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TRACTOR SUPPLY CO /DE/ (TSCO)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was mixed: net sales grew 2.1% to $3.47B, but comps fell 0.9% and diluted EPS declined 8% to $0.34; management attributed the shortfall primarily to a ~3-week delayed spring and softness in big-ticket categories .
  • Gross margin expanded 25 bps to 36.2% on product cost discipline and everyday-low-price execution, while SG&A deleveraged 81 bps given planned growth investments and lower comps .
  • Guidance was widened for FY25 (sales +4% to +8%, comps flat to +4%) and Q2 2025 was introduced (sales +3–4%, comps flat to +1%, EPS $0.79–$0.81), reflecting tariff uncertainty and cautious macro assumptions .
  • Consensus context: Q1 missed S&P Global estimates on EPS ($0.34 vs $0.368*) and revenue ($3.47B vs $3.53B*); management highlighted weather as the key driver, not broader macro .
  • Near-term catalysts: clarity on import tariffs (assumed for next 90-day receipts), normalization of spring demand, and traction from Allivet and Tractor Supply Rx launch .

What Went Well and What Went Wrong

What Went Well

  • Gross margin expanded 25 bps to 36.2% on disciplined product cost management and everyday low price strategy .
  • CUE (consumable, usable, edible) and winter categories showed robust unit growth; heating fuel was up north of 20%, and poultry/equine/livestock feed grew despite modest declines in animal counts, indicating share gains .
  • Management emphasized resilient customer health: strong transaction growth (+2.1%), positive new customer counts, and record retention of existing customers, reinforcing market share gains .

Selected quotes:

  • “We had robust transaction growth…record retention of existing customers…we continue to gain market share.” — CEO Hal Lawton .
  • “Our gross margin rate of 36.2% increased 25 basis points…disciplined product cost management and everyday low price strategy.” — CFO Kurt Barton .

What Went Wrong

  • Comparable store sales fell 0.9% as spring seasonal/big-ticket categories underperformed; riding lawn mowers down ~25%, lawn & garden declined low double digits .
  • SG&A rate rose 81 bps to 29.0% due to planned investments (depreciation, 10th DC operations) and fixed-cost deleverage on lower comps .
  • Weather was the “key swing factor”: spring delayed by ~3 weeks, especially in the South, where spring categories were down 30%; Easter timing ($20M comp headwind) further pressured March .

Financial Results

P&L vs prior quarters and YoY

MetricQ3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$3.468 $3.773 $3.467
Net Income ($USD Millions)$241.5 $236.4 $179.4
Diluted EPS ($USD)$0.45*$0.44 $0.34
Gross Margin (%)37.21 35.24 36.21
EBIT Margin (%)9.36*8.44*7.19
Operating Income ($USD Millions)$324.6 $318.3 $249.1

Notes: Values marked with * retrieved from S&P Global.

Key KPIs

KPIQ1 2024Q1 2025
Comparable Store Sales (%)+1.1 -0.9
Average Transaction Value ($)$58.66 $56.87
Comparable Avg Transaction Value Change (%)-0.2 -2.9
Comparable Transaction Count Change (%)+1.3 +2.1
New Store Sales (% of Total)1.8 2.8
Exclusive Brands (% of Sales)29.7 30.7
Imports (% of Sales)11.4 11.2

Capital and Cash Flow Highlights (Q1 2025)

