Tractor Supply Targets More Than $75 Million in Annual Cost Cuts

Tractor Supply is targeting more than $75 million in additional annual selling, general and administrative cost reductions over 2027 and 2028, while expecting capital expenditures to fall below 4% of sales in 2027 and beyond.

President and CEO Hal Lawton said the savings are expected to accumulate over the two years, with a substantial share in the first year. The target is incremental to operating-margin gains the company expects as comparable-store sales growth rises above about 2%. Lawton did not provide a year-by-year breakdown of the savings target.

Work underway includes closing Petsense by Tractor Supply locations, changing benefit programs and improving store productivity. Tractor Supply closed 74 Petsense stores during the third quarter. The company also sees room to reduce costs in its supply chain, corporate operations, technology and processes. Chief Financial Officer Kurt Barton said vendor-support changes are expected to provide more than $50 million in annualized benefits in 2027.

Lawton said capital expenditures are expected to move below 4% of sales in 2027 and later years. For 2026, Tractor Supply forecasts net capital expenditures of $675 million to $700 million, including expected sale-leaseback proceeds of $325 million to $350 million. The company expects to open about 85 to 90 stores in 2027 and has not provided a dollar estimate for that year's capital spending.

The plans come as Tractor Supply works to improve profitability. The retailer's third-quarter results showed net sales rose 5.1% to $3.91 billion in the quarter ended Sept. 26, while net income fell 13.3% to $224.7 million. Operating income declined 10.2% to $307.7 million, and operating margin was about 7.9%. Gross margin narrowed to 36.4% from 37.4% a year earlier; comparable-store sales increased 0.4%.

Lawton said Tractor Supply wants to return to an operating margin above 9%. The company reaffirmed its 2026 outlook, which calls for net sales growth of 2.5% to 3.5% and diluted earnings per share of $1.78 to $1.88; its adjusted diluted earnings-per-share outlook remains $1.90 to $2.00. Lawton said Tractor Supply plans to provide more detail on its 2027 priorities and updated long-term financial framework as that work is completed.