Tractor Supply Company Q3 FY2025 earnings call

• Team members' commitment drives success. • Third quarter results in line with expectations, driven by share gains in consumable, usable, and edible businesses. • Customer engagement strong: record customer satisfaction, high customer metrics. • Category performance: tractors and riders strong, wildlife supplies expanding with Field and Stream launch, discretionary and weather-dependent categories lag. • Digital sales growing, nearly 80% of online orders fulfilled by stores. • 20th anniversary of Peasants by Tractor Supply. • Distribution centers productive. • Pet pharmacy growing. • Disciplined real estate growth with new store openings and existing store investments. • Progress on Life Out Here strategic initiatives.

Net sales grew 7.2% to $3.72 billion. Comparable store sales increased 3.9% (transaction growth 2.7%, average ticket growth 1.2%). Gross margin increased 15 basis points to 37.4%. SG&A expenses were $1.05 billion, up 8.4% from last year, deleveraging 29 basis points to 28.1% of net sales. Diluted earnings per share was $0.49. Digital sales grew at a low double-digit rate. Opened 29 new stores in the quarter, year-to-date total 68. Neighbors Club represents over 80% of sales.

• Narrowed fiscal 2025 guidance: net sales growth 4.6%-5.6%, comp sales growth 1.4%-2.4%, operating margin 9.5%-9.7%, diluted EPS $2.06-$2.13. • 2026 expected to open 100 new stores, anticipate consistent opening pace, optimistic about maintaining comp sales step up, expect P&L normalization, margin inflection around low 2% comp sales range.

Q: Update on direct sales rep build-out and final mileage coverage.

A: Direct sales off to excellent start, 312 stores covered, reps comping at nearly 50%, selling over $2,000 a week, 48 specialists now, ramping with more to come.

Q: Consumer behavior and initiative contribution.

A: Consumer strong and resilient, Q business fundamental, Q4 guidance based on weather, direct sales driving growth.

Q: Pricing and tariffs impact on ticket.

A: Navigating tariffs, surgical price taking, focus on value, guidance reflects cost navigation.

Q: OI margin expansion in 2026.

A: SG&A pressure less in 2026, potential margin inflection with low to mid 2% comp sales.

Q: Q4 comp range and 2026 first half vs second half.

A: Q4 range due to weather, 2026 sales straightforward with some AUR and DC impact.

Q: Comp building blocks and Alivet.

A: AUR, transactions, strategic initiatives contribute, details in January call.

Q: Holiday assortment and margin.

A: Team adjusted for tariffs, confident in holiday assortment, operating margin potential with low comp rates.

Q: Hunting supplies expansion.

A: Ammo extension of wildlife category, half the chain has it, deepening in outdoor categories.

Q: Seasonal shift and ticket in Q4.

A: 50-60 bps tailwind from spring-summer shift, ticket may be up more in Q4.

Q: Retail media and discretionary softness.

A: Retail media growing, triple revenue growth, discretionary softness in big ticket.

Q: AI updates.

A: Enterprise software adoption, custom built apps scaling, automation with OpenAI integration.

Q: Store growth in 2026.

A: 100 new stores expected, growth in various markets, new store productivity strong, low cannibalization