Tractor Supply Company Q1 2025 Results: Q2 Guidance and FY 2025 Sales Range Expanded
Tractor Supply Company (NASDAQ: TSCO), the largest rural lifestyle retailer in the United States, announced its financial results for the first quarter of 2025, which ended on March 29, 2025. Despite facing a challenging business environment marked by increased uncertainty and the introduction of new tariffs, the company demonstrated resilience in its operations and reaffirmed its commitment to navigating the ever-changing market landscape.
Financial Highlights
Net Sales
Tractor Supply reported a 2.1% increase in net sales for the first quarter, totaling $3.47 billion, up from $3.39 billion during the same period in 2024. The growth in sales was primarily driven by the opening of new stores and the contribution from Allivet, a leading pet pharmacy and online retailer that Tractor Supply acquired in 2024. However, this positive performance was somewhat tempered by a 0.9% decline in comparable store sales compared to an increase of 1.1% in the prior year’s first quarter.
The decline in comparable store sales reflects a mixed performance across various product categories. While the company saw a strong growth in the average transaction count of 2.1%, this was offset by a decline in the comparable average ticket, which fell by 2.9%. Notably, the growth in average transactions was primarily driven by strong sales in year-round product categories, including consumable, usable, and edible products, as well as winter seasonal merchandise. On the other hand, the spring seasonal category, including larger ticket items, faced a decline, which negatively impacted overall sales performance.
Gross Profit and Margin
Tractor Supply’s gross profit for the first quarter increased by 2.8%, reaching $1.26 billion compared to $1.22 billion in the same period last year. The gross margin also saw an improvement of 25 basis points, rising to 36.2% from 36.0% in the first quarter of 2024. This modest increase in gross margin was primarily attributed to disciplined product cost management and the company’s continued execution of its everyday low price strategy.
Selling, General and Administrative Expenses
Selling, general and administrative (SG&A) expenses, which include depreciation and amortization, rose by 5.1% to $1.01 billion, up from $957.7 million in the prior year’s first quarter. As a percentage of net sales, SG&A expenses increased by 81 basis points, reaching 29.0% compared to 28.2% in the first quarter of 2024. The higher SG&A expenses as a percentage of sales were mainly due to planned growth investments, such as the increased depreciation and amortization from the opening of the company’s 10th distribution center, as well as the increased operational costs associated with these investments.
In addition to these growth-related expenses, the company also faced some deleveraging of fixed costs due to the decline in comparable store sales. However, Tractor Supply continues to maintain a focus on productivity and cost control, which helped to mitigate some of the expense increases. The company also benefited modestly from its ongoing sale-leaseback strategy, which contributed to overall financial performance.
Operating Income and Net Income
Operating income for the first quarter of 2025 decreased by 5.3%, totaling $249.1 million, compared to $263.1 million in the same period last year. The decrease in operating income was largely due to the rise in SG&A expenses and the decline in comparable store sales.
Net income for the quarter also saw a decrease, dropping by 9.5% to $179.4 million, down from $198.2 million in the first quarter of 2024. As a result, diluted earnings per share (EPS) fell by 8.0%, from $0.37 in the first quarter of 2024 to $0.34 in the current quarter.
Shareholder Returns and Capital Allocation
Tractor Supply continues to prioritize returning capital to shareholders. In the first quarter of 2025, the company repurchased approximately 1.7 million shares of its common stock for a total of $94.0 million. Additionally, the company paid out quarterly cash dividends totaling $122.4 million. In total, Tractor Supply returned $216.4 million to its shareholders during the quarter, underscoring its commitment to shareholder value.
Store Openings and Expansion
In the first quarter of 2025, Tractor Supply continued to expand its physical footprint, opening 15 new Tractor Supply stores and two new Petsense by Tractor Supply stores. However, the company also made adjustments to its Petsense stores, closing two locations during the same period. These strategic openings and closures reflect the company’s ongoing efforts to optimize its store network in response to evolving market conditions.
CEO’s Commentary
Hal Lawton, President and CEO of Tractor Supply, provided commentary on the company’s performance amid the current business environment. “As the year unfolds amid increasing volatility, our conviction in Tractor Supply’s resilient and durable business model remains strong,” Lawton stated. “We have a long track record of navigating uncertain environments, and we believe we are well-positioned to do so once again. Tractor Supply is uniquely differentiated by our needs-based product categories, our predominantly U.S.-sourced assortment, deep and trusted vendor relationships, and a nimble, scalable supply chain.”
Lawton also acknowledged the increased uncertainty in the business environment, particularly due to new tariffs. As a result, the company updated its full-year financial outlook and provided guidance for the second quarter. Despite these challenges, Lawton expressed confidence in the company’s ability to continue thriving, emphasizing the dedication and passion of its 52,000 team members.
