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Shares of rural lifestyle retailer Tractor Supply fell sharply after the company reported first-quarter results this week.
Revenue rose 3.6% year over year to $3.59 billion, but comparable store sales increased just 0.5%. Earnings per share declined to $0.31 from $0.34 in the year-ago quarter.
Management said its companion animal product category dragged comparable sales by more than 100 basis points.
Companion animal is a meaningful part of the business. Tractor Supply’s 2025 annual report shows the category accounted for 24% of net sales last year, which helps explain why weakness there drew investor attention.
On the earnings call, CEO Hal Lawton said dog ownership—particularly in larger breeds—has come under pressure. He also noted the company under-indexes in cats and in fresh and premium nutrition, segments that have been performing better recently.
Management also pointed to cost pressure. Selling, general, and administrative (SG&A) expense rose 6.1% in the quarter, faster than revenue. The company said part of the deleverage reflected comparable store sales running below its 2% breakeven threshold.
The company’s growth momentum had already been cooling before this report. Comparable sales rose 3.9% in Q3 2025, slowed to 0.3% in Q4, and came in at 0.5% in Q1.
Despite the stock reaction, management highlighted areas of improvement. Four of five product categories posted positive sales growth, and six of seven geographic regions were positive. Digital sales grew at a strong double-digit rate.
The company also said high-value customers remained engaged, with active customer counts continuing to grow. In addition, management reported that big-ticket categories grew at a mid-single-digit rate.
Timing also played a role. Lawton said pet sales are weighted more heavily in Q1 than in the rest of the year, meaning weakness in the category had an outsize impact on the quarter compared with other periods.
Tractor Supply reaffirmed its 2026 outlook: net sales growth of 4% to 6%, comparable sales growth of 1% to 3%, and earnings per share of $2.13 to $2.23. CFO Kurt Barton also said the company expects stronger earnings per share growth in Q2 and Q4.
Lawton said the company does not view the situation as a structurally lower growth business.
To address pet food weakness, Tractor Supply said it is expanding fresh and frozen pet food from about 80 stores to more than 250 by the end of May, with a path to 700 stores by year-end. Management also said roughly one-third of customers who bought Freshpet in early pilots were either new to the category or reactivated to it at Tractor Supply.
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