Key financial results
- Net sales increased 5.1% to $3.91 billion, driven by new store openings, VIP Petcare, and comparable store sales growth.
Net sales increased 5.1% to $3.91 billion, driven by new store openings, VIP Petcare and comp sales growth.
- Comparable store sales increased 0.4% on top of a 3.9% growth in the third quarter a year ago, reflecting a 0.7% increase in average ticket and a 0.3% decline in transactions.
Comps increased 0.4% on top of 3.9% growth in the third quarter a year ago, reflecting a 0.7% increase in average ticket and a 0.3% decline in transactions.
- Diluted earnings per share was $0.43.
Diluted EPS was $0.43.
- Gross profit increased 2.6% to $1.42 billion, and gross margin was approximately 36.4%, down about 90 basis points from the prior year.
Gross profit increased 2.6% to $1.42 billion. Gross margin was approximately 36.4%, down about 90 basis points from the prior year.
- SG&A expenses were approximately $1.12 billion, representing 28.6% of sales compared with 28.1% in the prior year.
SG&A was approximately $1.12 billion or 28.6% of sales compared with 28.1% in the prior year.
- Operating income for the quarter was $307.7 million, resulting in an operating margin of approximately 7.9%.
Operating income for the quarter was $307.7 million, representing an operating margin of approximately 7.9%.
Business segment results
- Consumables: Consumable, usable, and edible categories continued to outperform the chain with strong momentum in September.
Our consumable, usable and edible categories continue to outperform the chain with strong momentum in September.
- Merchandise categories: The company saw strength in wildlife supplies, equine and livestock, truck tool and hardware, and seasonal products, which were partially offset by softness in big-ticket items.
- Digital: Digital sales increased approximately 16% in the quarter, with growth in both traffic and conversion.
Digital sales increased approximately 16% in the quarter, with growth in both traffic and conversion.
- Pet: Pet comparable sales improved sequentially, moving from negative 4% in Q1 to negative 3% in Q2 and negative 3% in Q3.
Pet comps improved from approximately negative 4% in Q1 to negative 3% in Q2 to negative 2% in Q3
- Pet: Total pet business grew 5% in the quarter when including new stores, Allivet, and the VIP Petcare acquisition.
including new stores, Allivet and our VIP Petcare acquisition, our total pet business grew 5% in the quarter.
- Pet: Subscription business in pet experienced triple-digit growth.
triple-digit growth in our subscription business.
- Stores: Rural store locations returned to positive comp growth and outperformed other population density groups.
rural locations returned to more positive comp growth and again outperformed the other population density groups.
Capital allocation
- For 2026, net capital expenditures are expected to be in the range of $675 million to $700 million.
We now expect net capital expenditures in the range of $675 million to $700 million
- Share repurchases for the full year are expected to be between $425 million and $450 million.
share repurchases of $425 million to $450 million.
- Net capital expenditures forecast includes expected sale-leaseback proceeds in the range of $325 million to $350 million.
The net capital expenditures forecast includes expected sale-leaseback proceeds in the range of $325 million to $350 million.
- Capital expenditures are expected to moderate significantly and move below 4% of sales in 2027 and beyond.
we expect capital expenditures to moderate significantly and move below 4% of sales in 2027 and beyond
- New store openings in 2027 are expected to moderate to approximately 85 to 90 stores.
we expect to moderate new store openings in 2027 to approximately 85 to 90 stores.
Industry trends and dynamics
- Elevated interest rates and reduced housing mobility continue to weigh on property improvements and larger projects.
Elevated interest rates and reduced housing mobility are weighing on property improvements and larger projects.
- Pet ownership headwinds, particularly new pet acquisition, continue to affect demand in certain categories.
Pet ownership headwinds, particularly new pet acquisition, continue to affect demand in certain categories.
- Across the farm economy, increases in commodity prices and operating costs are influencing purchasing decisions.
Across the farm economy, increases in commodity prices and operating costs are influencing purchasing decisions.
