Q4 2024 Earnings Summary
- Moderation of Macro Headwinds Could Boost Sales Growth: Tractor Supply anticipates that the macroeconomic headwinds—including shifts in personal consumption expenditure from goods to services, deflation in commodity-related items, and stabilization of the pet category—that have weighed on the business are moderating as they move through 2025. The company sees "light at the end of the tunnel" on these factors, which could lead to improved sales performance and potential upside to their 1% to 3% comp sales guidance.
- Strong Comp Transaction Growth and Successful New Store Performance: The company reported strong comp transaction growth in Q4, which was widespread across categories and geographies. Comp transactions are expected to continue being a strong growth driver in 2025. Additionally, new stores are performing well, with first-year sales of $4.2 to $4.3 million, in line with expectations. New stores are expected to contribute modestly to comp sales growth over time as they ramp up from 80 to 90 openings in 2025. ,
- Growth Potential from the Allivet Acquisition: The acquisition of Allivet expands Tractor Supply's total addressable market by $15 billion, providing a significant growth opportunity in the pet prescription market. Allivet has a solid operating margin and is expected to be accretive to earnings in 2025. Over the long term, Allivet could equal or surpass Tractor Supply's operating margins, enhancing profitability.
- Moderation in Big-Ticket Sales Growth: Tractor Supply Company experienced strong big-ticket sales growth in 2024, but this momentum moderated in the fourth quarter. Management acknowledged that they are "cycling strong big-ticket comps in 2025," and big-ticket items are expected to "run positively more in line with chain average in 2025," indicating potential challenges in sustaining high growth rates in this category.
- Slight Decline in Gross Margin and Potential Margin Pressure: The company's gross margin decreased by 9 basis points to 35.2% in the fourth quarter, marking the first decline since late 2022. This was partly due to increased promotional activity and a shift in mix. Management expects gross margin expansion to be offset by SG&A deleverage due to factors like higher depreciation and investments in new initiatives, which may pressure overall profitability.
- Lower Operating Margin Guidance at the Bottom End: The operating margin guidance for 2025 has a lower end of 9.6%, which is slightly below previous indications. This is driven by planned investments in strategic growth initiatives, including the Life Out Here 2030 initiatives, which may weigh on near-term earnings despite long-term growth potential.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +3% (up from $3.6598B in Q4 2023 to $3.7736B in Q4 2024) | Total revenue increased modestly due to overall business strength, with emerging contributions from new or growing segments such as Companion Animal partially offsetting declines in other areas. This improvement builds on previous period performance that underwent similar category shifts vs. |
Livestock, Equine & Agriculture | Swing from –$155.58M in Q4 2023 to $759.05M in Q4 2024 (a turnaround of over $910M) | The dramatic reversal indicates a significant recovery and improved market dynamics in this segment. Enhanced unit sales and favorable product mix dynamics, building on prior negative trends, suggest that strategic initiatives and market share gains have begun to reverse earlier underperformance vs. |
Companion Animal | Emerged as a material segment with $1.0028B contribution in Q4 2024 (not reported in Q4 2023) | The new prominence of Companion Animal reflects robust consumer demand and effective channel strategies. Its emergence as a key revenue driver in Q4 2024 highlights a shift from previous periods where the segment was not separately reported, indicating successful positioning. |
Seasonal & Recreation | –17% (declined from $912.79M in Q4 2023 to $758.08M in Q4 2024) | The sharp decline is likely due to weak consumer sentiment and timing shifts in seasonal purchasing, possibly influenced by adverse weather conditions and a re-allocation of discretionary spending compared to the previous quarter’s more favorable seasonal events vs. |
Truck, Tool & Hardware | +24% (increased from $519.41M in Q4 2023 to $645.57M in Q4 2024) | Strong gains in this category were driven by improved product mix and higher sales volumes, reflecting consumer trends toward home improvement and durable goods. This performance builds on prior momentum while benefiting from strategic initiatives in pricing and inventory management vs. |
Clothing, Gift & Décor | –7% (declined from $649.86M in Q4 2023 to $607.96M in Q4 2024) | The modest decline can be attributed to shifting consumer preferences and pricing pressures in discretionary categories. This is consistent with trends seen in the previous period, where external and internal challenges affected consumer spending in non-core segments vs. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Net Sales | FY 2024 | no prior guidance | $14.85B to $15.0B | no prior guidance |
Comparable Store Sales | FY 2024 | no prior guidance | flat to up 1% | no prior guidance |
