During the second quarter of fiscal 2026, the Company completed a strategic reassessment of the Petsense business including an evaluation of the current operations and future growth outlook for that business. As a result of this review, management approved a plan to restructure the business, including the closure of approximately 75 stores. These planned store closures and the corresponding decrease in expected future cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This also signaled that potential impairment indicators existed for both the goodwill asset and tradename intangible asset that are related to the Petsense reporting unit. The Company performed assessments of the fair value of inventories and tangible long-lived assets and concluded that impairment charges were necessary. Finally, the Company evaluated other restructuring charges as a result of these planned closures.

Goodwill is allocated to each identified reporting unit, which is defined as an operating segment or one level below the operating segment. Goodwill is not amortized, but is evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of goodwill may not be recoverable. The aforementioned planned closure of approximately 75 Petsense stores and the corresponding decrease in expected cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This indicated that it was more likely than not

The Company conducted a quantitative impairment analysis of the Petsense reporting unit using the income approach. The determination of fair value under the income approach requires management to make subjective judgments involving, among other items, forecasts of projected financial information (such as revenue growth rates, profit margins, tax rates, and capital expenditures) and selection of a discount rate that reflects the risk inherent in estimated future cash flows. These are unobservable inputs classified as Level 3 inputs under the fair value hierarchy.


	Fiscal Three and Six Months Ended						Fiscal Three and Six Months Ended
	June 27, 2026						June 28, 2025
	Tractor Supply		Petsense		Consolidated		Tractor Supply		Petsense		Consolidated
Net goodwill, beginning of year	$	324,563	$	22,161	$	346,724	$	224,258	$	22,161	$	246,419
Impairment expense	—		(22,161)		(22,161)		—		—		—
Acquisition of Allivet	—		—		—		100,882		—		100,882
Acquisition of VIP Petcare	100,856		—		100,856		—		—		—
Net goodwill, end of period	$	425,419	$	—	$	425,419	$	325,140	$	22,161	$	347,301

The Company had approximately $80.8 million and $52.3 million of intangible assets other than goodwill at June 27, 2026 and June 28, 2025, respectively. These identifiable intangible assets included the Petsense tradename intangible asset, which had a carrying value of $23.1 million at June 28, 2025. The intangible asset balance represents the carrying value of certain indefinite-lived assets, which are not subject to amortization as they have an indefinite useful life on the basis that they are expected to contribute cash flows beyond the foreseeable horizon, and certain definite-lived assets. These assets are evaluated for impairment annually and whenever events or changes in circumstances indicate the carrying value of the asset may not be recoverable.

The aforementioned planned closure of approximately 75 Petsense stores and the corresponding decrease in expected future cash flow due to the closures resulted in a downward adjustment of the future financial forecast for the Petsense business. This indicated that it was more likely than not that the carrying value of the Petsense tradename asset exceeded its fair value. We conducted a quantitative impairment analysis in the second quarter of fiscal 2026 using the relief-from-royalty method to measure the estimated fair value of the tradename intangible asset at the measurement date. The determination of fair value requires management to make subjective judgments involving forecasts of projected revenue growth rates, royalty rates, and tax rates, as well as the selection of a discount rate that reflects the risk inherent in estimated future cash flows. These are unobservable inputs classified as Level 3 inputs under the fair value hierarchy. If actual results are not consistent with our estimates and assumptions used in estimating future cash flows and asset fair values, we may be exposed to additional impairment losses in a future period. As a result of the quantitative impairment analysis, it was determined that the carrying value of the Petsense tradename was in excess of the fair value, resulting in a pre-tax impairment loss of approximately $11.0 million, included in the impairment expense income statement caption, in the fiscal three and six months ended June 27, 2026.