Tractor Supply falls 6% on earnings miss, weak FY26 guidance
Retailer faces discretionary moderation and tariff pressures as margins compress
Tractor Supply Company shares fell nearly 6% in pre-market trading Thursday after the rural lifestyle retailer reported quarterly earnings that fell short of analyst expectations and provided fiscal year 2026 guidance that investors found underwhelming.
The Brentwood, Tennessee-based company posted fourth quarter diluted earnings per share of $0.43 to $0.44, missing the consensus analyst estimate of $0.47, according to multiple analyst reports. Revenue reached $3.90 billion for the quarter, below the $4.02 billion that Wall Street had anticipated, as comparable store sales increased just 0.3% to 1.2%.
For the full fiscal year 2025, Tractor Supply achieved net sales growth of 4.3%, reaching $15.52 billion, with comparable store sales up 1.2% year-over-year. However, operating income declined 6.5% to $297.7 million as gross margin compressed to 35.1% and selling, general and administrative expenses deleveraged to 27.5% of sales, according to the company's earnings materials.
Chief Executive Officer Hal Lawton acknowledged that fourth quarter results "came in below our expectations," citing "discretionary moderation and tariff pressures" as key headwinds. The rural retailer, which sells agricultural supplies, lawn and garden equipment, and pet products to farmers and rural homeowners, has faced challenges as consumer discretionary spending softens amid broader economic uncertainty.
The company's outlook for fiscal year 2026 did little to reassure investors. Tractor Supply projected diluted earnings per share in the range of $2.13 to $2.23, which falls short of the analyst consensus of $2.30. The company expects net sales growth between 4% and 6% for the coming year. Additionally, Tractor Supply plans to repurchase $375 million to $450 million of shares in fiscal 2026.
The disappointing results and guidance come after several analysts had already grown cautious on the stock ahead of the earnings release. In recent weeks, Gordon Haskett downgraded the shares, citing expectations of softer same-store sales and limited visibility on long-term growth targets.
Truist Securities downgraded Tractor Supply to "Hold" from "Buy" and reduced its price target from $67 to $55, based on proprietary card data suggesting sales continued to fall short of expectations. Stephens & Co. and TD Cowen also lowered their price targets to $53 and $55, respectively, in the days leading up to the report.
Despite the near-term challenges, Tractor Supply maintains its position as a dominant player in the rural retail sector with a network of stores nationwide. The company's focus on essential products has provided some stability even as discretionary categories face pressure. However, the modest 2026 guidance suggests management expects the current environment to persist through the coming year.
Shares of Tractor Supply closed Wednesday at $55.14, giving the company a market capitalization of approximately $29.4 billion. The stock has traded between $46.26 and $63.47 over the past 52 weeks and remains down about 13% from its recent highs. Analysts, on average, maintain a price target of $60.63, according to market data, suggesting room for recovery if the company can execute on its growth plans and improve margins.
Investors will be watching closely for signs of stabilization in consumer spending patterns and any updates on the company's strategic initiatives to improve profitability. The rural lifestyle trend that has been a tailwind for Tractor Supply in recent years remains intact, but the company must navigate current macroeconomic headwinds to restore investor confidence.