Harry A. Lawton III
President and Chief Executive Officer, Director at Tractor Supply
Thank you, Mary Winn. Good morning, everyone, and thank you for joining us. I'd like to begin by thanking the 52,000 Tractor Supply members for their commitment to each other and our customers and for their dedication to serving Life Out Here. Team is executing at a high level and did a nice job nimbly adjusting in the second quarter. We're operating in a tougher environment than we expected at the beginning of the quarter and certainly tougher than what we forecasted as we entered the year. Consumer spending continues to shift in favor of services. Shoppers that are tired of inflation are being judicious on their baskets.
Consumers continue to pull back on discretionary purchases. And additionally, our business was further impacted by the abnormal seasonal trends, particularly in the month of June. Despite this environment, we still expect 2023 to be a pretty solid year. Our customer is healthy, and we're gaining share, outgrowing our market by two times and we are significantly outpacing total U.S. retail sales growth. We anticipate that we will have positive sales comps and positive comp transactions for the year, albeit in the low single digits range. And importantly, net sales and earnings will grow strong mid-single digits on top of the 53rd week last year.
We have a long track record of growth and high expectations of performance. We view our underperformance to these expectations as specific to the current environment. The team has dialed in and understands the challenges. For the remainder of the call today, I'll speak to a few highlights of the second quarter and then share an update on our Life Out Here strategy. John Ordus will then provide greater insights on our real estate strategy and our plans to accelerate our store growth. And then Kurt will follow John and share further details on the second quarter and our full year outlook.
So let's dig in. All right. Turning to the second quarter. We grew net sales by 7.2% with comparable store sales up 2.5% and diluted EPS $3.83, an increase of nearly 9%. Our comparable store sales growth was driven by transaction growth of 1.8% and ticket growth of 0.6%. We expected and were pleased to see comp transactions turn back positive and this trend has continued into Q3. We began the quarter with mid-single-digit comp sales growth in both April and May. As we moved through the month of June, we experienced a noticeable slowdown in our seasonal categories with the period coming in modestly positive.
In my 25 years in retail, June was one of the most topsyturvy months that I have seen, smoke, drought, heat, hit had a little bit of it all. As mentioned, our customer base is healthy. Our active customer counts are stable and growing. Importantly, our new customer trends have leveled out after a period of lapping tremendous growth in 2020 and 2021. Our customer satisfaction scores continue to break records and improved year-over-year. And customer demographic trends continue to trend younger and more female than pre-pandemic. Our Neighbor's Club reached a record 31 million members in the quarter, an increase of five million members in the last year.
We're seeing continued favorable trends from our loyalty members. Retention rates remain at all-time high. Neighbors Club members continue comping at a faster rate than our overall performance and our high-value members reached a record count in the quarter. A few key trend that we're seeing our customers as follows: one, customers are increasing in their usage of credit. Two, shoppers continue to seek out value, particularly in our lower-income customers. And three, customers are buying a little more often but a little less per trip. Now shifting from our customer to our categories.
Our year-round categories were up mid-single digits, indicative of our ongoing market share gains and our demand-driven need-based business model. Our consumable, usable and edible categories continue to deliver strong stable performance and drive trips to Tractor Supply. In this quarter, CUE categories had growth in the low double digits. In companion animal, we are gaining substantial share throughout the category. Again, this quarter, we had sequential increases in the number of customers shopping us for this category each week. In livestock, our spring Chick Days event was one of the largest ever for us with the poultry category up strong double digits.
We believe we're on track to exceed last year's record of 11 million birds sold, not only regain growth from existing customers, we are also experiencing robust growth in new customers to the category, and this is driving both trips and ticket. Our seasonal categories were flat and below expectations. The miss was primarily in June when, as mentioned previously, there were a number of choppy environmental conditions across our markets that resulted in the consumer not being as engaged in the categories we expected. This softer seasonal performance in June had a material impact on our second quarter performance and was the main driver of our miss versus our expectations.
Our big ticket sales were down in that high single digits and in line with our expectations. And in fact, our performance in the quarter was a sequential improvement from the first quarter. The most significant pressure in the quarter was in zero- turns, generators and recreational vehicles. On the real estate front, we opened 17 new Tractor Supply stores and three petsense by Tractor Supply stores in the quarter. For the second consecutive quarter, we've seen the cadence of our new store openings returned to a more normalized rate. Our petsense Tractor Supply business is performing well and comps in the quarter were greater than over tractor supply. And the integration of Orscheln is right on track.
