TSCO · Q4 2025 Earnings

Cautious

Tractor Supply

Reported January 29, 2026

30-second summary

Q4 FY2025 comp printed +0.3%, missing the bottom of the +1% to +5% guide and breaking the H2 inflection narrative that Q3 FY2025's +3.9% appeared to validate. FY2026 guidance frames revenue +4–6% and EPS $2.13–$2.23, but the operating-margin range steps down to 9.3–9.6% (vs FY2025's 9.45% actual and the 9.5–9.7% guide entering Q4 FY2025) — that is a margin cut hidden inside a flat-to-up EPS line. Q4 GM was essentially flat YoY (35.1% vs 35.2%) and FY GM expanded 16bps to 36.4%, so the tariff-offset narrative is actually holding on the gross line; the pressure is in SG&A deleverage. Buyback guidance returned ($375–450M), partially answering last quarter's working-capital question, but the comp inflection thesis is now off the table.

Headline numbers

EPS

Q4 FY2025

$0.43

Revenue

Q4 FY2025

$3.90B

+3.3% YoY

Gross margin

Q4 FY2025

35.1%

Operating margin

Q4 FY2025

7.6%

Key financials

Q4 FY2025

Metric	Q4 FY2025	YoY	Q3 FY2025	QoQ
Revenue	$3.90B	+3.3%	$3.72B	+4.8%
EPS	$0.43	—	$0.49	-12.2%
Gross margin	35.1%	—	37.4%	-221bps
Operating margin	7.6%	—	9.2%	-157bps

Guidance

FY2025 results narrowly met expectations; FY2026 guidance raises EPS modestly while comp sales and margin outlooks signal cautious demand and operational

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Comparable Store Sales growth	Q4 FY2025	+1% to +5%	0.3%	-0.7pts below guide low end	Missed
Net Sales growth	FY2025	+4.6% to +5.6%	4.3%	-0.3pts below guide low end	Met
Operating Margin Rate	FY2025	9.5% to 9.7%	9.45%	-0.05pts below guide low end	Met
Net Income	FY2025	$1.09 billion to $1.14 billion	$1.11 billion (full-year actual derived from results)	mid-point of prior guide range	Met
EPS (GAAP)	FY2025	$2.06 to $2.13	$2.09 (derived estimate)	in-line with prior guide midpoint	Met

New guidance

Metric	Period	Guide	YoY
Net Sales growth	FY2026	+4% to +6%	—
Comparable Store Sales growth	FY2026	+1% to +3%	—
Operating Margin Rate	FY2026	9.3% to 9.6%	—
Net Income	FY2026	$1.11 billion to $1.17 billion	—
EPS (GAAP)	FY2026	$2.13 to $2.23	—
Capital Expenditures, net of sale leaseback proceeds	FY2026	$675 million to $725 million	—
Share Repurchases	FY2026	$375 million to $450 million	—

Platform metrics

Q4 FY2025

Segment	Q4 FY2025
Comparable store sales growth (Q4)	0.3%
Comparable store sales growth (FY)	1.2%
New store openings (FY)	99 Tractor Supply + 5 Petsense
Owned Brands and Exclusive Product Categories (% of sales)	30.9%
Store count end of period	2,602 total (2,395 Tractor Supply + 207 Petsense)
Inventory turns (annualized)	3.22
Average inventory per store	$1,116.3k

Profitability

Q4 FY2025

Segment	Q4 FY2025
Operating margin rate (Q4)	7.64%

Management tone

Q1 FY2025 reassurance → Q2 FY2025 step-change conviction → Q3 FY2025 narrowed range and 2026 pivot → Q4 FY2025 "wide range of demand outcomes."

The H2 inflection narrative is gone, replaced by macro-uncertainty hedging. Two quarters ago management committed to a "step change" in H2 comp and said momentum "strengthened into July." Last quarter that softened to "balanced outlook" with a wide 1–5% Q4 range. This quarter: "we are preparing for a wide range of demand outcomes...the broader environment remains uncertain with a wide range of potential consumer spending outcomes." That is three sequential quarters of widening guardrails — not a refinement, a retreat. The +1% to +3% FY2026 comp guide is structurally below the +1.4–2.4% FY2025 entry guide and below the +1.2% FY2025 actual.

Storm activity was reclassified mid-cycle from manageable tailwind to material structural distortion. Last quarter management framed the Q4 weather setup as "primary driver of fourth-quarter business, more so than holidays." This quarter: "it became clear that it contributed more meaningfully to our results in 2024 than we had originally estimated...we now estimate this dynamic represented roughly 100 basis points headwind to comps." That is a retrospective admission that 2024's comp base was less organic than management's prior framing implied — and that the 2025 weakness was partially mechanical, not just demand-driven. It also raises questions about how confidently management can size the underlying 2026 comp base.

