Tractor Supply (TSCO) Q2 2026 earnings summary

Executive summary

• Net sales for Q2 2026 increased 2.3% year-over-year to $4.54 billion, driven by new store openings and the VIP Petcare acquisition, but comparable store sales declined 1.5% due to lower transactions and softer discretionary demand.

• Net income for Q2 2026 decreased 16.1% year-over-year to $360.7 million, or $0.69 per diluted share, impacted by $71.7 million in impairment and restructuring charges for Petsense and $9.5 million in VIP Petcare acquisition costs; adjusted net income was $423.5 million, or $0.81 per diluted share.

• Performance was impacted by adverse conditions in May, including high fuel prices and drought, which pressured big ticket and discretionary categories, while needs-based and digital sales remained resilient.

• Strategic actions included closing approximately 75 underperforming Petsense stores, expanding pet services through the VIP Petcare acquisition, and reallocating capital to remodels and delivery initiatives.

• Shareholder returns included $260.9 million in Q2 via share repurchases and dividends, with a strong balance sheet supporting ongoing investments.

Financial highlights

• Gross profit for Q2 2026 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%.

• SG&A expenses rose 14.4% to $1.22 billion, including $65.8 million in Petsense restructuring and $9.5 million in acquisition costs; adjusted SG&A up 7.3%, deleveraging 118 bps as a % of sales.

• Adjusted operating income was $548.3 million; adjusted operating margin was 12.1% for the quarter.

• Adjusted net income was $423.5 million; adjusted diluted EPS was $0.81, flat year-over-year.

• Inventory per store up 6.5% year-over-year to $1.23 million, with annualized inventory turns at 3.33.

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

• Long-term financial framework withdrawn; update expected with Q4 2026 results.

• Capital expenditures for fiscal 2026 projected at $675–$725 million, supporting new stores, remodels, and distribution center expansion.