Operating Margin Rate | FY 2024 | no prior guidance | 9.8% to 10.1% | no prior guidance |
Net Income | FY 2024 | no prior guidance | $1.09B to $1.12B | no prior guidance |
Diluted EPS | FY 2024 | no prior guidance | $10.10 to $10.40 | no prior guidance |
Return of Capital to Shareholders | FY 2024 | no prior guidance | $1B | no prior guidance |
Net Sales Growth | FY 2025 | no prior guidance | 5% to 7% ($15.6B to $15.9B) | no prior guidance |
Comparable Store Sales | FY 2025 | no prior guidance | 1% to 3% | no prior guidance |
Gross Margin | FY 2025 | no prior guidance | +20 to +40 bps | no prior guidance |
Operating Margin | FY 2025 | no prior guidance | 9.6% to 10% | no prior guidance |
Interest Expense | FY 2025 | no prior guidance | $65M to $70M | no prior guidance |
Effective Tax Rate | FY 2025 | no prior guidance | 22.2% to 22.5% | no prior guidance |
Diluted EPS | FY 2025 | no prior guidance | $2.10 to $2.22 | no prior guidance |
Net Capital Expenditures | FY 2025 | no prior guidance | $650M to $725M (≈4% to 4.5% of sales) | no prior guidance |
Share Repurchases | FY 2025 | no prior guidance | $525M to $600M | no prior guidance |
Store Openings | FY 2025 | no prior guidance | ~90 Tractor Supply stores and ~10 Petsense stores | no prior guidance |
Deflation Impact | FY 2025 | no prior guidance | modest headwind in H1, neutral by mid-2025 | no prior guidance |
EPS Growth | FY 2025 | no prior guidance | expected to be relatively consistent between first and second half | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Net Sales | FY 2024 | $14.85 billion to $15.0 billion | $14.88 billion (sum of 3,394.83+ 4,246.6+ 3,468.2+ 3,773.57) | Met |
| Topic | Previous Mentions | Current Period | Trend |
|---|---|---|---|
Macro headwinds | Cited each quarter, covering inflation/deflation, weather, and consumer spending shifts. | Seeing “light at the end of the tunnel,” with deflation moderating, goods-to-services shift nearly normalized, and pet category stabilizing. | Sentiment improving though still cautious |
Shift from goods to services | Consistently referenced as a major headwind, gradually lessening impact. | Mostly reverted to pre-COVID levels, leaving only ~0.5 points to fully normalize. | Diminishing as a headwind |
Deflation and disinflation | Major concern each quarter, cited as cycling through by early-to-mid 2025. | Deflation in commodity products a ~100bps drag, expected to be neutral by mid-2025. | Gradual improvement |
Big-ticket sales | Consistently strong rebound since Q1, with notable performance in mowers, vehicles, equipment. | Low single-digit growth in Q4; expected to stabilize in 2025. | Continues to outperform |
Comp transaction growth | Modestly positive yet under pressure from macro challenges; weaker in Q2, improved in Q3. | Up 2.3% in Q4, offset by deflation-driven ticket decline. | Remains positive, improved in Q4 |
New store performance | Q3 noted 16 new stores opened; Q2 details not provided; Q1 highlighted Orscheln integration. | In line with targets (~4.2–4.3% returns); planning more openings in 2025. | Consistently strong, fueling growth |
Garden centers and Project Fusion | Q3 had 550+ garden centers, 45% of stores remodeled; consistently drives higher productivity. | Key initiatives delivering solid returns; ~25% localized space rollout in 2025. | Ongoing expansion with strong ROI |
Neighbor's Club loyalty program | Grew from 34M in Q1 to 37M in Q3, consistently outpacing overall sales and a major retention driver. | Surpassed 38M members, now 80% of sales; integrating Allivet for pet Rx services. | Continued growth and strategic focus |
Allivet acquisition | Announced in Q3 as an online pet pharmacy tuck-in deal; no mention in Q2/Q1. | Integration focus in Q1 2025; expands TAM by $15B and expected to be accretive. | New in Q3, moving toward integration |
Operating margin pressures | Cited quarterly, influenced by supply chain expansions, new DC costs, and modest deleverage. | 2025 margin guide of ~9.6–10%; pressures from D&A and investments offset by gross margin gains. | Stable outlook despite cost challenges |
Gross margin fluctuations | Fluctuated each quarter due to freight costs, mix shifts, and cost management efforts. | Down 9 bps to 35.2% in Q4; projecting modest 20–40 bps expansion in 2025. | Stable to slightly improving |
Pet food category softness | Noted softness Q1–Q3 from moderating ownership trends and deflation, though still outpacing category. | Stabilizing, aiming for low single-digit growth in 2025; company gaining share. | Improving outlook |
Weather impact on seasonal sales | A recurring theme each quarter: spring delays, summer heat, and storm impacts shifting seasonal demand. | Warmer conditions hampered winter items but boosted summer categories in Q4. | Remains variable; net neutral to positive |
Life Out Here 2030 initiatives | Limited detail in Q3, with more info promised from Dec. 2024 event; no specifics in Q2/Q1. | Focusing on store localization, B2B, Allivet integration, and direct delivery capabilities; key pillar for future. | More details shared in Q4; major future driver |
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Macro Outlook & Comp Guidance
Q: How will macro headwinds impact your business in 2025?
