Tractor Supply Company (TSCO Quick QuoteTSCO - Free Report) delivered a strong second-quarter 2025, underscoring the durability of its rural-focused model despite looming tariff pressures. The retailer reported record quarterly sales of $4.44 billion, up 4.5% year over year, and comparable store sales growth of 1.5%, supported by steady customer traffic and improving ticket trends.

The gross margin expanded 31 basis points (bps) to 36.9%, reflecting disciplined cost management, efficiency gains across its supply chain, and robust performance in core consumable, usable and edible (C.U.E.) categories. Customer engagement remained a standout, with Neighbor’s Club membership surpassing 41 million and accounting for more than 80% of total sales.

However, management acknowledged that tariff-related cost pressures are beginning to surface and will become more pronounced in the second half of 2025. The company expects higher costs from direct import receipts to weigh modestly on margins, even as it maintains competitive pricing and navigates a dynamic inflationary environment.

While these headwinds are expected to slightly offset gains from product cost initiatives, Tractor Supply’s strong vendor partnerships, predominantly U.S.-sourced assortment and operational agility provide it with some buffer. The company reaffirmed its full-year outlook, anticipating net sales growth of 4-8% and EPS between $2.00 and $2.18.

Looking ahead, the key test lies in maintaining profitability as tariffs and input inflation pressure costs. With rural consumer confidence holding steady, expanding digital and “Final Mile” capabilities, and continued loyalty growth, Tractor Supply’s core strengths position it to weather short-term margin turbulence while sustaining long-term value creation.

How Are TSCO’s Competitors Performing Amid Tariff Woes?

In the face of escalating tariff pressures, how are TSCO’s key competitors, Ulta Beauty (ULTA Quick QuoteULTA - Free Report) , Five Below (FIVE Quick QuoteFIVE - Free Report) and Sally Beauty Holdings (SBH Quick QuoteSBH - Free Report) , navigating operational headwinds and protecting their margins?

Ulta Beauty’s margins are under pressure as tariffs, wage inflation and higher SG&A costs weigh on profitability. Despite gross margin gains, the operating margin contracted amid rising store payroll, healthcare costs and marketing spend. The exit from Target’s high-margin partnership adds further strain, while cautious guidance reflects wary consumer sentiment. As Ulta Beauty invests in in-store experiences and rural expansion, sustaining profitability amid cost pressures remains a key challenge.

Five Below’s margins are feeling the heat from steep tariff headwinds, with the operating margin forecast to fall sharply as cost pressures mount. Despite efforts to mitigate impact through pricing and supply-chain tweaks, limited pricing power constrains relief. Rising SG&A expenses from higher wages and incentive pay are further squeezing profitability. As tariffs weigh heavily, sustaining growth momentum and rural market strength remains a key challenge for Five Below.

Sally Beauty’s margins face pressure amid tariffs, weak consumer sentiment and currency headwinds. Fiscal third-quarter sales dipped as macro uncertainty curbed discretionary spending, though hair color and digital channels showed resilience. Management is mitigating tariff impacts through vendor cost-sharing, selective price hikes and sourcing diversification. However, persistent FX volatility and tariff exposure may constrain margin stability, testing the company’s ability to sustain profitability in a tough retail landscape.