TRACTOR SUPPLY CO /DE/ Q4 FY2025 earnings call

• Acknowledged team members' efforts during winter storm Fern. - Fourth quarter results were below expectations with drivers including storm cycle, big ticket category step down, and holiday/seasonal category underperformance. - Full year had steady progress with net sales growth, disciplined execution, and progress on Life Out Here 2030 strategy. - Opened 99 Tractor Supply stores, expanded digital business, advanced final mile delivery, and made progress in pet and animal prescriptions. - In 2026, focused on normalization, new store openings, margin expansion, SG&A management, and various strategic initiatives like Chick Days, product assortments, direct sales, and final mile delivery.

Fourth quarter net sales increased 3.3% to $3.9 billion, with comparable store sales up 0.3% driven by average ticket growth. Digital business had high single-digit growth. Full year net sales rose 4.3% to $15.5 billion, driven by new store growth and comparable store sales gains. Consumable, usable and edible categories were strong with low mid-single-digit comparable growth. Big ticket emerging response categories declined high single digits. Digital business had high single-digit growth for the year. Inventory per store up ~5%, with ~1/3 due to tariffs and remaining for customer demand and in-stock levels.

• 2026 total sales growth expected 4%-6% driven by new stores and comps. - Comp sales growth 1%-3% with average ticket and transaction growth. - Gross margin expected to expand with cost management, exclusive brands, etc., offset by delivery costs and tariffs. - SG&A expected to have measured deleverage. - Operating margin expected 9.3%-9.6%. - Diluted EPS range $2.13-$2.23. - Net capital spending $675M-$725M, plan to open 100 new stores, share repurchases $375M-$450M. - Comp sales performance expected balanced across year, with second half margin stronger and first half SG&A deleverage modestly higher.

Q: Good morning, ladies and gentlemen, and welcome to Tractor Supply Company's conference call to discuss fourth quarter and fiscal year 2025 results.

A: [Operator instructions and opening remarks]; Q: Steven Zaccone from Citigroup on gross margin and promotions; A: Kurt Barton's response; Q: Jonathan Matuszewski from Jefferies on 1Q trends; A: Harry Lawton's response; Q: Bobby Griffin from Raymond James on discretionary weakness; A: Harry Lawton's response; Q: Katharine McShane from Goldman Sachs on tariff costs and pricing; A: Kurt Barton's response; Q: Michael Lasser from UBS on comp growth return and challenge; A: Harry Lawton's response; Q: Robert Ohmes from Bank of America on direct sales model profitability; A: John Ordus's response; Q: Peter Benedict from Baird on inflation and garden centers; A: Seth Estep and Harry Lawton's responses; Q: Oliver Wintermantel from Evercore ISI on sales leaseback benefits; A: Harry Lawton's response; Q: Michael Baker from D.A. Davidson & Company on investment leverage; A: Harry Lawton's response; Q: Christopher Horvers from JPMorgan on initiative build and inflection; A: Harry Lawton's response; Q: Peter Keith from Piper Sandler on pet food category; A: Seth Estep's response; Q: David Bellinger from Mizuho on core business underperformance and promo; A: Harry Lawton's response