Floor & Decor Q3 Earnings Call Highlights

Key Points

• Third-quarter earnings improved despite weak demand: Sales rose 3% to $1.21 billion and diluted EPS increased 15% to $0.61, while comparable-store sales declined 1.4% but improved sequentially. September comparable sales turned positive, helped by stronger professional-customer demand.
• Pro customers and cost controls supported performance: Pro sales rose 9% in September and represented 55% of quarterly sales. Gross margin expanded to 43.7%, while operating cash flow nearly doubled year over year and the company repurchased $91.4 million of shares during the quarter.
• Management remains cautious on growth: Floor & Decor plans to moderate warehouse-store openings to 10–15 in 2027 because of subdued housing activity and continued demand pressure. Fourth-quarter comparable sales were down about 3.8%, although fiscal 2026 guidance calls for $535 million–$550 million in adjusted EBITDA.

Floor & Decor NYSE: FND reported fiscal third-quarter earnings growth as the specialty flooring retailer managed costs and expanded its professional customer business despite continued pressure on demand for large discretionary home-improvement projects.

Diluted earnings per share rose 15% year over year to $0.61, including an approximately $0.02-per-share benefit from a lower tax rate, Chief Executive Officer Brad Paulsen said. Excluding that benefit, earnings per share increased 11%, which Paulsen attributed to expense discipline and operational execution.

Total sales increased 3% to $1.21 billion, while comparable-store sales declined 1.4%. The comparable-sales decline improved from a 2.1% decline in the second quarter and a 3.7% decline in the first quarter. Comparable sales fell 2.3% in July and 2.6% in August before increasing 0.4% in September, Floor & Decor’s first month of positive comparable-sales growth since January 2026.

Pro Business and Category Trends

The company said its sales to professional customers accelerated during the quarter, with Pro sales rising 9% in September, the strongest monthly growth rate of the year. Pro penetration reached 55% of quarterly sales, compared with about 50% a year earlier.

Paulsen said Floor & Decor is seeking to deepen relationships with existing professional customers through stronger sales capabilities, quote generation, closing rates, inventory availability and store expansion. The company recently began piloting a Pro Digital Loyalty program in select markets and remains on track for a broader launch in the first quarter of 2027.

Comparable average ticket increased 1.6%, accelerating from 0.8% growth in the second quarter, while comparable transactions declined 2.9%. The transaction decline was unchanged from the second quarter but improved from a 5.5% decline in the first quarter.

Among merchandise categories, tile sales grew 5% year over year and represented about 23% of sales. Installation materials, also representing 22% of sales, grew 10%. Paulsen said the company believes it is gaining share in tile and installation materials, particularly through its efforts to serve professionals with a “supply house mentality.”

Laminate and vinyl flooring sales remained under pressure but improved sequentially. Chief Financial Officer Bryan Langley said total laminate and vinyl sales declined 10.4% in the first quarter, 4.6% in the second quarter and 3% in the third quarter. Management said it has used special buys, new everyday products and targeted pricing to improve the category’s value proposition.

Margins, Cash Flow and Share Repurchases

Gross profit increased 3.8% to $19.4 million, while gross margin expanded 30 basis points to 43.7%. Langley said the increase was primarily driven by the recognition of IEEPA tariff refunds as affected inventory was sold. Higher supply-chain costs, including diesel fuel prices that were about 70% above the prior-year period, partially offset the benefit and represented an approximately 100-basis-point gross-margin headwind.

The company recognized approximately $14 million of tariff-refund benefits during the third quarter and expects the remaining approximately $8 million to flow through during the fourth quarter.

SG&A expenses rose 3% to $13.4 million, driven primarily by new store openings. SG&A as a percentage of sales was flat year over year at 37.3%. Langley said comparable-store SG&A declined by $7.9 million during the quarter, while the company has removed nearly $100 million in comparable-store costs since the fourth quarter of 2023.

For the first 39 weeks of fiscal 2026, operating cash flow totaled $485.3 million, compared with $257.8 million a year earlier. Floor & Decor ended the quarter with $1 billion in unrestricted liquidity, including $392.5 million of cash and cash equivalents and $641.3 million available under its asset-based lending facility.

The company repurchased 1.8 million shares for $91.4 million during the third quarter. Through the first three quarters, it repurchased 3.1 million shares for $157.1 million under its $400 million authorization, leaving $242.9 million available.

Store Growth Moderated for 2027

Floor & Decor opened 12 warehouse-format stores through the first three quarters of 2026 and plans to open eight more in the fourth quarter, bringing the full-year total to 20. However, management expects to moderate warehouse-store openings to 10 to 15 in 2027, citing subdued existing-home sales and a challenging flooring-demand backdrop.

Paulsen said the decision is a matter of pacing rather than a change in the company’s long-term goal of operating 500 warehouse stores in the U.S. The company will continue to prioritize tier-one and tier-two markets, including smaller-format stores of roughly 55,000 to 65,000 square feet.

“We believe this is temporary and not a reflection of the new run rate around new store openings,” Paulsen said during the question-and-answer session.

Mature stores, defined as locations at least five years old, are producing about $20 million in annual sales on average and roughly 23% EBITDA margins, Langley said. Those volumes remain below historical peak levels of approximately $26 million to $28 million.

Outlook Reflects Continued Demand Pressure

Management said demand remains constrained by elevated mortgage rates, weak existing-home sales, higher energy costs and cautious consumer spending. Fourth-quarter-to-date comparable-store sales were down approximately 3.8%.

For fiscal 2026, Floor & Decor expects:

• Sales of $4.765 billion to $4.835 billion, up 2% to 3% from fiscal 2025.
• Comparable-store sales to decline 3.5% to 2.0%.
• Adjusted gross margin of approximately 43.6%.
• Adjusted EBITDA of $535 million to $550 million.
• Adjusted diluted earnings per share of $1.88 to $1.98.
• Capital expenditures of $235 million to $250 million.

The company’s fiscal year includes a 53rd week, which it expects will contribute approximately $65 million in sales, $11 million in adjusted EBITDA and $0.08 in adjusted diluted earnings per share.

Floor & Decor also announced board changes. Norman Axelrod will not stand for reelection at the company’s 2027 annual meeting. Effective Jan. 1, 2027, Tom Taylor will move from executive chair to chair of the board. Lauren Taylor Wolfe will join the board as an independent director effective Feb. 1, 2027.

About Floor & Decor (NYSE:FND)

Floor & Decor Holdings, Inc is a specialty retailer focused on hard-surface flooring and related products. The company offers a broad selection of tile, natural stone, wood, laminate and vinyl flooring, along with installation materials, tools, accessories and home-decor items.

Floor & Decor serves homeowners, professional installers, designers, remodelers and commercial customers through warehouse-format stores, smaller design studios and its e-commerce platform. Its stores are designed to provide a wide product assortment for renovation and construction projects, while also offering services such as design support and product fulfillment.

Founded in 2000 and headquartered in Atlanta, Georgia, Floor & Decor operates primarily in the United States.

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