Today, we fully transitioned and rebrand opened 15 locations. We remain very pleased with the customers' response as we convert to the Tractor Supply brand. Although the operating environment may be different than we anticipated as we entered the year, I'm incredibly proud of how the team has come together to navigate the various circumstances and control what we can control. Now transitioning to an update on our Life Out Here strategy. We remain very confident in our long-term growth outlook. We participate in a large fragmented and attractive market. We continue to benefit from numerous structural tailwinds, including rural revitalization, home setting, self-reliance and pet ownership.
We have numerous substantive competitive advantages and are investing to expand them through our Life Out Here strategy. Since we first embarked on our strategy in the fall of 2020, the team has made remarkable progress on the transformation of Tractor Supply. As a reminder, the five pillars of our strategy include: deliver legendary customer experiences, advance our ONETractor capabilities, operate the Tractor Way, go the country mile for our team and generate healthy shareholder returns. And the key initiatives that support this strategy include our Project Fusion store remodels, our Garden Center transformation, our Neighbor's Club loyalty program and the expansion of our omnichannel capabilities.
Our Project Fusion store layout is now in over 700 stores, representing greater than 30% of our store base. This program is enhancing our space productivity with improved layout, signage, SKU expansions and improved adjacencies. And for remodels, it also offers an improved customer shopping experience that is much more contemporary. Complementing Project Fusion is the sideline transformation, which is leveraging and expanding our existing outdoor side lot retail to drive greater productivity and convenience with the addition of a Garden Center and a drive-through pickup lane to support our omnichannel technology investments. With more than 400 Garden Centers today, we've significantly expanded our assortment of lawn and garden products that are relevant to our customers' lifestyle. Importantly, these two projects are delivering on our return expectations.
They're providing material sales lift. We're seeing improvement in customer satisfaction and we're seeing higher levels of new customer acquisition in these remodeled stores. Also, our execution on the remodels continues to improve as we're in year three now of the effort, and we're reducing project costs and also continuing to shorten construction times. We relaunched our Neighbor's Club program to a points-based structure in April of 2021 and the timing was very fortuitous as it allowed us to lock in the millions of new customers that found us through the pandemic. In total, since the relaunch, our membership has increased by 12 million members, a 60% increase. Additionally, the design of the program has facilitated upward spend migration and driven strong retention rates.
Lastly, the program provides invaluable insight into our customer behavior and allowed to personalize our offering tailored to their needs. Look for us to evolve the structure again sometime in the next 12 to 18 months to further enhance value for our members. Underpinning our strategy are substantial investments in our distribution network to support the significant sales increase and store growth. Today, our network is achieving record service levels and the strongest productivity we've experienced in the last five years. Our new state-of-the-art distribution center in Navarre, Ohio, and our increased count of mixing centers now up to 15 and the implementation of engineered labor standards, are all contributing to this performance.
Today, I'm excited to share with you a new strategic focus area that we've been working on for a little over a year, the transformation of our real estate model, enabled by a number of new capabilities that is designed to deliver material benefit to both revenue growth and operating margin rate and reinforce our long-term guidance. First, we're raising our new store growth target. We now believe there is a 3,000 store opportunity domestically for Tractor Supply. This is supported by our total addressable market of more than $180 billion of robust growth and our ongoing market share gains.
Our new target represents an increase of 200 stores. And we believe we continue to have significant run rate for growth with high return new stores. Second, we're implementing new capabilities to enable owned and development of new store builds. This capability is expected to generate significant construction cost savings and allowing for lower rents in these applicable stores once we sell them post construction. Third, we're also announcing plans to periodically execute sale-leaseback transactions of our existing ownership of 117 stores. And we're going to have a step-up in our ongoing build of stores back to 90 stores per year starting in 2025. Today's real estate announcement extends our runway for growth and reinforces our long-term financial model. It's a compelling addition to our Life Out Here strategy that will further solidify our growth for many years to come. And with that, I'll turn it over to John, who can share some more color on our real estate strategy.
