Name: TRACTOR SUPPLY CO /DE/ Q3 2025 Earnings Call
Start: 2025-10-23T14:00:00.000Z

Executive Summary

Q3 delivered in-line performance: net sales grew 7.2% to $3.72B, comps +3.9% (traffic +2.7%, ticket +1.2%), and diluted EPS $0.49, with gross margin +15bps YoY to 37.4% .
Against S&P Global consensus, EPS modestly beat ($0.49 vs $0.482*) while revenue was essentially in line ($3.719B vs $3.722B*), implying limited estimate risk this print. The quarter was aided by an extended summer season and continued C.U.E. strength, partially offset by tariff and freight headwinds and warmer September weather .
FY25 guidance was narrowed: sales growth +4.6% to +5.6% (from +4% to +8%), comps +1.4% to +2.4% (from +0% to +4%), operating margin 9.5%-9.7% (from 9.5%-9.9%), EPS $2.06–$2.13 (from $2.00–$2.18) .
Stock-relevant narrative: management reiterated 4Q comps +1% to +5% driven by weather, highlighted 2026 as a “more normalized” year with margin expansion potential at low-2% comps, and indicated the direct sales/final mile investments should be self-funded in 2026—key medium-term margin and multiple catalysts .

What Went Well and What Went Wrong

What Went Well
- Traffic-led comp strength continued: “a hallmark of Tractor Supply,” with all regions comping positive; customer metrics hit Q3 records and Neighbors Club exceeded 80% of sales .
- Seasonal recovery and execution: extended summer (“bathtub” effect) contributed ~50–60 bps to Q3; strong tractors/riders, lawn & garden, sprayers/chemicals, power equipment parts and accessories .
- Margin discipline: gross margin +15 bps YoY to 37.4% driven by product cost management and EDLP despite tariff and transport headwinds .
What Went Wrong
- September warmth and no emergency response activity weighed on fall seasonal and generator demand; discretionary big-ticket softness persisted (e.g., kennels, trailers, gun safes) .
- SG&A deleverage (28.1% of sales, +29 bps YoY) tied to planned investments (final mile, direct sales), higher incentive comp vs easy accruals, and lower sale-leaseback benefit .
- Tariff pass-through still a headwind; management taking surgical pricing with limited elasticity so far but expects tariff costs to continue flowing through in 4Q .

Financial Results

Consolidated summary (sequential trend and YoY context)

Metric	Q1 2025	Q2 2025	Q3 2025
Revenue ($USD Billions)	$3.467	$4.440	$3.719
Gross Margin %	36.21%	36.94%	37.35%
Operating Margin %	7.19%	13.01%	9.21%
Net Income Margin %	5.17%	9.69%	6.97%
Diluted EPS ($)	$0.34	$0.81	$0.49
Comparable Store Sales %	-0.9%	+1.5%	+3.9%
Ticket (YoY)	-2.9%	+0.5%	+1.2%
Transactions (YoY)	+2.1%	+1.0%	+2.7%

Actuals vs S&P Global consensus (Q3 2025)

Metric	Actual	Consensus	Surprise
EPS	$0.49	$0.482*	+1.7%*
Revenue ($B)	$3.719	$3.722*	-0.1%*

Values retrieved from S&P Global.

Category/other operating KPIs

KPI	Q3 2025	Q3 2024
Exclusive Brands (% Sales)	29.2%	29.1%
Imports (% Sales)	9.8%	10.4%
Avg Transaction Value ($)	$59.48	$58.87
Store Count (TSC / Petsense)	2,364 / 206	2,270 / 205
Total Selling Sq Ft (000s)	40,253	38,668
Pre-Opening Costs ($000s)	$5,510	$2,240
Capex (Q3, $mm)	$277.6	$188.2

Guidance Changes

Metric	Period	Previous Guidance (as of Q2)	Current Guidance (Q3)	Change
Net Sales Growth	FY25	+4% to +8%	+4.6% to +5.6%	Narrowed; midpoint ↓ (6.0% → 5.1%)
Comparable Store Sales	FY25	+0% to +4%	+1.4% to +2.4%	Narrowed; midpoint ~flat/slightly ↓ (2.0% → 1.9%)
Operating Margin Rate	FY25	9.5% to 9.9%	9.5% to 9.7%	Narrowed lower; high end ↓
Net Income ($B)	FY25	$1.07–$1.17	$1.09–$1.14	Narrowed; midpoint slightly ↓ ($1.12 → $1.115)
Diluted EPS ($)	FY25	$2.00–$2.18	$2.06–$2.13	Narrowed; midpoint ~flat/slightly ↑ ($2.09 → $2.095)
Q4 Comp Guidance	Q4 2025	—	+1% to +5%	Set; weather-driven range
Dividend/Share (Quarterly)	Ongoing	$0.23 declared Aug 7	$0.23 declared Nov 5; Pay 12/9/25	Maintained