Q4 discretionary weakness has been reframed as external/transitory rather than business-specific. "We believe these dynamics were category-specific, quarter-specific, and broadly consistent with what we saw across retail." Compare to Q3 FY2025's framing of a "discerning" consumer that was acknowledged as TSCO-relevant. The current framing reduces management accountability for the miss but also moves further from the prior "needs-based resilience" positioning that has been the bull case for years.

The strategic-initiatives story has hardened from optionality to operational dependence. "Two of our highest priority initiatives are direct sales and final mile, which are gaining traction and becoming increasingly important." Q3 FY2025 framing positioned these as supplementary; this quarter they are explicitly the comp lift management is relying on (Q&A confirmed ~40bps of comp impact from direct sales alone in 2026). When initiatives move from "incremental upside" to "comp contributors we are counting on," the underlying core-business demand picture is weaker than management is willing to say directly.

Tariff impact extended further than the "halfway through" framing implied. Last quarter: "halfway through" with Q4 ticket expected to run "slightly higher." This quarter: tariffs are still "20 or 30 basis points of pressure" and management characterized themselves as "basically halfway through" — implying the second half is still ahead, not behind. The mile marker has not moved meaningfully in three months. The offset story is, however, working at the gross-margin line.

Recurring themes management leaned on this quarter:

Hurricane/storm activity quantification and destockingMacro uncertainty and consumer spending volatilityPromotional environment as transitory Q4 phenomenonNeeds-based model resilience vs. discretionary weaknessDirect sales and final-mile delivery scalingTariff and commodity cost management

Risks management surfaced:

Uncertain broader consumer spending environment with mixed signalsDiscretionary spending volatility and customer selectivityPersistent promotional pressure in retail environmentTariff and commodity cost inflation headwindsNew DC opening cost ($10M incremental expense in 2026, mostly H2)

Q&A highlights

Chris Horbers · J.P. Morgan

When will self-help benefits from prescriptions, final mile, and direct sales become a material portion of comp growth such that overall trends become less macro sensitive? Is there an inflection point in 2026 and beyond with quantification?

Management expects material comp benefit from these initiatives in 2026. Direct sales alone expected to provide ~40 basis points of comp impact (50 reps grew from $2M in December to exceeding that rate in January). Final Mile serves three purposes: reducing delivery costs, enabling direct sales, and fulfilling future demand. Pet RX also scaling with strong growth rates contributing to comp.

Direct sales expected ~40 basis point impact on comp in 202650 direct sales reps achieved $2M in December, exceeded that run rate in JanuaryFinal Mile expanding to 50% store coverage with twice the number of stores in 2026$10 million in annual freight savings from Final Mile initiative

Michael Baker · DA Davidson and Company

When will the company start leveraging its investments in delivery and Big Barn to improve operating leverage? What is the inflection point for operating margin improvement?

Management identified low 2% comp as the inflection point for retail operating margin improvement. Final Mile is self-funding with no incremental operating expense in 2026, expanding to 50% store coverage while generating $10M in freight savings. Direct sales doubling from 50 to 100 class stores with prior year cohort funding new expansion. Both initiatives provide material cost savings that fund their own growth without further margin dilution.

Low 2% comp identified as operating margin inflection pointFinal Mile expansion to 50% store coverage with zero incremental operating expense$10 million annual freight savings from Final MileDirect sales class doubling from 50 to 100 stores

Peter Keith · Piper Sandler

Pet food category was not highlighted in Q4 performance. Are there concerns about market share loss or category deflation in pet food? What did you see in Q4 and what are expectations for 2026?

Management stated pet food does not need to over-deliver outsized growth to achieve comp targets as a multi-category retailer. Holding market share based on data-rich industry analysis. Pet engagement remains strong: 2M+ pets through pet washes, pet vet clinics grew 20%+ in sales. Positioning well with fresh/frozen expansion (few hundred stores planned), localized assortments, and brand revitalization for long-term share maintenance and growth.

Pet food not required to over-deliver for overall comp targetsHolding market share (not losing share based on industry data)2M+ pets processed through pet washes last yearPet vet clinics grew 20%+ in sales in stores

Oliver Wintermantel · Evercore ISI

How should investors think about the sales-leaseback operating income benefit and will there be incremental contributions in 2026 or does the comparison become neutral?

Sale-leaseback will be flat year-over-year from an operating income benefit in 2026. Management pivoted to discussing real estate model success: 50% of new stores now developed in-house, generating high single-digit (~10%) savings both on developer fees (reinvested in stores) and procurement of materials. Selling some owned stores at strong cap rates. Real estate strategy delivering significant returns and cost benefits.

