Rural goods retailer Tractor Supply (NASDAQ:TSCO) fell short of the market’s revenue expectations in Q1 CY2025 as sales rose 2.1% year on year to $3.47 billion. The company’s full-year revenue guidance of $6 billion at the midpoint came in 61.8% below analysts’ estimates. Its GAAP profit of $0.34 per share was 9.1% below analysts’ consensus estimates.
Revenue: $3.47 billion vs analyst estimates of $3.53 billion (2.1% year-on-year growth, 1.9% miss)
EPS (GAAP): $0.34 vs analyst expectations of $0.37 (9.1% miss)
Adjusted EBITDA: $369.2 million vs analyst estimates of $386.1 million (10.6% margin, 4.4% miss)
EPS (GAAP) guidance for the full year is $2.00 at the midpoint, missing analyst estimates by 7.5%
Operating Margin: 7.2%, in line with the same quarter last year
Free Cash Flow Margin: 2.2%, similar to the same quarter last year
Locations: 2,517 at quarter end, up from 2,435 in the same quarter last year
Same-Store Sales were flat year on year (1.1% in the same quarter last year)
Market Capitalization: $27.2 billion
StockStory’s Take
Tractor Supply’s first quarter results were shaped by a delayed spring selling season and ongoing macroeconomic uncertainty, as management pointed to adverse weather—particularly in southern markets—as the primary reason for a softer top-line. CEO Hal Lawton noted, “We estimate the arrival of spring was delayed by about three weeks across most of our markets,” impacting sales of spring seasonal and big-ticket items. Despite these headwinds, the company cited robust transaction growth and record retention of existing customers as positive indicators of underlying business health.
Looking forward, management revised its full-year outlook, citing three key factors: spring season softness, persistent pressure on larger discretionary categories, and the potential impact of increased tariffs on imported goods. Lawton explained the updated guidance reflects “a range of scenarios related to tariff costs that our vendor base and we are incurring,” and emphasized a prudent approach to near-term forecasting. The company is also closely monitoring consumer sentiment and potential shifts in demand as it navigates a more complex cost environment.
Key Insights from Management’s Remarks
Management attributed the quarter’s underwhelming performance primarily to unfavorable weather and soft demand for discretionary categories, while highlighting resilience in needs-based segments and ongoing progress in strategic initiatives.
Weather-Driven Sales Impact: Delayed spring weather, especially in southern U.S. markets, led to weaker demand for seasonal and big-ticket categories such as lawn and garden equipment and riding mowers.
Needs-Based Category Growth: Consumable, usable, and edible categories—such as animal feed and heating fuel—experienced high single-digit unit growth, supported by strong transaction counts and positive new customer trends.
Chick Days Expansion: The annual Chick Days event, which promotes backyard poultry ownership, is on pace for record results. Management noted increased engagement from both core and new customers seeking to offset high egg prices.
Tariff Mitigation Efforts: Leadership emphasized ongoing efforts to diversify sourcing away from China, with the share of direct imports from China expected to fall below 50% by year-end. The company is using vendor negotiations, agile supply chain management, and targeted price actions to offset rising costs.
Pet Rx Initiative Launch: The integration of the Alivet acquisition enabled the rollout of Tractor Supply Pet Rx, a new offering targeting the company’s 40 million Neighbor’s Club members, many of whom are pet owners. Early adoption has been strong, with further in-store integration planned.
Drivers of Future Performance
Management’s outlook for the rest of the year is cautious, with a focus on navigating tariff uncertainty, consumer demand shifts, and ongoing investments in strategic growth areas.
Tariff-Related Cost Pressures: The updated guidance incorporates only the next ninety days of known tariff impacts, with further outcomes dependent on evolving trade policy and vendor negotiations. Future price increases may be required if tariffs persist or escalate.
Big Ticket Category Weakness: Management expects continued pressure on higher-priced, discretionary items unless there is a material change in consumer sentiment or weather patterns. These categories represent less than 15% of total sales but have a disproportionate impact on average ticket size.
Strategic Growth Initiatives: Investments in digital platforms, localized store formats, and the Pet Rx business are expected to support customer retention and unit growth, even in a slower macroeconomic environment. Leadership indicated flexibility in the pace of these investments depending on business conditions.
Top Analyst Questions
Peter Benedict (Baird): Asked for clarity on the assumed tariff environment and its effect on quarterly guidance. Management explained only tariffs impacting Q2 receipts are embedded, with ongoing evaluation for later quarters.
Bharat Rao (JPMorgan): Sought details on expectations for big-ticket categories and how spring trends inform full-year guidance. CEO Hal Lawton stated guidance assumes current run rates continue, with no recovery in big-ticket through the quarter.
Josh Young (Truist): Inquired about the scope and timing of vendor price increase requests and whether Tractor Supply has started to pass through higher costs. Lawton clarified no retail price increases have been implemented yet, but negotiations are expected soon.
Michael Lasser (UBS): Pressed management on how a 4% comp increase could be achieved without substantial price increases given traffic uncertainty. Leadership cited expected positive trends in average unit retail and category mix in the second half.
Steven Forbes (Guggenheim): Asked about early traction and margin profile for the new Pet Rx platform. Rob Mills, EVP and CTO, reported strong initial adoption and stated more in-store integration is planned, with the business still ramping up.
Catalysts in Upcoming Quarters
Looking ahead, the StockStory team will be monitoring (1) the pace and breadth of tariff-related cost pass-through and further sourcing diversification, (2) signs of stabilization or recovery in big-ticket and seasonal categories as spring advances, and (3) adoption rates and customer retention tied to new initiatives like Pet Rx and localized store formats. The evolution of consumer sentiment and weather patterns will also be key determinants of near-term performance.
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