A: We expect the macro headwinds that have weighed on our business over the past 18–24 months—such as the shift from goods to services spending, deflation in commodity-related items, and stabilization of the pet category—to neutralize in 2025. This is reflected in our comp sales guidance of 1% to 3% for the year, with sequential improvement expected from the first half to the second half. We've had a solid start to the year and are confident in our plans. -
Operating Margin Guidance
Q: Can you elaborate on the operating margin outlook for 2025?
A: We forecast our 2025 operating margin to be in line with the 2024 level, centering around 9.6% to 10%. The operating margin range is proportional to our comp sales range of 1% to 3%. We're investing in growth initiatives and self-funding these with gross margin expansion and SG&A efficiencies. -
Comp Sales Potential Upside
Q: Is your comp sales guidance conservative given positive drivers?
A: We feel very good about our 1% to 3% comp sales guidance and are highly confident it's the right place to start. If we experience comp upside, we'll evaluate our initiatives and investments to determine the best approach. Historically, when we see comp growth in the 3–5% range, we expect operating margins to improve. Any comp outperformance would likely result in operating margin flowing towards the higher end of our guidance. -
Big-Ticket Sales Expectations
Q: How do you view big-ticket categories in 2025?
A: In 2024, our merchants did an excellent job with big-ticket sales, achieving low double-digit growth. We recognize we're cycling strong comps, but we expect big-ticket sales to run positively, more in line with the chain average in 2025. We're bringing together newness, competitive pricing, and opportunities in areas like zero-turn mowers and trailers. -
Allivet Acquisition Impact
Q: What impact will Allivet have on earnings and margins?
A: Allivet is a consistent and stable business with solid operating margins. While accretive to earnings in 2025, we'll invest in onboarding and integrating Neighbor's Club members. Over the next five years, we expect Allivet's operating margins to equal or surpass Tractor Supply's levels. -
New Store Productivity & Comp Contribution
Q: How do new stores contribute to comp sales and productivity?
A: New stores continue to perform in line with our expectations, with openings in the 4.2 to 4.3 range on a first-year basis. Net of cannibalization, new stores contribute modestly to comp sales. As we ramp up new store openings from 80–90 to 100 over the next few years, we expect this contribution to grow. New store productivity has been extremely consistent and is performing at or above our targets over the last 3–4 years. -
Gross Margin Details & Outlook
Q: Can you explain the slight gross margin decline and outlook?
A: Gross margin for the fourth quarter was in line with our expectations, down 9 basis points year-over-year, mainly due to a strong comparison from the prior year. There wasn't significant promotional activity impacting margins. For 2025, we expect gross margins to be slightly more favorable in the first half than the second half. We'll start lapping transportation efficiencies by midyear and expect benefits from exclusive brands and retail media in the back half. -
Localization Initiatives & Field & Stream Partnership
Q: How will localization and the Field & Stream partnership impact growth?
A: Our localization efforts remain consistent, adjusting macro space floor planning to maximize productivity, which we anticipate will deliver a low single-digit incremental lift. The Field & Stream partnership will enhance our wildlife category, one of our fastest-growing areas, starting midyear. It will expand into exclusive apparel lines and unique marketing opportunities, further driving sales per square foot and comp transactions. -
Backyard Poultry & Egg Prices
Q: Are rising egg prices boosting backyard poultry demand?
A: Yes, rising egg prices are driving acceleration in the backyard poultry category. About 1 in 5 of our current shoppers participate in this hobby, well above the national average. This year's Chick Days event offers customers guidance and expanded items to grow their flocks, attracting both existing and new customers.