Note: No explicit FY25 tax rate/OI&E guidance provided; management noted Q3 ETR 21.0% with normalization expected over the year .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 & Q2)	Current Period (Q3)	Trend
Tariffs & Pricing	Q1 widened FY25 ranges due to new tariffs; focus on U.S.-sourced mix and cost controls . Q2 reaffirmed outlook; disciplined price actions .	Surgical pricing amid tariff flow-through; limited elasticity thus far; expect continued tariff costs in Q4 .	Persistent headwind; managed via surgical pricing and cost actions.
Consumer & Mix	Q1: traffic up but ticket down; spring seasonal weak . Q2: comps improved; C.U.E. strength; some discretionary softness .	Traffic-led comps; C.U.E. momentum; strong seasonal (extended summer); discretionary big-ticket mixed; no emergency response .	Healthier engagement; category bifurcation persists.
Seasonal & Weather	Q1 winter helped; spring lagged . Q2 delayed spring; improvement .	~50–60 bps comp benefit from elongated summer; Sept warmth pressured fall; Q4 outcome weather-driven .	Weather remains key volatility driver.
Strategic Initiatives	Q1 launched TSCO Rx/Allivet integration /. Q2: steady progress .	Direct sales/final mile scaling; digital sales low double-digit; retail media revenue triple YoY; ammo dens; Field & Stream rollout .	Building optionality; early monetization.
2026 Outlook	—	2026 seen as “more normalized” with margin inflection at low-2% comps; 100 new stores planned; initiatives self-funding .	Constructive medium-term setup.
AI/Tech	—	Enterprise AI adoption (vendor modules), custom tools (HeyGura, Tractor Vision, Corso), OpenAI enterprise integration for agents/automation .	Early-stage productivity lever.

Management Commentary

CEO Hal Lawton on Q3 execution and customer health: “The Tractor Supply team delivered a strong third quarter… driven by ongoing share gains… extended summer season and healthy transaction growth” . “Customer satisfaction remains strong… record 17 quarters of consecutive improvement… Neighbors Club… represents over 80% of our sales” .
CFO Kurt Barton on margins and SG&A: “Gross margin increased 15 basis points to 37.4%… offset by tariff costs and higher transportation costs” . “SG&A… deleveraged 29 basis points… due to planned strategic investments… higher incentive compensation… lower sale leaseback benefit” .
CEO on outlook and weather: “We feel really good about the guidance we’ve given in Q4… it is all about the cold weather and winter that starts to happen in December” .
On strategic initiatives: “We remain incredibly bullish… direct sales… off to an excellent start… 2026 would be when you’d start to see the impact… results” .

Q&A Highlights

Direct Sales & Final Mile: 48 specialists covering ~312 stores; weekly sales >$200K and ramping; average ticket ~7x company average; self-funding in 2026 (no incremental SG&A pressure) .
Tariffs & Ticket: Ticket up modestly in Q3 mainly from AUR; Q4 ticket could be slightly higher given import mix and tariff passthrough; elasticity limited so far .
2026 Margin Leverage: Margin expansion expected with comps in low-2% range as investment pressure normalizes; gross margin momentum and SG&A leverage anticipated .
Category Expansion: Wildlife/recreation growth, Field & Stream exclusives, and ammo dens in ~half the chain; attractive multi-year growth vector .
Retail Media: Triple-digit revenue growth YoY; partner count +80%, avg partner revenue +~50%; expanding products and in-store offerings in 2026 .

Estimates Context

Q3 vs S&P Global Consensus: EPS $0.49 vs $0.482*, revenue $3.719B vs $3.722B*—a small EPS beat and essentially in-line revenue. 30 EPS estimates and 25 revenue estimates underpinned consensus breadth*.
Implications: Limited estimate reset; guidance narrowing suggests modest fine-tuning rather than a directional change. Focus shifts to 4Q weather sensitivity and 2026 margin normalization commentary .