Floor & Decor(US:FND)2022-02-25 02:59Financial Data and Key Metrics Changes - The fiscal 2021 fourth quarter adjusted earnings increased 7.3% to $0.44 from $0.41 last year, with a 2-year compound annual growth rate of 30.1% from 2019 [7] - Total sales for the fourth quarter increased 26.4% to $914.3 million, exceeding expectations, and on a 13-week to 13-week basis, total sales increased 34.1% [8] - Full year fiscal 2021 total sales increased 41.5% to a record $3.4 billion, more than double the fiscal 2018 sales [8] - The fiscal 2021 fourth quarter gross margin rate contracted to 38.8% from 42.5% in fiscal 2020, primarily due to higher-than-expected supply chain costs [29] Business Line Data and Key Metrics Changes - Comparable store sales for the fourth quarter increased 14% on top of a strong 21.6% growth last year, with a full year increase of 27.6% [9] - The company opened 7 new warehouse format stores in the fourth quarter, totaling 27 new stores for fiscal 2021, representing a 20.3% growth from fiscal 2020 [10] - Pro sales increased 44.1% from last year, exceeding $1 billion, indicating a faster growth rate than homeowner sales [19] Market Data and Key Metrics Changes - E-commerce sales for the fourth quarter increased 45.1% year-over-year, with a penetration rate of 16.4% [18] - The average ticket increased by 14.8%, driven by higher retail prices and increased sales in laminate and vinyl [14][15] Company Strategy and Development Direction - The company plans to open 32 new warehouse format stores in fiscal 2022, with a focus on owned locations to improve control and reduce costs [10][12] - The company aims to grow its gross margin rate throughout 2022, targeting approximately 41% by the fourth quarter [17][39] - The strategic focus includes enhancing the connected customer experience and expanding Pro and commercial customer segments [19][23] Management Comments on Operating Environment and Future Outlook - Management expressed optimism about fiscal 2022, citing strong demand in housing and remodeling spending, despite challenges from geopolitical events and inflation [35][36] - The company is monitoring supply chain costs and plans to pass on some of these costs through price increases [37][39] Other Important Information - The company raised its minimum starting wage to $15 per hour effective January 1, 2022, to improve employee retention [8] - The company expects fiscal 2022 net sales to be in the range of $4.285 billion to $4.375 billion, an increase of 25% to 27% [38] Q&A Session Summary Question: Price increases in the fourth quarter and future expectations - Management indicated that modest price increases were taken in the fourth quarter to cover supply chain costs, with industry-wide price increases noted [46][48] Question: Impact of Spartan acquisition on sales growth - The Spartan acquisition is currently a small contributor to sales but is expected to grow significantly in the future as integration progresses [55] Question: Gross margin recovery strategy - Management believes gross margin levels can return to previous highs through a combination of price increases and improved product mix [51][52]