Sale-leaseback operating income benefit flat year-over-year in 202650% of new stores developed in-house (up from previous developer model)~10% savings on total cost to build from in-house development~10% savings on material procurement for store builds

David Bellinger · Mizuho

If accounting for new initiative benefits, why is the core Tractor Supply business underperforming? Why has the company widened outcome guidance range? Is the increased promo activity from Q4 expected to continue into 2026?

Management expressed optimism about 2026 setup and the first 5-6 weeks of the year. Stated promo activity has not carried over into 2026 despite Q4 volatility in retail. Spring plans already largely established for normalized environment, though company prepared to respond if necessary. Highlighted positive factors: supply chain strength, store operations, potential for tax refunds, and prospect of strong spring after two tough prior years.

Promo activity from Q4 has not carried over into 2026First 5-6 weeks of 2026 described as 'nice start to the year'Spring plans already laid out for normalized environmentOptimistic about tax refund potential

Answers to last quarter's watch list

Q4 FY2025 comp landing within the 1–5% range. Resolved negatively. Q4 comp printed +0.3%, 70bps below the low end of the range and well below the 2% threshold that would have preserved the inflection narrative. Management attributes ~100bps to cycling 2024 hurricane benefit; even adjusted, comp barely cleared 1%. Status: Resolved negatively

Reinstatement of buyback guidance. Resolved positively. FY2026 share repurchase guide of $375–450M is above the $325–375M range withdrawn in Q3 FY2025, signaling working-capital pressure has eased. Still well below the original $525–600M January 2025 outlook. Status: Resolved positively

FY2026 initial operating margin guide vs the 9.5–9.7% FY2025 range. Resolved negatively. FY2026 operating margin guide of 9.3–9.6% sits below the FY2025 entry range on both ends, with midpoint flat to FY2025's 9.45% actual. The 5–15bps expansion management telegraphed is not in the guide — SG&A deleverage from the new DC ($10M incremental, mostly H2) is the named culprit. Status: Resolved negatively

100-store 2026 opening pace. Resolved positively. FY2025 delivered 99 TSC + 5 Petsense; FY2026 guidance implies continued pace. CapEx guide of $675–725M is consistent with the unit-growth investment intent. Status: Resolved positively

Direct sales reaching self-funding. Resolved positively. Management confirmed in Q&A that direct sales and Final Mile have no incremental operating expense in 2026, with direct sales expected to contribute ~40bps of comp. The ~20bps SG&A relief flagged last quarter appears to be flowing through. Status: Resolved positively

Gross margin progression as second-half tariff flow-through hits. Resolved positively. Q4 FY2025 gross margin was 35.1%, essentially flat YoY vs Q4 FY2024's 35.2%, and FY gross margin expanded 16bps to 36.4%. Tariff offsets are working at the gross line — management's "halfway through" tariff framing is supported by the data even as it remains unchanged from last quarter. Status: Resolved positively

What to watch into next quarter

Q1 FY2026 comp vs the +2% midpoint. Management said the first 5–6 weeks of 2026 are a "nice start." A Q1 print below 1% calls the entire FY +1–3% comp range into question; above 2.5% validates that Q4 was the storm-cycling anomaly management claims it was.

Whether the FY2026 operating-margin guide gets revised mid-year. The 9.3–9.6% range is structurally lower than FY2025's entry guide. Watch whether the low end holds or gets clipped further when Q1 sales come in — management has now lowered the operating-margin floor for two consecutive years.

Q1 FY2026 gross margin YoY vs Q1 FY2025. With Q4 FY2025 GM flat YoY, the tariff-offset story is on track. Watch whether Q1 sustains the offset and whether management quantifies the remaining tariff drag explicitly.

Direct sales weekly run-rate trajectory. Management disclosed $2M+ in December across 50 reps and committed to doubling the class to 100 reps in 2026. Watch for explicit weekly revenue disclosure and confirmation that ~40bps of comp is tracking — this is now the named comp lever, not a side initiative.

Pet-category comp disclosure. Two consecutive quarters of analyst pressure on pet weakness without explicit category comp from management. Watch for either a discrete disclosure or a continued deflection — the latter would suggest the share-holding claim is fragile.

H2 SG&A deleverage from new DC opening. Management flagged $10M of incremental expense, mostly weighted to H2. The quarter that captures the DC opening (likely Q3 FY2026) is the cleanest read on whether the operating-margin guide range holds.

Sources

Tractor Supply Q4 FY2025 Earnings Release (SEC Form 8-K Exhibit 99.1): https://www.sec.gov/Archives/edgar/data/916365/000091636526000005/ex991-q42025earningsrelease.htm
Tractor Supply Q3 FY2025 Earnings Release (prior-quarter guidance baseline): https://www.sec.gov/Archives/edgar/data/916365/000091636525000157/ex991-q32025earningsrelease.htm

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