in other impairment and restructuring charges, and $9.5 million in acquisition costs.
On an adjusted basis, nine-month diluted earnings per share were $1.55. The company said it does not provide a reconciliation for forward-looking non-GAAP estimates where it cannot calculate reconciling items without unreasonable effort.
Tractor Supply is reaffirming its financial outlook for fiscal 2026. The guidance is shown below.
| Guidance item | Fiscal 2026 outlook |
|---|---|
| Net sales | +2.5% to +3.5% |
| Comparable store sales | (1%) to flat |
| Operating margin rate | 8.0% to 8.3% |
| Adjusted operating margin rate | 8.5% to 8.8% |
| Net income | $930 million to $990 million |
| Adjusted net income | $990 million to $1.05 billion |
| Earnings per diluted share | $1.78 to $1.88 |
| Adjusted earnings per diluted share | $1.90 to $2.00 |
“Our third quarter marked a step forward for Tractor Supply, with improved sales momentum and broader strength across our business,” President and Chief Executive Officer Hal Lawton said. “The actions we are taking around value, pet, digital and convenience gained traction in the quarter.”
“We are moving with urgency to sharpen our strategic priorities, drive productivity and make deliberate choices about where we invest our capital and resources,” Lawton said.
On guidance, he said: “Our progress in the quarter and the actions underway give us confidence in our ability to deliver within our full-year guidance, which we are reaffirming today.”
The company opened 23 new Tractor Supply stores in the third quarter and closed 74 Petsense by Tractor Supply stores, as previously announced. It ended the quarter with 2,486 Tractor Supply stores and 135 Petsense by Tractor Supply stores.
The company repurchased about 2.7 million shares for $88.5 million and paid quarterly cash dividends totaling $124.9 million, returning $213.4 million to shareholders in the quarter. Dividends declared per share were $0.24, up from $0.23 a year earlier.
Inventories were $3.62 billion at quarter end, up from $3.25 billion a year earlier. Long-term debt was $2.23 billion, compared with $1.74 billion.