  • Shareholder returns: $216.4M (repurchases $94.0M; dividends $122.4M) .
  • Capex: $141.3M (new stores $59.5M; existing stores $43.0M; IT $26.0M) .
  • Operating cash flow: $216.8M; Acquisition of Allivet: $140.6M cash outflow .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales GrowthFY 2025+5% to +7% +4% to +8% Widened (lower low end, higher high end)
Comparable Store SalesFY 2025+1% to +3% 0% to +4% Widened (lower low end, higher high end)
Operating Margin RateFY 20259.6% to 10.0% 9.5% to 9.9% Lowered
Net Income ($B)FY 2025$1.12 to $1.18 $1.07 to $1.17 Lowered
Diluted EPS ($)FY 2025$2.10 to $2.22 $2.00 to $2.18 Lowered
Net Sales GrowthQ2 2025—+3% to +4% New
Comparable Store SalesQ2 2025—Flat to +1% New
Diluted EPS ($)Q2 2025—$0.79 to $0.81 New
DividendFY 202515th consecutive year growth (Q4’24) +4.5% increase; 16th consecutive year Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024, Q4 2024)Current Period (Q1 2025)Trend
Tariffs/MacroPrepared to manage tariffs; imports ~12%; guidance did not assume tariff changes Assumed current 90-day tariff costs (10% non-China; 145% China) for Q2 receipts; widened FY25 ranges; pricing actions likely surgical later Elevated uncertainty; near-term cost absorption; cautious pricing
Supply ChainTwo new DCs; 20% structural stem-mile improvement 10th DC operations weighed on SG&A; broke ground on 11th DC in Nampa, Idaho Building capacity; short-term SG&A drag, long-term efficiency
Product PerformanceBig-ticket strength: zero-turns, trailers; discretionary softer Winter needs strong (heating fuel >20%); spring seasonal weak; riding mowers -~25% Mix shift toward needs-based; seasonal softness
CUE (needs-based)Unit growth, deflation headwind High single-digit unit growth; continued share gains even as pet/large animal counts decline Resilient; deflation easing mid-year
Pet Rx/AllivetAnnounced acquisition; accretive in 2025 Launched Tractor Supply Rx; integrating Allivet; early adoption strong Strategic initiative scaling
Regional TrendsTexahoma strongest; Far West/Midwest pressured by heat South spring categories down ~30%; North solid but insufficient to offset Weather divergence persists
Sale-LeasebackOngoing program modest SG&A benefit $17M gain in Q1 (SG&A); modest more expected in 2025 Consistent funding mechanism
Inflation/DeflationDeflation headwind; anticipated neutrality late ’24/early ’25 Expect AUR to turn positive mid-2025; tariffs could add inflationary pressure Turning from deflation to inflation

Management Commentary

  • “This is not an existential crisis for Tractor Supply…over 60% of our business is U.S.-sourced and only 12% is direct imports…China share reduced from >90% to <70%, targeting ~50% by year-end.” — CEO Hal Lawton on tariffs and sourcing .
  • “We estimate the arrival of spring was delayed by about 3 weeks…spring categories in the South were down about 30%…~250 bps headwind.” — CFO Kurt Barton .
  • “We are not taking price increases at this time…once there’s greater certainty, we’ll engage with vendor partners.” — CEO Hal Lawton .
  • “Guidance calls for net sales growth of 4% to 8%…operating margin 9.5% to 9.9%…EPS $2.00 to $2.18.” — CFO Kurt Barton .

Q&A Highlights

  • Tariff assumptions: Company embedded 90-day Q2 receipts at current rates (10% non-China; 145% China) and will update as policy evolves; impacts expected to flow into second-half AUR rather than Q2 pricing .
  • Pricing posture: No price increases yet; expect vendor cost requests; intent is surgical pass-throughs protecting value perception and margin sustainability .
  • Q2 guide construction: Flow-through of March/April run rates; assumes continued big-ticket pressure but solid Q categories; prudent stance with upside if spring normalizes .
  • Sale-leaseback: $17M gain in Q1, modest incremental activity in 2025; used to offset startup investments .
  • Market share: Continued gains in CUE and pet; positive transaction trends and loyalty scale cited as competitive advantages .

Estimates Context

How results compared to S&P Global consensus (Q1 2025):

MetricConsensusActualResult
Revenue ($USD Billions)$3.532*$3.467 Miss
EPS ($USD)$0.368*$0.34 Miss
EBITDA ($USD Millions)$386.4*$369.2*Miss

Q2 2025 guidance vs consensus:

MetricCompany GuidanceConsensusContext
Revenue ($USD Billions)+3–4% growth (implies ~$4.41–$4.46B off Q2’24 base) $4.396*Slightly above consensus at midpoint
EPS ($USD)$0.79–$0.81 $0.802*In-line at midpoint

Notes: Values marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • Weather-driven miss, not demand decay: Management isolated the shortfall to delayed spring and category mix; customer health and transactions remain solid .
  • Tariff playbook engaged: 90-day cost capture embedded in guidance, with pass-throughs likely in 2H via targeted pricing; sourcing diversification and vendor negotiations should mitigate .
  • Mix resilience: CUE momentum and winter needs offset some seasonal softness; focus on value and EDLP supports gross margin stability .
  • Strategic initiatives scaling: Tractor Supply Rx/Allivet integration, localization, direct sales, and Final Mile position the company for multi-year growth despite near-term SG&A deleverage .
  • Guidance prudent with optionality: FY25 ranges widened; Q2 visibility provided. Watch for spring demand normalization and tariff clarity to drive estimate revisions .
  • Capital returns intact: Dividend increased (+4.5%) and buybacks continued; sale-leaseback gains provide funding flexibility .
  • Trading lens: Near-term stock moves likely tied to tariff headlines and spring demand cadence; medium-term thesis hinges on CUE share gains, 2H AUR inflection, and execution on Rx/direct sales .

Values retrieved from S&P Global.