- More than 60% of surveyed customers felt less comfortable making nonessential purchases than 6 months ago due to inflation, higher fuel costs, and broader uncertainty.
Competitive landscape
- Higher spending customers led quarterly performance, delivering above comp chain growth for the fourth consecutive quarter.
Higher spending customers, again led quarterly performance, delivering above comp chain growth for the fourth consecutive quarter
- Neighbor's Club members represented nearly 82% of third-party sales, with member comps increasing and retention improving modestly.
Neighbor's Club members represented nearly 82% of third quarter sales, with member comps increasing and retention improving modestly.
- Younger customers, specifically Gen Z and millennials, led comparable sales growth across age groups.
Our younger demographic led comparable sales growth across age groups in the third quarter with strength among Gen Z and millennials.
- Management believes the company gained market share across most metrics and categories during the quarter.
We believe we gained market share across most metrics and categories with improvement through the quarter.
Macroeconomic environment
- Retail price inflation was just under 50 basis points for the third quarter.
retail price inflation was just under like 50 basis points.
- Higher transportation costs, including rising fuel costs and carrier rates, intensified from the second quarter and created greater pressure than anticipated.
Growth opportunities and strategies
- The company expects to realize approximately $100 million in tariff refunds this year, investing about 40% in customer value.
- Freshpet rollout target for year-end is being increased from more than 700 stores to approximately 1,000 stores.
based on Freshpet's performance, we're increasing our year-end rollout target for more than 700 stores to approximately 1,000 stores.
- The company has successfully integrated Allivet as the prescription platform for VIP Petcare.
We've also successfully integrated Allivet as the prescription platform for VIP Petcare post that acquisition.
- The company intends to expand the outdoor recreation and wildlife supplies program to a meaningful number of stores by the end of next year.
we intend to expand the outdoor recreation and Wildlife supplies program to a meaningful number of our stores by the end of next year
Financial guidance and outlook
- For the fourth quarter of 2026, the company is reaffirming its guidance and contemplates positive comparable sales.
- For the fourth quarter gross margin, the company expects a more stable year-over-year comparison that is modestly down by 10 to 30 basis points.
- Management expects approximately 15 to 20 basis points of benefit from the Nampa distribution center to begin in the fourth quarter.
we expect the benefits from that capacity and productivity to begin contributing more meaningfully as we move forward.
- Depreciation growth is expected to moderate to mid-single digits or lower in 2027 following several years of elevated capital investment.
Following several years of elevated capital investment, we expect depreciation growth to moderate to the mid-single digit or lower in 2027.
- Renegotiated vendor support agreements are expected to generate more than $50 million in annualized benefits next year.
renegotiated vendor support agreements are expected to generate more than $50 million in annualized benefits next year.
- The company is targeting more than $75 million in additional annual SG&A reductions over 2027 and 2028, incremental to operating margin leverage.
Q3 FY2026 results
| Metric | Result | Change |
|---|---|---|
| Net sales | $3.91 billion | increased 5.1% |
| Comparable store sales | 0.4% | on top of 3.9% growth last year |
| Diluted EPS | $0.43 | Not stated |
| Gross profit | $1.42 billion | increased 2.6% |
| Gross margin | 36.4% | down about 90 basis points |
| Operating income | $307.7 million | Not stated |
How management sounded
Balanced (+25 on our -100 to +100 scale). Management highlighted improving sales momentum and strong September performance, though they noted ongoing consumer caution and cost pressures. Management sounded more upbeat than on 6% of the 302 calls we cover; most companies sound positive on their own calls, so the comparison says more than the label.
Read the analyst Q&A summary and guidance and outlook for this call.
What to watch before the next call
- Fourth quarter weather patterns and consumer discretionary spending
- Progression of freight and transportation cost pressures
- Execution of the $75 million SG&A cost reduction program over the next two years
Earlier calls
- Q2 2026 (Jul 23, 2026), tone Cautious: Tractor Supply reported second quarter net sales of $4.5 billion, up approximately 2%, while comparable store sales declined 1.5% due to adverse weather and macroeconomic pressures in May.
