Tractor Supply Co. (TSCO) Pet category showing early signs of stabilization but management withdraws long term guidance

Equity Research 24 July 2026 | 2:39AM EDT

Tractor Supply Co. (TSCO): Pet category showing early signs of stabilization but management withdraws long term guidance

Tractor Supply’s stock closed up 3.2% today (vs. the S&P -1.2%) despite a 2Q26 miss, Kate McShane, CFA | reduced guidance for FY26 and the decision to withdraw its long term guidance. Key Goldman Sachs & Co. LLC takeaways from the quarter include: 1) Comps declined -1.5% in the quarter as Nishi Agarwal unusually adverse May weather, peak fuel costs, and discretionary big-ticket | pressure more than offset better trends in April and June; 2) June’s positive trends Goldman Sachs India SPL

carried into July; however, management did not fully quantify the quarter to date Mark Jordan, CFA | other than noting July is its hardest compare but the two year stack is in line with Goldman Sachs & Co. LLC sequential improvement the company saw in June; 3) FY26 guidance was reduced based on the Q2 miss as well as a reduced outlook for the 2H on both the top line Emily Ghosh | and margin as the company faces an uncertain demand environment and higher Goldman Sachs & Co. LLC freight costs. In addition, management withdrew its long-term financial algorithm Grace Chee given the change in the environment and noted they will be providing a revised long | Goldman Sachs & Co. LLC term outlook on their Q4 call; and 4) The pet category is showing early signs of Samantha Chiang stabilization following category resets. | Goldman Sachs & Co. LLC We stay Buy-rated on Tractor Supply given the current valuation, a more conservative outlook, and an early signs of a companion animal stabilization. However, while we could see some sequential improvement in the near term, we think it may take a return to sustainable LSD top line growth and margin expansion to drive the stock higher. Our new price target is $38 (vs. $43 prior).

n Q2 comps miss driven by May-specific weather and fuel cost hikes, along with big-ticket pressure: In 2Q26, Tractor Supply comps declined -1.5% (vs. +0.5% in 1Q26), reflecting lower transaction counts (most pronounced in May), modest inflation, and softer discretionary demand, while CUE categories remained positive. Management noted that positive comps in April and June were more than offset by unusually adverse conditions in May, which drove Q2 results below expectations. Specifically, weak May performance in big-ticket items and hardlines spring goods alone exerted an approximate 200 bps drag on Q2 comp sales. Additionally, management noted that fuel prices peaked during the height of the spring selling season, putting meaningful pressure on discretionary spending, while persistent drought conditions across key Southeastern markets limited normal seasonal activity, reducing demand for lawn care and outdoor-related purchases. Consequently, big-ticket categories declined in the MSD for the quarter, while needs-based businesses remained resilient, and digital sales achieved double-digit growth in May, supported by

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Goldman Sachs Tractor Supply Co. (TSCO)

strong deliver-from-store performance. While pet performance remains below company expectations, trends improved sequentially from Q1. n Quarter to date trends: Management highlighted that the toughest y/y comparison of the 2H is July, which faces an extended spring selling season and robust big ticket performance in the prior year. However, management did not fully quantify the quarter to date other than noting July is its hardest compare but the two year stack is in line with sequential improvement the company saw in June. Management noted that June’s spring selling momentum carried into July, aided by…