Hal Lawton
President and Chief Executive Officer at Tractor Supply
Thanks, Mary Winn, and thank you to everyone for taking the time to join us this morning. To start, I would like to express my sincere thanks and appreciation to my fellow 50,000 Tractor Supply and Petsense team members. As always, they lived our mission and values, delivered exemplary service to our customers, did a great job being nimble in the quarter and continued to deliver against our strategic initiatives. At Tractor Supply, the underlying health of our business remains strong. We continue to achieve substantial market share gains. Our customer trends and customer engagement are robust and our Life Out Here strategic initiatives remain on track.
Entering the third quarter, we had a sharp focus on the impact of the evolving macro environment and the impact of that environment on our customers' retail spending patterns. Despite this view, our quarter was more challenging than we initially expected. The primary drivers of our underperformance were less-than-ideal weather conditions as well as our customers continuing to be discerning with their spending. On the weather impact for the quarter. As we shared in our July earnings call, we anticipated that our compares would ease through the quarter as we were lapping one of the worst droughts in a decade. We were not assuming a significant benefit from the weather, but rather that it would not continue to be a drag on our performance. In fact, it was a drag.
We estimate that the unfavorable weather conditions in the third quarter contributed more than one point of comp to our sales shortfall compared to our expectations. While we never like to call out the adverse impacts of the weather on our business, there is no doubt that the challenging conditions continued to weigh on our sales this year as it relates to weather. In Q3, we had extreme heat and drought in Texahoma and, to a lesser degree, the Midwest, and also we had excessive rainfall and the absence of cool weather in other areas like the Northeast. As an example, Texahoma, which makes up a little over 15% of our sales, we saw extreme temperatures and dryness there for most of the quarter. In fact, Austin, Texas, as an example, there were 44 consecutive days of temperatures over 100 degrees in the third quarter.
And for perspective, this was twice as many as Q3 of last year. Additionally, last year in the third quarter, we benefited from both the emergency response from Hurricane Ian and a shift of cooler fall temperatures in the last few weeks of the quarter in some of our markets. This year, we did not have these events working in our favor. In the quarter, the emergency response from Hurricane Adelia was much smaller than the prior year and a wave of summer-like temperature continued into September and, in fact, even now into late October. Turning to the macro environment.
As we shared last quarter, we believe that due to the cumulative effects of many factors, our customers are showing signs of strength. Examples of these factors include inflation, higher credit card balances and the resumption of school loan payments. Additionally, consumers continue to shift their spending from goods to services, reverting back to pre-pandemic levels. In the context of this shift, though, we believe that they remain more committed to the Out Here lifestyle and that our business is stickier than more discretionary components of retail. But nonetheless, to some degree, we've been affected by this shift. Now turning to the numbers for the third quarter. The team delivered net sales growth of 4.3% with a modest comparable sales decrease of 0.4%.
Diluted earnings per share for the quarter were $2.33, an increase of 11% over the prior year. Now let's shift to some highlights for the quarter. Comp transactions were flat to the prior year, offset by an average ticket decline of 0.3%. The average ticket performance was driven by a decline in units per transaction with average unit retail remaining relatively strong. July was our best performing period of the quarter with positive comps. Both August and September comps were negative given the seasonal trends I mentioned earlier. Importantly, our active customer counts are stable and growing low single digits. Also importantly, our reactivated as well as new customer counts are also both positive and growing. E-commerce achieved sales growth in the high single digits with strong conversion performance. Our Buy Online, Deliver from Store program was up over 80%.
And on a rolling 12-month basis, very notably, our digital sales have now surpassed $1 billion. Our consumable, usable and edible products represented a meaningful portion of our business in the quarter, and these businesses continue to outperform our overall sales comp results with continued strength in categories like dry dog food, cat food, poultry feed, lubricants and shavings, just to name a few. CUE continues to be one of our structural advantages and these categories and products represent the strength of our core business, and they are what drives footsteps into our store. The gains in these categories were offset by declines in our late spring/summer seasonal product and big ticket categories as well as softness in demand for those fall/winter product categories that usually begin to see some growth at the end of the quarter due to the unseasonably warm weather.
Big ticket performance remained under pressure, down in the mid-single digits, which was a slight improvement from the first half of the year. If I step back, overall, though, we continue to gain share across categories online and in-store and continue, as I said earlier, to see strong customer trends. On the customer front, our Neighbor's Club membership base represented more than 77% of our sales for the quarter. We're seeing continued favorable trends from our loyalty members. Retention rates have never been higher, and our Neighbor's Club members continue comping at a faster rate than our overall sales performance. And importantly, our high-value customers again reached another record count in the quarter.
In just over a year since launching Neighbor's Club at Petsense, penetration of sales to our members now stands at over 65%, and we continue to benefit from the cross-shopping between the two brands as we grow our share of wallet with these customers and focus on Pets Out Here in our collaboration between the two brands. A couple of trends that I mentioned last quarter did continue into this quarter, and those are, one, customers are continuing to increase in their usage of credit; and two, shoppers continue to seek out value, particularly in lower-income customer cohorts. Importantly, our overall customer satisfaction scores hit another new all-time high as we continue to invest in our team and they continue to do a fantastic job providing best-in-class customer service, a hallmark of Tractor Supply. Through the third quarter, our customer satisfaction scores have increased and experienced an improvement every week year-over-year since 2021. We've made significant progress in our Life Out Here strategy.
We now have just over 35% of our chain or 780 stores that are in the Project Fusion layout, and our Garden Center transformation is now active in over 420 locations. We continue to be very pleased with the strategic benefits and the financial returns of the store-level investments. Our Orscheln Farm and Home acquisition remains on track with nearly 50 stores converted to the Tractor Supply brand. And during the quarter, we completed the sale of the Orscheln store support center and the distribution center as planned. Year-to-date, we've opened 51 new Tractor Supply stores in 10 set locations. Our team has done an excellent job executing our real estate projects this year and getting us back to a normalized cadence of new store openings in spite of a tough backdrop in the broader construction market.
During the quarter, the real estate team also successfully executed our first sale-leaseback transaction with the sale of 10 stores. In addition, the team has about 35 fee development sites in the works. I anticipate our real estate strategy will continue to be a source of increasing strength for Tractor Supply over the next few years. Given our performance through the third quarter and our outlook for the fourth quarter, we're updating our sales and earnings guidance for 2023, and Kurt will share some more details on our outlook later in the call.
Before I hand it over to Kurt, if I just step back for a moment, if you told me in January of 2020 that we would nearly double our top line sales and earnings and deliver strong cash return to shareholders while increasing our capital investment and growth initiatives and investing in team member wages and investing in brand building, and doing all this through a global pandemic, major disruptions in global supply chains, rapidly changing consumer shifts, also rapidly escalating costs including the highest consumer inflation in 40 years, it would have been hard to imagine. But that's exactly what this team has delivered. Over the last four years, we've added $7 billion in incremental sales. We've grown our market share significantly and we've increased our earnings by 115% and returned over $3.2 billion of cash to shareholders.
Our resilient needs-based business model has a proven history of growing through various economic conditions. Our customers and team members are dedicated to the Out Here lifestyle, and they prioritize it as it is their authentic lifestyle. Our customers are owners, landowners, pet owners and animal owners. We believe that the softness we're seeing is unique to transitory conditions and weather and consumer spending patterns. We continue to have a long-term structural macro trends that are favorable and sustainable. And as the market leader, we have substantial competitive advantages.
And with that, I'll now turn the call over to Kurt.
