Drought and high gas prices hammered the earnings of a popular rural lifestyle retailer, leading to a staggering number of store closures.
Tractor Supply Co. announced in an earnings call Friday that it will shutter around 75 of its 206 Petsense locations, a pet-store brand the company bought in 2016.
“Fuel prices peaked during the height of our spring selling season, putting meaningful pressure on our customers' discretionary spending at the most important time of the quarter,” CEO Hal Lawton said during the company’s second-quarter earnings call Thursday. “At the same time, persistent drought conditions across several key southeastern markets limited normal seasonal activity and reduced demand for lawn care and other outdoor-related purchases.”
The company’s typical customer drives a diesel-powered pickup truck and has to make a long drive to get to the nearest Tractor Supply store, Lawton said, making them sensitive to higher gas prices.
To counter the money lost from elevated gas prices and drought, Tractor Supply chose to close roughly 36 percent of its Petsense stores.
Tractor Supply’s customer base has been especially hard-hit by the spike in fuel prices in the months after President Donald Trump launched a war with Iran.
Whereas the average price of a gallon of unleaded gas was around 97 cents higher than it was a year ago on Monday morning, diesel prices were $1.56 higher.
While higher gas prices drained customers’ wallets, drought tempered spending on lawn-care products in key southeastern markets, Lawson said.
April projections from the U.S. Drought Monitor indicated that that 97 percent of the southeast would experience drought, the highest levels since the monitor started tracking drought 26 years ago.
With spring losses piling, the company chose to cut 75 of its Petsense stores. Once the cuts are complete, Tractor Supply will own five fewer Petsense locations - 131 - than it did when it bought the brand in 2016.
The closures will free up money that the company will use to “reinvest back into the core of our business,” Lawton said during the earnings call.
Pet stores and services have been a growing part of Tractor Supply’s business. In May, the company acquired mobile vet service VIP Petcare, the largest mobile pet care provider in the country, and purchased online vet pharmacy Allivet in December 2024.
Lawton said he believes both brands will become a core part of Tractor Supply’s operations, and noted that Petsense “is not directly connected to the core of Tractor Supply business.”
