Floor & Decor (FND) Q3 2025 Earnings Transcript

Core Insights - The company announced the appointment of Brad Paulsen as the new CEO, effective at the start of fiscal 2026, with Tom Taylor transitioning to the role of Executive Chair [1][5][4] - Fiscal 2025 third quarter diluted earnings per share increased by 10.4% to $0.53, exceeding guidance, while total sales grew 5.5% to $1.18 billion [8][29] - Comparable store sales declined by 1.2% year-over-year, reflecting ongoing challenges in the hard surface flooring market [21][22] Financial Performance - The gross margin rate for the third quarter decreased by approximately 10 basis points to 43.4%, impacted by increased distribution center costs [30] - Selling and store operating expenses rose by 7.3% to $363.8 million, primarily due to non-comparable stores [31] - Adjusted EBITDA increased by 4.4% to $138.8 million, with an adjusted EBITDA margin of 11.8% [34] Store Expansion and Strategy - The company opened five new stores in fiscal 2025, with a total of 12 new locations year-to-date, ending the quarter with 262 stores, a 9% increase from the previous year [12][11] - Plans to open 20 new stores in fiscal 2025 and maintain a similar pace in fiscal 2026, aiming for a long-term goal of 500 warehouse format stores [13][15] - The company is strategically diversifying its store locations, including entry into smaller markets while maintaining flexibility in response to economic conditions [14][13] Market Conditions and Outlook - The company anticipates continued pressure on consumer spending, particularly on big-ticket items, with existing home sales stabilizing around 4 million units [36][37] - Fiscal 2025 total sales are expected to range from $4.66 billion to $4.71 billion, reflecting a 5% to 6% increase from fiscal 2024 [37] - Comparable store sales are projected to decline by 2% to 1%, with average ticket sales expected to increase by low single digits [38] Customer Engagement and Product Strategy - The company achieved its highest net promoter scores in September, indicating strong customer satisfaction and engagement [10][20] - Ongoing initiatives include expanding kitchen cabinets to approximately 200 stores and enhancing outdoor product assortments [24][68] - The design services segment continues to show robust growth, significantly outperforming overall company sales [24]